Yongye International, a Chinese fertiliser maker fails to build its repo again in the market even by a buyout offer from Morgan Stanley. The company in order to raise its public confidence manipulated some accounting standards.
Morgan Stanley and its group agreed to buy Yongye International Inc. Before that Yongye International Inc has trimmed half of its share on the Nasdaq Stock Market. Now the stock traded at 22% with a discount to offer price.
Absaroka Capital Management LLC, The short seller of the company said if the company is involved in any unfair practices then it would be delisted from the U.S exchange. The company lowered down its private equity which attracts the eyes of the potential investors.
U.S regulators now involved in the investigation that whether the company is really associated with some unfair practices.
On Oct 15 Yongye International Inc rallied 17% to $5.61. According to the company they received a non binding offer from the buyout group for the purchase of the company’s share in $6.60. At the same time they said the deal is not yet finalised and they are looking for a better opportunity. The company also mentioned about a new offer concerned from Abax Global Capital Ltd, a Hong Kong based company and the company is working on the study of analysis of the $295 million offer.
Its share declined by 0.8% to $5.12.
As the news of buyout spread all over, the short interest on the company declined to 1.5% from 8% on September 10. In short selling the investors are not involved in acquiring the shares with a long-term vision. It only goes on in purchasing the same with an intention to sell it off for a short term gain. And by betting a lower price they can buy back the shares again.
Yongye International Inc commercialised the buyout deal with Morgan as a weapon to raise its investor’s confidence in the global market.