Why NQ Mobile Shares Popped Today
What: Shares of NQ Mobile popped briefly this morning, opening the trading day with 12% gains only to give some back. As of 11:48 a.m. ET, shares were up just 5%, after the company announced a divestment agreement.
So what: For nearly a year, NQ has been attempting to divest its majority owned Cayman Islands subsidiary FL Mobile, but ran into some roadblocks along the way. NQ has now reached a definitive agreement with Shenzhen Prince New Materials Co., Ltd. To sell its entire stake in FL Mobile to Shenzhen Prince.
Now what: Shenzhen Prince will acquire NQ's 65% equity interest in FL Mobile for approximately 3.2 billion yuan ($500 million). Shenzhen Prince will acquire the remaining equity interests held by other affiliates and executives of NQ. The total deal values FL Mobile at 5 billion yuan ($767 million).
Image source: NQ Mobile.
Shenzhen Prince is funding the deal with equity financing, and it has also entered into share subscription agreements with investors. NQ will receive 95% of the cash consideration within 10 days of closing, bolstering its balance sheet.
The article Why NQ Mobile Shares Popped Today originally appeared on Fool.com.
Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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