Hotpot chain Little Sheep jumped more than 15 per cent to an all-time high yesterday after the Chinese government gave the green light to a buyout bid by Yum! Brands.
'The government approval came much earlier than the market had expected, sharply pushing up the share price,' said Olive Xia, food and beverage analyst of Core Pacific-Yamaichi Securities.
Hong Kong-listed Little Sheep rose to a record HK$6.40 just hours after it said early yesterday that the buyout proposal had been cleared by the Ministry of Commerce. The stock ended the day 15.2 per cent higher, at HK$6.37, yesterday.
The company's shares plunged 12 per cent on October 26, the most in three years, when Chinese regulators said they would extend the review period of the bid.
Yum! Brands, US owner of the KFC and Pizza Hut fast-food chains, plans to spend HK$4.4 billion on increasing its holding in Little Sheep to 93.2 per cent, from 27.2 per cent, and intends to take the company private.
It is offering HK$6.50 per share in a deal that values the Inner Mongolia-based hotpot chain at HK$6.7billion.
The deal will be subject to various conditions including approval by Little Sheep shareholders.