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Biotech / Medical : ACMI - Accumed Inc.

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To: CARYTRE who wrote (1191)	1/18/1998 12:09:00 PM
From: Sigmund	Read Replies (3) of 1894

You are right we are not reading the same press release. The one I read indicated that the partners would have up to 49% of NewCo. Clearly the partners have obtained rights to an entity part of which used to be part of ACMI. Please correct me if I have misinterpreted this. For their share which has not yet been defined except to say that it is less than 50%, they contribute cash and perhaps something else. So of course it makes sense to take the value of what they contribute and devide this value by the percentage ownership they receive and this is the value they have placed on the total new entity. For example. If they contribute $10MM for half of the entity the new entity is worth 20MM to them. Otherwise they would not have been willing to kick in $10MM for only half. ACMI also has half of the new entity so they also have something worth $10MM for which they contributed certain technology. If the partners contribute $10MM but get only 33.33% then the venture is worth $30MM. ACMI has something worth $20MM for which they contributed certain technology. The second case is a better deal for ACMI and a less attractive deal for the partners. I don't understand why you seem to be saying that it is not useful to analyse the deal from a financial perspective and compute how the value of this deal to ACMI compares to the value the market has placed on the assets of ACMI which are going into this venture? I think it makes a big difference to how the market will value ACMI stock moving forward and should be of interest to all current or potential ACMI shareholders. My arithmetic I think is sound. It doesn't take into account the value if any of the rights to manufacture for the venture and the management contract both of which might be pluses or minuses depending on the terms. The synergy impact benefits all of the parties and yes I certainly see it. I really don't understand why you disagree with me but everyone's opinion is equally valid so I respect yours as well. Perhaps I do have it all wrong on this. As far as your point that all of the stocks in the sector are being valued the same way by investors I can only say that if they were, the disparities in evaluation you referred to wouldn't be there. Clearly the market doesn't place much value on ACMI's high sales to market cap ratio. The question is why. I have advanced an explaination. It may not be correct but who knows. Clearly my explanation doesn't resonate with you. The explanation that you seem to advance which is that the Wall Street just hasn't noticed that ACMI is a better buy doesn't resonate with me. It requires believing that the investors in these other stocks just don't know what they are doing. And furthermore it requires believing that these people who don't know what they are doing will suddenly see the light and realize the true value of ACMI. Well I too think people will soon realize that ACMI is a good buy. But I think that will occur when ACMI demonstrates that it is a good buy and not because investor mentality is going to change any time soon. I am just trying to be objective about this stock. I own it now, and may buy more or get out. This thread is useful to investors as they make up their minds about a stock.

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