David,
The advantage of a spin off is that you leave investors with a cool, nice little 15% grower that is profitable....not having to fund R&D for the Bio-ID division.....while you release a rapid growth, 60% margin 300% grower to soar....on the Nasdaq.
The Bio-ID division now has most of it's ducks in a row....product ready to fly out the door......and is ready to begin showing huge quarter over quarter sales increases.....perhaps it would be a 200% or 300% sales grower.
IDX gives existing shareholders 1 share of the spin-off company, for every 2 shares of IDX they own. They also IPO an additional 5 million shares....at say....$15.
The Bio-ID division raises $75 million........has 20 million shares outstanding......and doubles or triples the first day.....on the Nasdaq.
Investors see that sales estimates for the new company are $25 million the first year...and $75 million the second...a 200% growth rate. They bid the price up to 20 or 30 times sales....like Amazon, who is NOT growing that fast.....and you have $25 million x 25 = $625 million market cap.....divided by 20 million shares = $31.00 per share......or $15.50 per original IDX share. (I think this is conservative)
The Bio-ID division is worth it...because it is growing at 200% or 300% per year....and huge news just keeps rolling out.
The Live-Scan/Anadac part is free to be profitable ...$80 million in sales...... 15% grower......$5.00 per share, on 36 million shares.? 2x sales.....sure.
Total shareholder value.....$20.00+
I think, David.....a way to unlock shareholder value.....is to separate the slow growth from the rapid growth.
Anadac and Live scan have paid the bills...and all of that.....but the Bio-ID division is where the huge growth is........If IDX can separate this unit.....raise 75 million to bankroll it.......that should be plenty to get them through to profitability.
Lots of companies do this, or have done this......Themo, US West, HP.....and so on.
Often times......folks like KKR take a company over, because they see that this can be done....and double shareholder value.
If like you say....IDX is worth $15.00 per share now......then it should go there. If it is worth $20 per share broken up....then someone will come in and do it....if IDX does not.
Just kicking around some ideas......
Is change really in the air?.......I hope so. I would like a little bit of "Onward and Upward"
Would I be happy about Anadac getting another huge 2% margin government contract?........No....not right now.
bg
ps. IMO..... Why have a Corvette sitting in the garage? Is Bio-ID ready to take off?.......or is it not?
Are sales going to explode this year? If so....what better time to spin it off and IPO it?.......Drive that Vette!......on the Nasdaq Road.<ggg>
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