YaSheng Group (HERB)

[RealDutch]

I changed my mind. I now think a merger is possible or even likely.

Let's review our options one more time. Why the website updates?

1) You could argue they did it just for fun. But the one thing that doesn't make sense is the corporate governance committee which they added to the address. Also, the existing assets haven't been updated, so what is the point.

2) Are they starting to file again? No. They are still showing the YHGG ticker from 2013 and they would be off to a really bad start already. They are simply leaving, and there is no way back now.

Which leaves the merger and the going private offer.

The going private offer speaks for itself. They have the cash now. And, it does explain the corporate governance committee because such a transaction would need independent board approval.

But here is the thing.

1. Parent owns 25% of the sister company, Gansu Yasheng Industrial (with a listing in Shanghai). That makes it a related party transaction if the sister company is acquiring HERB. And that would also explain the corporate governance committee.

2. They didn't update the existing assets. There sure as hell is a legal reason for this. Which could point to a going private offer but it does point more to a potential merger IMO.

3. The plan has always been to merge. As confirmed by Dan Zhang two years ago. And the latest 10-K filing in 2014 also mentioned they wanted to list on a major exchange.

4. These guys still want to expand internationally. Nothing has changed IMO. How are they going to do that if they are private? But they can do it if they merge. The sister company is already well connected internationally through Alibaba etc. And they would already have a listing in Shanghai.

5. I would be VERY excited to acquire HERB's assets if I were on the BOD of the sister company. You get the 5 high value plantations, lots of cash flow, a truckload of cash, and whatever they have been doing with Hemp and CBD. Besides.... it was the sister company who paid Dan Zhang (the lawyer) to advise them on this merger. Not HERB. IMO.

Conclusion. A merger is still very likely IMO. Or, they could kick out the minority shareholders while merging. That would surely solve the issue of setting a decent buyout price.