CASE DESCRIPTION This case concerns a "reverse merger" by which a Chinese corporation obtains publicly traded status in the United States. The objective is to familiarize students with this alternative to an initial public offering, the more widely known method by which a company can become publicly traded, and to sharpen their analytical and research capabilities as they access the SEC website and EDGAR database as well as websites that provide other financial information for the answers to specific questions. This case is appropriate for use in an advanced corporate finance class, an entrepreneurship or new business formation class, or an international finance class. Some aspects of the case may also be of interest to a business law or securities class. The case has a difficulty level...
The "reverse merger" is an alternative to the initial public offering method of "going public." This back-door SEC registration technique is relatively common in practice, but is entirely ignored in finance textbooks as well as the academic literature. The case considers China Automotive Systems Inc, formed when Visions-In-Glass Inc, a US non-operating, public "shell"company, acquires Great Genesis Holdings Ltd, a closely held Hong Kong company that indirectly owns joint venture interests in mainland China. In addition to focusing on the process of the reverse merger and the financial returns to various investor groups, this case examines how recent SEC actions may affect future reverse mergers. These actions include the suspension of trading in 26 shell companies for delinquent reporti...
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