By Sam Boughedda
In a proposal that would value the company at $1.8 billion, a consortium led by Hollysys Automation (NASDAQ:HOLI) management intends to take the publicly traded automation and control system manufacturer private, according to a report by Reuters on Friday.
Reuters sources said the management team, which is led by founder and CEO Wang Changli, has received approval from the Beijing local government for the acquisition.
Hollysys shares are up more than 16% in early Friday trading.
The team, which is said to be working under the local government's direction, has joined forces with a Beijing-based state company for the potential deal.
Meanwhile, the consortium reportedly believes that Hollysys is undervalued in the U.S. market. They are said to be planning to offer around $29 per share to take Hollysys private, representing an 81% premium to the firm's average share price over the past three months.
The consortium will reportedly bring several investors into the deal, including U.S. private equity firm Warburg Pincus and Chinese venture capital firm Legend Capital, claim Reuters.
They are also said to have held talks with banks to finance the deal and are close to securing loans worth at least $1 billion from Chinese lenders, led by ICBC (Asia).