M&A Alerts: MBO Heads Harbin's Way (HRBN)

Harbin Electric, Inc. (NASDAQ: HRBN) is going private, at least that is if the deal is accepted.  The company has received a proposal letter from its Chairman and CEO, Mr. Tianfu Yang and Baring Private Equity Asia Group Limited.  The offer is for $24.00 per share in cash, subject to certain conditions.  The company is a developer and manufacturer of electric motors in China and products include industrial rotary motors, linear motors, and specialty micro-motors.

Mr. Yang currently owns 31.1% of Harbin’s common stock and an acquisition vehicle will be formed and the deal is intended to be financed with a combination of debt and equity capital.  In addition, the equity portion of the financing would be provided by Mr. Yang, the Baring Fund and related sources.  Goldman Sachs (Asia) LLC is acting as financial advisor to the acquisition vehicle.

Harbin’s Board of Directors has already formed a special committee of independent directors (David Gatton, Boyd Plowman and Ching Chuen Chan) to consider this proposal.  The special committee will retain independent advisors to assist in a decision and no decisions have been made by the special committee over this proposal.

Management buyouts have a mixed history when it comes  to independent committees approving such mergers.  The fact that this is more of a Chinese operation may only make predicting whether a buyout would allowed only that much more difficult.  The company did note, “There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.”

Harbin’s shares closed at $19.96 on Friday and the 52-week trading range is $15.26 to $26.00.  Shares are up more than 21% at $24.30 in thin-volume trading.