The Westaim Corporation (TSE:WED) gaped up this morning after the company announced an agreement to sell their subsidiary.
WED gaped up in the morning and held 7.35% in gains amid the session. The trading volume jumped significantly in the first half of the trading session, with 35.6 million shares traded, which is far beyond the daily average of 1.5 million. This could as well be an effect of manipulation by market makers but the company also had news which is affecting the general trading.
On May 2 Westaim announced to have entered into an agreement with Intact Financial Corp. (TSE:IFC) to sell their subsidiary JEVCO Insurance Company. The aggregate cost of this transaction is $530 million in cash.
Westaim retained the right to accept a superior proposal but it would cost the company $18.5 million to sever the current agreement.
The transaction still has to be approved by the company’s shareholders and regulators. A final sale is expected in fall this year. Currently it’s expected that Westaim will distribute the proceeds among its shareholders.
The terms appear very attractive to those holding WED stock. Still the increase in share price likely won’t last for now, but will return once the actual sale is at hand. Currently there are uncertainties at play and the initial enthusiasm about the sale should vanish comparatively quickly.
