Charm Communications Gets Offer From Founder To Be Taken Private For $4.70/ADS

(RTTNews) - China-based advertising agency Charm Communications Inc. (CHRM) said Monday that it has received a preliminary non-binding proposal from a consortium led by its founder and chief executive officer He Dang to take the company private for $4.70 in cash per American depositary share of the company.

The company's board of directors received a takeover proposal letter dated September 30, 2013 from a consortium that comprises its founder and chief executive officer He Dang, two companies in the British Virgin Islands that are controlled by the founder - Honour Idea Ltd and Merry Circle Trading Ltd - and China-focused private equity firm CMC Capital Partners HK Limited.

The consideration payable for each American depositary share or ADS of the company, each representing two Class A ordinary shares, will be $4.70 in cash, or $2.35 in cash per Class A ordinary share. The consideration payable for each Class B ordinary share of the company will also be $2.35 in cash. The offer price represents a 17.2 percent premium to the company's closing stock price of $4.01 per share on September 27, 2013.

Charm Communications said its board plans to form a special committee of disinterested directors to consider the proposal. Further, the company cautioned its shareholders and others considering trading in its securities that the board has just received the proposal and has not made any decisions with respect to the company's response to the proposal.

The consortium said in its proposal letter that it plans to finance the acquisition with a combination of debt and equity capital. The consortium has held talks regarding potential debt financing with China Merchants Bank, which has expressed interest in financing the proposed acquisition.

The consortium also specified that the proposal constitutes only a preliminary indication of its interest and is subject to negotiation as well as execution of definitive agreements relating to the proposed transaction.

CHRM closed Friday's trading at $4.01, down $0.69 on a volume of 158,700 shares.