SemiLEDs Corporation (NASDAQ: LEDS) is screaming for the top in the market this morning, trading on gains of more than 50% early on. The gains come after the company issued a filing announcing that it has received an offer to purchase about $2 million in common stock. Here’s what’s happening:
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LEDS Stocks After Offer To Purchase Shares Is Disclosed
In an SEC filing that was issued late yesterday, SemiLEDs said that it received an offer from Xian Chang Ma. The letter from Mr. Ma, an individual investor that lives in China, came on August 17, 2019.
In the letter, Mr. Ma offered to purchase 680,000 shares of LEDS common stock at a price of $3.00 per share. This would bring the total value of the transaction to $2,040,000.
Should the company take the offer, Mr. Ma will purchase shares representative of about 19% of outstanding shares. After closing, the final percentage of outstanding shares, adjusted for the 680,000 new shares to fill the order, would come in at 16%.
In the SEC filing, LEDS said that the sale of shares is subjec tto the Board of Directors making the decision to accept the offer and the negotiation and execution of a definitive stock purchase agreement.
If the sale does close, the company announced that it will appoint Mr. Ma to its Board of Directors. As part of the agreement, LEDS must also agree to change the Chinese name of its principal subsidiary from SemiLEDs Optoelectronics Co., Ltd. to SemiLEDs Tengjun Technology Co., Ltd.
In the filing, the company said that its Board will make a decision with regard to the offer no later than 5:00 PM EST on August 30, 2019. Of course, there is no assurance that the transaction will close at this point.
Why This News Is So Exciting
As you can see, LEDS is running for the top in the market. So, what about this deal is so exciting? First and foremost, the deal represents a strong premium over the closing price of $2.22 per share yesterday and the closing price of $2.18 on the date the letter was received.
Moreover, Mr. Ma will bring his ideas to the company’s Board of Directors if the transaction closes. Success breeds success and it’s always a good idea to have someone with Mr. Ma’s experience involved in a company.
All in all, this would be a tremendous deal for the company, and due to the strong premium on shares and growth that the offer has caused, dilution is not much of a concern.
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