Shares of XPEC Entertainment Inc. (????), a local gaming software developer, made a significant comeback in the Thursday morning session, jumping from an early 10 percent dive caused by a botched tender offer that left many investors stunned, dealers said.
"I think the current buying came from short covering after the stock suffered heavy losses in recent sessions," Hua Nan Securities analyst Henry Miao said. "Since prosecutors have launched an investigation into the failed tender offer, investors should stay alert over the stock until the probe yields concrete results."
As of 12:21 a.m., shares of XPEC had risen 10 percent, the maximum daily increase, to NT$45.75 (US$1.46) from a 10 percent decline seen earlier in the session, with 14.37 million shares changing hands, on the local over-the-counter market.
The stock had faced heavy downward pressure soon after the local equity market opened Thursday on follow-through selling from a session earlier. But the stock made its dramatic U turn at around 9:20 a.m.
XPEC shares suffered a 10 percent decline the previous day for the sixth consecutive session after Japan-based Bai Chi Gan Tou Digital Entertainment Co. (????) on Aug. 30 withdrew a tender offer the potential suitor had proposed in late May to acquire 38 million XPEC shares, or a 25.17 percent stake in the Taiwanese firm, at NT$128 per share.
The acquisition through the tender offer was valued at NT$4.86 billion.
After the announcement of the tender offer, many investors rushed to pick up XPEC shares in a bid to participate in the tender offer. The buying lifted XPEC shares to a recent high of NT$114 June 1.
However, speculation emerged from Aug. 19 that Bai Chi Gan Tou would delay the acquisition, which started to push XPEC shares lower. The Japanese firm extended the deadline of the payment in late August, and even worse, on Aug. 30 it announced it had decided to walk away from the deal, resulting in a settlement default.
More than 3,000 XPEC investors formed a self-help association for their massive losses caused by the failed tender offer. Some of them staged a protest in front of the Financial Supervisory Commission (FSC) last week, demanding an investigation into the case to find out who should be held accountable and to seek compensation.
The FSC, the top financial regulator in Taiwan, has taken into custody a 14 percent stake in XPEC that now belongs to Bai Chi Gan Tou. Prosecutors summoned XPEC Chairman Aaron Hsu (???) Wednesday for questioning and named Hsu as a defendant in the case. Hsu was released without bail but barred from leaving the country.
Local media reported that Hsu failed to clarify the case when he met with prosecutors.
"The entire situation remains murky. I think the current rebound in XPEC shares is technical in nature and could be short-lived," Miao said.
Some market analysts attributed the rebound to a plan for XPEC to buy back its own shares from the open market starting from Friday in a bid to shore up investor confidence.
Source: Focus Taiwan News Channel