Could the SEEK Limited (ASX: SEK) share price soar in 2016?
Following an overnight announcement from SEEK's 63.2%-owned Zhaopin Ltd, some investors likely think it can.
What's Zhaopin?
Zhaopin is the Chinese equivalent of SEEK's popular Australian job seeker website, seek.com.au. Zhaopin is growing rapidly. For example, in the three-month period to 30 September 2015, the company achieved revenue growth of 18% and operating profit growth of 5%. Following a 9.5% rise overnight, Zhaopin shares are currently priced at $US15.74.
What happened overnight?
Overnight, Zhaopin revealed it had received a partial takeover offer from a Chinese group, made up of CDH V Management Company Limited and Shanghai Goliath Investment Management LP. In a statement made by the group titled: "Preliminary Non-Binding Proposal to Acquire Zhaopin Limited", the Chinese group said it will "acquire all outstanding ordinary shares in Zhaopin Limited…other than those owned by SEEK International Investments Pty Ltd in a taking-private transaction."
The company's offer price of $17.50 represented a 22% premium to the company's last closing price, the group said. The preliminary offer will be funded by equity capital and some debt.
In response to the news, SEEK's ASX announcement this morning read, "SEEK expects the Proposed Buying Group will endeavour to negotiate arrangements with SEEK for the future management of Zhaopin."
Foolish takeaway
In my opinion, it's too early for investors to act on the news. However, SEEK appears to be in a good place with its Zhaopin holding, and the market is now starting to clue on to its potential. Therefore, when combined with its other growing businesses, SEEK shares appear worthy of further research.
