Robin,
How an acquisition or merger occurs is no set formula. Every situation is dynamically different. Here is a basic example, usinf some LFEI stats of how it may work.
Controlling group of LFEI currently holds 20,000,000 shares
Public float holds around 5,000,000 share
Company XYZ wishes to go publis by merging with LFEI. LFEI pays company XYZ 19,000,000 share for company. Company XYZ now controls (owns) LFEI and will probably in the near future rename LFEI to XYZA. The previously c"ontrolling group of LFEI had a reason to do what they did. They just "profitted" 1,000,000 share of XYZ.
Crude example, not exact, but hopefully you now understand how it can work. However, there are countless other possible examples.
What will the value then be? The NPV?... Not many stocks trade at book value. Plus the "value" of XYZ just dramatically increased by "going" public. Share price could be 1, 5, 10 or 20 times NPV.
Signifigant cash in the bank means quite a bit, I don't know exactly how muck, will now when the audit report comes out, and will post. There are profit potential valuse though, as indicated in the example above.
No web site
Let me know if you have any more questions.
Happy Investing, Don Downing |
