(continued)
3) Given that the financials do not support the merger, one must consider the other reasons ROTC management argues for the merger. These are outlined on page 52 of the proxy documentation, items (ii) to (x). None are detailed significantly, but one is insignificant (item (v): compatibility of management), one is especially vague (item (x): short-term and long-term interests of various parties), and several are debatable (e.g. item (vii): management strength of IHS). Of those remaining, I view two areas as especially noteworthy: Item (iv): continuing medicaid and medicare reimbursement pressure, and items (ii) and (viii): the need to deal with consolidation in the healthcare industry. How important are these? I certainly don't know. You can be assured that ROTC and IHS both spent a lot of time discussing these two issues with institutional investors. If those large shareholders are convinced that the risks associated with these two issues are adequately addressed with this merger, and to an extent as to overcome all the other disadvantages of the merger, then it will be a done deal - and it probably should be a done deal. Unfortunately, as small players, we do not have access to the information or the people to make an appropriate evaluation. We must rely on the large shareholders to make the right decision.
4) Finally, if the merger doesn't go through, we will have a management team at ROTC that did not receive their merger bonuses. Several officers, apparently, are not even interested in continuing in a management role in this business. That would not be a good situation.
John
(long ROTC) |
