My understanding is that LUNN will represent about 26% of newco. Presumably, to achieve that ownership level, LUNN shares will be devalued by a factor of 10. TPG shares, in order to achieve a
74% ownership interest in newco, will be inflated by a factor of 8.3. Since I just came across this thread, and it looks like Monday is revelation day, I don't have time to run the numbers, but I'm
assuming you have. Can someone provide quick (short, easy to understand) answers to the following:
1. Comparing the shares outstanding for each company, does the relative inflator and deflator used result in LUNN deflated newco shares representing 26% of all newco shares?
2. Assuming that is the case, how was it determined that LUNN is valued at approximately 1/3 of TPG (i.e. represents approximately 1/4 the value of newco vis a vis TPG's 3/4) - is it relative sales,
assets, earnings? How was that determined and does it make sense?
As regards the reverse split vs reverse merger discussion, my comment would be that a duck is a duck. Whether the motives for the reverse split (presumably to accommodate the merger) are "good" or "bad" depends on the ratios used to build newco.
I know this isn't the most elegantly phrased set of questions. Time, however, is running out and I still have my day job to attend to. Based upon results of my most recent stock decisions, I can't afford to ignore my day job.
An aside. I have been involved in two merger situations as a shareholder, both favorably impacting the merging entities. The first, MXP and PDP resulting in newco PXD used PDP (a publicly traded company) as the base value. Newco shares were 1/1 for PDP shareholders, and 1/5 (give or take, can't remember exact numbers) for MXP shareholders. The merged market price (and street's "take" on the merits of the merger) was easy to calculate on a daily basis, just follow PDP's share price.
The second (ELEX and SANM) is an acquisition. Again, the acquired company's shares were given a fixed ratio (to be converted on merger date) to acquiring company's shares. The acquiring company never stopped trading so again, street response to relative value set by merging companies easy to calculate - just follow acquiring company's share price.
I don't see how we can monitor street's take on this one. Therefore, to my mind, crucial to know if the resulting company truly reflective of the relative values of the two merging entities. Hence, earlier uestions.
TIA
Pierre |
