How to play MSMA. How does one predict time frames and deal progress. How to quantify upside and downside. I'm new to this area but imagine that the huge gains are for founders.
Blank check companies are also known as blind pools, and for a good reason. It is impossible to predict a time frame for an acquisition.
The first Millstream (now NHRX) went public on August 23, 2003 and announced a deal six and a half months later. Trinity Partners announced a deal five and a half months after going public. It took Chardan China (CAQC) nine months to sign a deal.
Bear in mind that each of these companies has 18 months to do a deal, otherwise, they liquidate.
Given Arthur Spector's track record for doing reverse mergers, MSMA might be able to get a deal done faster than most of the other companies.
…imagine that the huge gains are for founders.
The original shareholders of Millstream ended up with 750,000 shares, purchased for pennies. Those shares are now worth a bit over $4.5 million. If International Shipping completes a deal, the 7,125,000 shares held by the original shareholders will have stock worth approximately $40 million. I think that most, if not all, of these deals are structured so that the insiders are locked up for a year beyond the date of the acquisition. Look at the stock as a “finder’s fee.”
As investors what can we expect?
Once again, hard to predict. Certainly a pop in price when a deal in announced. If you continue to hold beyond that point, the long-term performance is obviously dependent on the quality and growth prospects of the company being acquired. |
