Synutra International, Inc. Shares Pop on Its Big News

Image source: Synutra.

What happened

Synutra International, Inc. (NASDAQ: SYUT), the Chinese company that makes baby formula and other supplements, announced on Thursday after the market closed that the company is going private in an equity buyout. Shares are up more than 17% Friday as of 11 a.m. EST on the news.

So what

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In the company's official release about the buyout offer fromBeams Power Investment Limited and acceptance by Synutra's board, it announced that shareholders will receive$6.05in cash for each share outstanding. Shares are currently trading around $5.30. This discrepancy is likely because the deal still needs stockholder approval and to meet certain regulatory requirements.

Now what

The baby food market in China is likely to boom in coming months and years as the Chinese government announced a year ago that the infamous one child policy will be phased out. Even though Synutra was one of the purest plays in this growing market, there are others.Mead Johnson Nutrition Co.(NYSE: MJN), the pediatric nutrition company that makes the baby food brandEnfamil, gets a sizable chunk of its sales from China. Baby formula is also an important segment for food giants likeNestle(NASDAQOTH: NSRGY), which counts China as a growth market for its brands.

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