On August 14, 2012, an article on Yahoo Finance discussed recent privatization deals by Focus Media (FMCN) and Fushi Copperweld (FSIN). I found the information intriguing and thought-provoking. As a mid-cap company, Focus Media probably has better access to large capital infusion and could therefore strike such a big privatization deal. Nonetheless, the offer price of more than 20 times its trailing EPS is still quite amazing. For Fushi Copperweld, the buyout price is not cheap either at more than 13 times trailing EPS. That’s why Fushi’s buyout offer was only about 45% over its stock price before the announcement. For a smaller company trading at less than three times training EPS, a reasonable buyout can easily be more than 100% of its stock price before the announcement.
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