everthing you need to know about the $ASKH merger- read below:
Shareholders of Astika Holdings Inc. (OTCMKTS:ASKH) must be right now counting their stock gains. After the company announced a Non-Binding Letter of Intent to acquire a Chinese cash cow entity, some have doubled their money (even more) in a very short period of time. Its name is Jiangsu Ziyang Holiday Bedroom Articles Co. Ltd., and it has been in the business for ten years. As per our opinion, ASKH’s story is like the lottery. One day you hold shares of a company reporting no revenues and the following day you own shares of a multimillion-dollar business. Welcome to the magic of reverse mergers in the United States. Check the following price action before we provide more details about Ziyang Holiday.
The buyer: Astika Holdings Inc.
The company is headquartered in Auckland, New Zealand. It was founded in 2011. The company seems to be used only for the purpose of providing Jiangsu Ziyang Holiday access to the market. The recent income statements provided make us think so. No revenues have been seen in the last three years. Additionally, in the last annual report, the expenses are very little; only $0.018 million. Furthermore, the income reported for the year 2016 was negative (-$0.023 million).
Since the company may merge with Jiangsu Ziyang Holiday, so we will provide some information about the share capital structure. ASKH’s authorized shares are equal to 140 million. Additionally, the total amount of shares outstanding is 25,291,838 shares. While the float is not given, we believe that a few shareholders own large stakes in the company. The amount of volatility makes us think so. This will be appreciated by volatility players. You guys have a new micro cap profile to work with.
The seller: Jiangsu Ziyang Holiday Bedroom Articles Co. Ltd.
This is the most significant part of the deal. It does not matter whether ASKH reports revenues or not. If the transaction is completed and both parties merge, the new income statements will look much better. The revenues made by Jiangsu Ziyang will be shared by ASKH. In addition, the American company will gain access to the assets, know-how, and business model of ASKH. As a result, the share price could run.
Let’s revise what’s Jiangsu Ziyang doing. The company operates in the home textile sector for silk quilts, silk rugs, air-condition mats, down, feather, and wool products. This is the most significant:
“With operations in Jiangsu province in China, occupying 34,000 square meters with a manufacturing plant building of 23,000 square meters employing 300, including 20 technicians, 5 special designers, 4 manufacturing engineers, 1 spinning engineer, 3 quality engineers and 45 University educated staff. Jiangsu Ziyang Holiday Bedroom Articles Co. Ltd., holds 1 patent of invention, 12 patents for utility models, 4 design patents, and 40 copyright patents in the textile industry.” Source
Finally, the most important is that Jiangsu Ziyang reported almost $20 million in gross revenues. If the agreement is successful, the market will check this figure, so bear it in mind. The stock gains should be proportionate to this figure. In addition, please note that no information was given on the balance sheet. We expect it to be rich in assets, and properties. But, more concrete information will be needed. Be sure to look for these financial figures. They will also determine the stock performance of ASKH after the merger.
Why will the acquisition be useful for Jiangsu Ziyang? The company gave several reasons, but the most important is this one:
“The Acquisition is also the sale agents for brands such as: Calvin Klein, UGG, Spirit, Wal-Mart, Carrefour, Tesco. The Acquisition intends and has the potential to continue its growth to meet regional needs while looking for new market opportunities in China and global export.” Source
When will the transaction close?
It is still early to know a concrete date. Please note that the companies are still performing due diligence. Additionally, a definitive merger agreement should be signed. However, we need to mention that the purchase will not occur after July 31, 2018. In our opinion, transactions usually close in about 6 to 8 months. Bear this information in mind. If the stock price has not commenced running after this period of time, the transaction may not happen.
Players acquired big stakes
Like always, in this case, players in Wall Street have commenced to position themselves. Sin is mentioned, but sinner’s name is missing. So, have a look at the recent big stake acquired by a market participant.
What are the catalysts?
The following is a list of announcements that could make ASKH run:
A definitive merger agreement
The companies said that they cannot contact third parties. There is a no-go-shop agreement. However, third parties could be also interested in ASKH. If this happens, ASKH could run.
Information about Jiangsu Ziyang’s balance sheet.
Conversely, please note that the risk is also high. If the companies decide not to merge, ASKH’s price will collapse. Additionally, if the regulators in the United States or China decide to block the transaction, the same will happen. Finally, if the due diligence is not satisfactory, the deal will not see the light of the day.
Conclusion
Currently trading with a market cap of $1 million, ASKH is an interesting story among small caps. We believe that the transaction could close successfully. The most important is that Jiangsu Ziyang is expecting to raise as much as $10 million from the United States. That’s a powerful motivation to keep in mind. Additionally, financing in China is not as cheap as in the United States, and the regulatory framework is much more flexible. To sum up, the deal is a great idea. Let’s see if lawyers and negotiators do their work properly, and the shareholders can get paid.
AI
