AsiaInfo-Linkage Inc. rose to an eight-week high in New York on prospects Citic Capital Holdings Ltd., controlled by the sovereign wealth funds of Qatar and China, is close to acquiring the Chinese software services provider.
The shares gained 3.3 percent to $11.34 by 10:55 a.m. in New York on trading volumes 24 percent above the daily average over the past three months. AsiaInfo is poised for its highest close since Oct. 1.
Citic Capital is in advanced talks to buy Beijing-based AsiaInfo for about $900 million, said two people with knowledge of the matter who asked not to be identified as the information is confidential. The investment company, based in Hong Kong, is teaming up with AsiaInfo’s management to take the company private, according to one of the people. The companies are expected to reach an agreement by year-end, the people said.
AsiaInfo had $255 million in cash and short-term investments at the end of September, and no debt, data compiled by Bloomberg show. Excluding that, the deal would have a so-called enterprise value of about $645 million, compared with AsiaInfo’s current enterprise value of almost $593 million, the data show.
The company’s shares rallied as much as 40 percent in New York trading in the two months after it announced a buyout proposal from a Citic Capital unit on Jan. 19. The stock is down 18 percent from a March 13 high as AsiaInfo’s profit sank to a four-year low, giving the company a market value of $824 million.
Primavera Capital Group, the Chinese private-equity firm founded by former Goldman Sachs Group Inc. investment banker Fred Hu, and Silver Lake Management LLC, the biggest technology-focused private-equity firm, have dropped out of bidding for AsiaInfo, people familiar with the matter said in September.
Jimmy Xia, a Beijing-based spokesman for AsiaInfo, declined to comment, as did Citic Capital spokeswoman Cindy Tam.
Citic Capital sold a 22 percent stake in itself to Qatar Holding LLC in August, giving the fund additional capital for making overseas acquisitions. China Investment Corp. owns 31.1 percent of the company, which oversees more than $4.4 billion. Citic Pacific Ltd. and Citic International Financial Holdings together hold a 43 percent stake in Citic Capital.
AsiaInfo sells telecommunications software to China’s biggest wireless carriers. The company’s third-quarter profit dropped 65 percent to $4.6 million as costs increased, data compiled by Bloomberg show. Gross margins also fell to 37.3 percent from 43.9 percent a year ago.