Global Sources, a leading business-to-business company in Greater China, says its will not exercise its option to buy an additional 35 per cent of GEM-listed HC International, which operates a popular mainland business-to-business site.
Global Sources holds 12.8 per cent of loss-making HC International through wholly owned subsidiary Trade Media, which has an option to buy an additional 35 per cent of the mainland company at an exercise price of HK$2.2592 per share.
Trading of HC International stock was suspended yesterday pending the release of price-sensitive information, the company said. The shares closed at HK$1.23 on Friday, meaning the option price would have represented an 84 per cent premium.
'We do not rule out the possibility of Global Sources renegotiating the option contract with HC International at a lower purchase price,' Citibank analyst Jason Brueschke said in a note.
When Global Sources invested in HC International about a year ago, the move looked to be the prelude to an alliance that would take on Alibaba, the mainland's largest business-to-business site.
Alibaba has both a Chinese site for domestic trade within the mainland and an English site for international trade.