FUTURE FLUFF AND WHERE WE GO FROM HERE!!!!!! UP UP AND AWAY!!!
To Cisco and ALL,
I have some forward looking comments to make regarding valuation, and the future public offering.
Cisco brought my attention to an Accumed profile written in the "Wall Street Corporate Reporter" dated May 5th 1996.
In it Peter Gombrich discussed stock valuation saying "Number one the company is very undervalued at this time because it merged with a public shell with a very low baseline."
That statement has come to mind in my thoughts regarding a public offering and how we would fair in its aftermath.
Assume Peter is still regretting not having made an IPO thru a name brand investment bank. Perhaps they feel they can do it "right the second time".
Assume Accumed can attract a big player to handle the second IPO, lets say a Goldman or Solomon. This is likely because of the credible participants, credible products, huge market and, a profitable company whos value is way below its peer group.
What could happen in this scenario. I think it is likely that the IPO would be done at a market cap with all the FLUFF of its peer group. That would be at 10 or 11 times current sales. 100 to 200mm cap?
The ultimate benefit to us and Peter is twofold. Assuming Accumed retains its pre IPO ownership of "at least 50%" then there will be consolidation of sales and earnings to our balance sheet. The allowable percentage of ownership enabling consolidation is a question
but it may be as little as 20%.
Secondly and perhaps of greater value to us would be the ownership itself. The value of the underlying company stock could be the biggest kicker. Because for every share of acmi there is the underlying value
in Newco stock.
My assumption is that this is one of the concepts driving this deal,
and that Peter sees this potential. I also am assuming that some of the "shareholders" participating in the funding of Newco may be officers of Accumed (I am trying to confirm this). While that possibility did concern me initally,
my feeling is that the overall credibility of this deal is born out by Sakura, at least.
Assuming that Accumed retains a big league player to handle the IPO, I see the possibility of a steady progression upward in the mother company stock preceeding the IPO. After all these guys are paid to be greedy, they would most certainly want to profit from the disparity that exists among the peer group price levels.
cheers, C.S.
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