Vivian D. Labbe
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Vivian D. Labbe in Mergers & Acquisitions,

Short positions in CKI spike

Looks like the see deal undervaluing Power Assets by 25%

Short positions in CKI spike after the deal announcement

Hedge funds are betting Asia's richest man Li Ka-shing will sweeten his proposed $11.6 billion buyout of Hong Kong's Power Assets Holdings, but their hopes may be dashed by top independent shareholder Capital Group whose stance on the matter is a mystery.

Li's Cheung Kong Infrastructure Holdings (CKI) offered this month to buy the 61 percent it does not already own of Power Assets in an all-stock transaction that set a nearly equal value on the two firms. CKI also proposed a $2.5 billion special dividend if the deal goes through.

So hedge funds find CKI interesting for short positions. Meanwhile analysts recommend BUY.

CONSENSUS RECOMMENDATIONS:

Cheung Kong Infrastructure Holdings Ltd (CKISF.PK)

What would you do?