NEW YORK (The Deal) -- Yongye International (YONG) postponed the shareholder vote for its $340 million buyout by management and MSPEA Agriculture Holding Ltd. to provide more time to gain enough support for the deal.
Yongye, of Beijing, a Nevada incorporated company, announced Sept. 23 the $6.69 per share buyout by its chairman and CEO Zishen Wu, other Chinese investment funds and the Asian private equity arm of Morgan Stanley. The acquiring group represents 37.8% of Yongye, a manufacturer and distributor of crop nutrients in the People's Republic of China.
Shareholders representing a majority of the nonaffiliated shares, or about 31% of Yongye, must vote in favor of the merger for it to proceed.
Glenhill Advisors LLC filed a 13D in early October stating that the deal was too cheap based on Yongye's recent financial performance and that the company would benefit from a richer valuation if it listed on the Hong Kong Stock Exchange and that Glenhill, which owns 4% of Yongye, would not support the deal. In January, Glenhill filed an amended 13D stating it had failed to raise interest in an alternative bid for the agriculture company and would no longer pursue that effort. At that time, Glenhill said it might vote for the deal.
Yongye responded at the time that its financial performance had waned and, based on cash flows, the buyout price was fair. The company noted that of 51 buyouts of China-based targets, only 18 had increased their price, and the 9 cent, or 1.4%, increase in the buyout price from the October 2012 approach of $6.60 per share to $6.69 was difficult to negotiate with the buyer group. China-based companies that had gone public in the U.S. through reverse mergers had also fallen out of favor by 2012 because of concerns raised by the U.S. Securities and Exchange Commission, Yongye said.