On a July 25, 2016 we published a research note titled SkyPeople Fruit Juice — SPU — Lighting Up U.S Listed China Stocks. We summarized a potential transaction between one of SPU’s subsidiaries, Shaanxi Guoweiduomei Beverage Co,. Limited and a State Owned Enterprise (SOE) in China, Shaanxi New Silk Road Kiwifruit Group Inc. (NSR). The definitive agreement calls for NSR to purchase a 51% stake in Guoweiduomei. NSR will have to pay $46 million (we presume in cash or in NSR shares) to complete the transaction if certain conditions are met. The deal values the subsidiary at $100 million or $25.00 per SPU share.
SPU Pumping Again
Here is an excerpt from our initial research note:
SkyPeople Fruit Juice Inc. (NASDAQ:SPU) (~$17), a producer of various concentrated fruit juices sold mainly in China, lit the candle. On July 13, 2016 SPU closed at $2.95 compared to its current price of $18.00 pre-market this morning. The stock is pumping on a delayed reaction to an 8k released on June 21, 2016 that the company reached an agreement to sell 51% of its main subsidiary to Shaanxi New Silk Road Kiwifruit Group.
Shares suffered a steep pull back to around $6.00 after reaching $20.95. But SPU, a microcap with only 4 million shares outstanding, is pumping again. SPU rose 58% in yesterday’s (August 29, 2016) trading session to close at $9.50.
Since our initial SPU research note, as promised, we conducted on the ground due diligence (OTGDD). We want to verify if this transaction is actually on the table. Trust or the perception of trust means everything in the U.S. Listed China Space.