China VTM (HK:893) is currently subject to a proposed privatisation offer (by way of a scheme of arrangement) from it's controlling shareholder. The offer price is HK$1.93 per share. While this represents a decent premium to the prices at which the shares were traded before the offer was announced, to my mind it still undervalues the cash rich company. To make matters worse, the offer timetable has been pushed back and we will not see the offer being officially made until April which means that the proceeds of the offer won't be available until sometime after that (possibly late May or June). No reason for the delay has been given. To be quite frank, this is a pointless irritation.
Given that most of the buyers are purchasing shares for arbitrage purposes, it was no surprise to see a couple of cents trimmed off the share price to reflect the delay. I will still wait for the offer to go through rather than sell into the market but am tempted to pick up a few more. Net of costs, I would make about 6% if I purchased at current prices (HKD1.81) and the scheme is approved. Of course, there is the risk that the scheme will not be approved in which case I would expect the share price to fall significantly.
Probably best to do nothing?