NQ Mobile Inc (NQ) Officially Rejects Bison Capital’s Offer

Remember that go-private offer NQ Mobile Inc (ADR) (NYSE:NQ) received from a relatively unknown firm called Bison Capital? Several skeptics had questions about whether the non-binding offer was real, and now it certainly sounds like it. The company announced today that it has officially rejected it. NQ also said today that it “had the opportunity to explore numerous strategic options,” without saying what those other options might be.

NQ Mobile to stay public

In this morning’s press release, NQ Mobile said it will remain a public company and that it is currently “in active discussions” with Bison Capital regarding other “investment and collaboration” opportunities. NQ’s board will continue to review the company’s strategic options in the meantime.

The Chinese company also said it has closed the sale of 3.58% of its FL Mobile to Bison Mobile Limited, a division of Bison Capital Co Ltd., for $15 million. Other third party investors have bought .92% of FL Mobile. Investors can redeem their investments if FL Mobile doesn’t hold a qualified initial public offering within 12 months of the closing of the stake sales.

Michael Mauboussin: Here’s what active managers can do

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NQ Mobile short-seller may add to position

On Monday, NQ Mobile finally released its much-delayed 20-F. However, the Chinese company has yet to file three quarters of this year’s financials. As a result, short-sellers like Muddy Waters’ Carson Block and Regal Point Capital’s Vijay Marolia remain skeptical of NQ’s finances, saying that the filing of the 20-F means absolutely nothing.

In an email to ValueWalk on Monday, Regal Point said they were considering adding to their short position in NQ Mobile. In another email, Block told ValueWalk that the timing of the 20-F filing isn’t a surprise because of the run-up in NQ shares, claiming that “insider trading clearly continues to be rampant in this stock.”

He also reminded us that the company dismissed well-known auditing firm PricewaterhouseCoopers and chose Marcum’s Drew Bernstein, who he said “have publicly criticized short sellers in the past, and have issued clean audit opinions on numerous questionable Chinese reverse-merger companies.”