Investigation of Baoxin's purchase of NCGA

I wanted to find a little more relating to Baoxin's purchase of NCGA.

I've just found the media release regarding Baoxin's purchase of NCGA.

Here is a hyperlink to the announcement, which occurred on August 30th 2012.

http://www.autonews.com/article/20120830/GLOBAL03/120839993/china-baoxin-auto-to-buy-ncga-dealership-group-for-$305-million


Very interesting to then check out the share price history. For the previous 2 months to the announcement the share price plummeted, and whilst some volatility is evident, the prices have recovered reasonably since.

I would speculate that the reason for the plummet prior to the purchase may be due to speculation and uncertainty in the market due to market knowledge of the upcoming merger.  

I'd go on further to guess that the reason the share prices were so negatively affected is that generally when there is speculation of a merger or a merger is being planned, if it then doesn't come into fruition this generally affects share prices negatively for some time.

Also, by purely looking at the recovery of the share prices since the take-over, I'd suggest this adds some substance to the proof that the take-over has been successful as the share price has stabilised since the merger.

However, after writing all this I have managed to completely confuse myself. The Company only acquired NCGA on 1 December 2012, therefore I believe that the 30th August 2012 announcement would have been the first public notification of the merger. I believe that no-one would have had knowledge prior to that as the information would have been kept confidential due to the commercial sensitiveness. Also, this would mean that the share prices should have been negatively affected between the announcement (30th August 2012) and the take-over (1 December 2012) but this is not the case. So my observation all depends on whether the market was aware of an upcoming acquisition prior to 30th August 2012. If it didn't then my speculations are just useless rubbish. :)

On a separate note, obviously market growth is a strong contributor to the stabilisation of their share price since the take over but I also wonder if this partially answers my question about the Severances given to previous NCGA employees - if the company now has the right amount of man-power for growth, but not so much to burden the administrative costs then getting that balance right would also certainly improve the prospects of the financials for the firm.