Global Sources has completed two tender offers in the past 20 months. The most recent one in July resulted in the company buying back some 11 million shares at US$9.00. In November 2008, the company purchased 6.25 million shares from investors at US$8.00 per share. That is a purchase of 17.3 million shares at a cost of US$150 million.

Depending on the source, the figures vary regarding the number of GSOL shares held by insiders and by institutions, but it seems that the NASDAQ-listed company has 44.65 million shares outstanding. Of those, 65.01% are held by insiders and another 32.6% are held by institutions. That leaves 2.39% as free float which is typically defined as the shares not held by insiders and large (usually institutional) shareholders. Depending on the source, the free float figure range from 2+% to about 7.5%. So that translates into a free float of anywhere from 1.1 million shares to about 3.4 million shares. Companies pursue buybacks and tender offers for a variety of reasons and it does not necessarily indicate a path to privatizing, but Global Sources really hasn’t benefited much from its listing and it takes a considerable amount of time and resources to remain a NASDAQ-listed company.

Ten years ago, Global Sources listed on NASDAQ through a reverse listing – raising no capital in the process. The company generally has no need to use the listing to raise capital, it has no long-term debt, trades at a lower valuation compared to its peers and has not needed to use the shares for any significant M&A activity.  As a result, it seems a fair question to ask why the company needs to be listed at all.   Courtesy Business Strategies Group

BIIA Newsletter September II – 2010 Issue