ATA Inc. (NASDAQ: ATAI) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced preliminary agreements surrounding an acquisition.
As you could imagine, the news excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The preliminary agreements;
- what we’re seeing from ATAI stock as a result; and
- what we’ll be watching for ahead.
ATAI Announces Preliminary Agreements
As mentioned above, ATA Inc. is having a great start to the trading session this morning after announcing preliminary agreements surrounding an acquisition. The announcement was made via press release early this morning.
In the release, ATAI said that it has entered into non-binding framework agreements, a related conditional share purchase agreement and a deposit agreement. The agreements were signed with Beijing Huanqiuyimeng Education Consultation Corp. and certain of its shareholders for a proposed acquisition of ACG. The company said that ACG is a leading provider of educational students in China who are interested in applying for overseas study.
In the release, the company outlined its continued work toward a long-term goal of leveraging its expertise in assessment and education technologies and services, as well as industry relationships. The company plans on transforming into a leading international education service provider.
In the release, the company said that it has actively been exploring merger and acquisition opportunities where it can create a unique value proposition for students and schools in China and abroad. In a statement, Mr. Kevin Ma, Chairman and CEO at ATAI, had the following to offer:
Over the past few years, we have identified a significant opportunity to grow in certain strategic markets for domestic and international educational markets. The art education market is of particular interest due to rapidly growing interest in China and need for international education experience to enhance the learning capabilities of students.
The market has a low concentration, and we believe that ACG has a strong presence and is taking advantage of this opportunity to grow. ATA’s collaboration with ACG would provide considerable synergies in our core competencies as well as help to greatly enhance its market position. In addition, we will also continue to explore and validate other potential areas of expansion where appropriate.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to ATA Inc., the news proved to be overwhelmingly positive.
Should all go well with this transaction, it will open the door for the company to enter into the international education space in a big way. Of course, that would increase revenue and provide value for shareholders.
So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:20), ATAI is trading at $1.99 per share after a gain of $0.97 per share or 95.10% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on ATAI. In particular, we’re interested in following this preliminary agreement to see if it does evolve into a definitive agreement to acquire ACG. Nonetheless, we’ll keep a close eye on the story and bring the news to you as it breaks!
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