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Biotech / Medical : Biotech Derivatives -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (395)	9/15/1999 5:00:00 PM
From: Biomaven	Respond to of 555

I'm with DAK here. While the non-arms-length relationship between the two companies is always a concern, GENZ is big and reputable enough so that they are much less likely to try to screw the minority shareholders. In fact, having daddy GENZ around is probably a plus valuation-wise. (Although daddy was apparently either fast asleep or pretty heartless when GZTC was falling into the clutches of a toxic convertible merchant). Peter

To: LLCF who wrote (395)	9/15/1999 6:38:00 PM
From: RWReeves	Read Replies (2) \| Respond to of 555

We agree on point 1. On point 2. I actually mean a different case, i.e. as with any stock company, what you buy reflects the NPV of expected cash flows that would be available, generally, to an acquiring company. (For the case where the company pays no dividends or other distributions). You, as a minority shareholder can't actually get your hands on the cashflows. But the expectation that the share you hold could be sold to an acquirer and the acquirer could realize the actual cash flows would seem to be the underlying value- that's the essential function of an arbitrage market in equities. This just isn't there with a tracking stock. Let's say BTRN suddenly plummets to a nickel based on investors dumping the stock or just market downturns. Novartis, for one, could snap it up and realize the far greater inherent value of BTRN's technology. But if GZMO was selling for a nickel tomorrow who could buy it and realize the underlying value? Ass far as I can tell, nobody could legally buy it and own it. This is the arbitrage driver which I (maybe wrongly?) think is missing. I think I've taken too much "thread time" and just need to do some research on this. RWR