Not So Fast!
"Also, from a recent PR there are 12 Mil diluted outstanding shares of POKR, and the deal is for $12 Mil, therefore, POKR should trade up to $1 by the time the deal closes, independant of the price movement of AVIA."
Not necessarily.
Notice the PR did not mention how many AVIA shares will be given to POKR holders for each POKR share. The PR says AVIA shares valued at (approximately) $12 million. So what is the value placed on an AVIA share to come up with the $12 million??? The value placed on an AVIA share for this transaction determines the number of AVIA shares a holder of POKR gets for each POKR share. This is the big question.
If the value is today's AVIA market price (i.e. $1.75) the deal is a good one for POKR shareholders. At $1.75, it would take about 6.8 million AVIA shares to equal the $12 million purchase price. Each POKR share (current price is .28) would be exchanged for about .6 shares of AVIA (current price of $1.75). So, a .28 POKR share would be worth about .80 (at AVIA's current bid price of $1.38) to $1.00 (at Avia's current ask price of $1.75).
BUT, if the terms of the deal value AVIA shares more highly than the current market price, the deal is not as good for POKR shareholders. For example, if the deal values AVIA shares at $4, then it only takes 3 million AVIA shares to pay for POKR. A POKR holder would then get about 1/4th share (worth .34 to .44) of AVIA for each POKR share.
So the crucial item is the valuation placed on AVIA shares by this deal, which determines the number of AVIA shares POKR holders will receive for each POKR share. Unfortunately, the PR does not tell you this most crucial piece of info.
One other point. The ultimate value to POKR shareholders will be what they can sell the AVIA shares for, once they are received. This deal could well depress the value of AVIA shares. For example, if it is perceived that buying a POKR shares is a cheaper way of getting a share of AVIA than buying an AVIA share, why wouldn't holders of AVIA sell AVIA and buy POKR?
I've watched POKR for some time, and traded it a few times. But I would be leery of buying based on this PR unless I knew the full terms of the deal. |
