Harbin Still Under Acquisition (HRBN)

Harbin Electric, Inc. (NASDAQ: HRBN) is still getting acquired.  The deal for the electric motor company in China may seem a bit different and there is still a huge implied discount but the company has entered into a merger agreement with Tech Full Electric Company Limited.  Each Harbin share will be converted into the right to receive $24.00 in cash without interest, except for Shares owned by Tech Full and the acquisition company, prior to the effective time of the merger pursuant to a contribution agreement.

The reason this is a bit complicated is because Tech Full Electric is a Cayman Islands company wholly owned indirectly by Mr. Tianfu Yang, Harbin’s Chairman and CEO.  Tech Full Electric Acquisition, Inc. is a Nevada corporation wholly owned by Parent.  Collectively, the purchasing group beneficially owns approximately 40.6% of the outstanding Shares.

The Board of Directors, after the unanimous recommendation of a special committee, approved and adopted the merger.  The board is also recommending that shareholders vote to approve the merger. The Special Committee is also said to have negotiated merger terms with advisory services of Morgan Stanley, Lazard Freres, and Gibson Dunn & Crutcher LLC.

The company noted that “events that negatively affected the Company’s stock price over the past few months have left all shareholders unhappy and frustrated.”  It was also noted that a “significant amount of information that is false and misleading as well as defamatory has been introduced into the market, and has clearly affected market trading of the Company’s stock.”

Harbin also noted that it is prepared to take all necessary legal action against those who have made such statements.

We still have much more than 90 minutes before the market opens and we have seen over 225,000 shares trade hands.  The close on Friday was $8.39 and the 52-week trading range is $5.82 to $25.05.  The last pre-market trade was up over 40% at $12.60.

JON C. OGG