David Addison
Value, medium-term horizon, commodities, oil & gas

Shareholder Rejection Of Yongye's Buyout Offer: Boon Or Boondoggle?

The last two weeks have been eventful for shareholders of Yongye International (NASDAQ:YONG). On Wednesday, 19 February, theStreet.com reported that Yongye had postponed the vote on the buyout, ostensibly to garner more shareholder support. At the time, shares were trading at around $6.57, representing a paltry 1.82% risk premium versus the buyout price of $6.69. The January 15 expiry $7 calls were priced at $0.05, representing a 6.84% expected annualized standard deviation under Black & Scholes' pricing assumptions. Clearly, even in spite of evidence to the contrary, the market thought that the deal was "a sure thing". This was not to be the case. On Wednesday, 5 March, Yongye announced that the going private proposal had not...

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