When one loss-making company buys another that is barely profitable from its controlling shareholder at two-times asset value, discerning investors might step back.
But shares in Vanda Systems & Communications Holdings jumped 37 per cent yesterday to $1.52 on news it would acquire Hutchison Global Communications (HGC) from Hutchison Whampoa, which holds a controlling 37.05 per cent stake in the systems integrator.
In return, Hutchison receives 4.87 billion new Vanda shares at 80 cents each - worth a total of $3.9 billion and more than doubling its stake.
Hutchison also receives a $3.2 billion note through the transaction, which it can convert into Vanda shares at 96 cents each and brings the deal's total value to $7.1 billion.
But before Hutchison can receive its coveted one-off gain, it needs to sell its Vanda shares to third-party investors.
Will there be ready buyers in this game of pass-the-asset? For when the music stops, investors who come to the party last may find this hastily wrapped parcel contains an unpleasant surprise.