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Technology Stocks : Identix (IDNX) -- Ignore unavailable to you. Want to Upgrade?

To: brad greene who wrote (16186)	1/4/2000 3:47:00 PM
From: David	Read Replies (2) \| Respond to of 26039

I see we are using much different numbers. Under your example, with IDX shareholders getting one share of Identixicator for every two IDX they hold, the new spinoff would be 75% owned by IDX shareholders. Under my example, it is 25% owned by IDX shareholders. Somehow, I think my scenario is closer to what will happen if there is a spinoff, since the idea is to pass corporate control to new majority ownership . . . otherwise, it isn't fully spun off. And under your version, Grant Evans and crew and other insiders don't get to loot the stock treasury . . . as they surely would. I'm willing to boost the $5 figure for the left-behind shell to $8, say, but this never really enters into the math we care about. If the business case is as good as you are suggesting, there's no reason why IDX can't do a secondary for $75 million (say, another 7.5M shares @ $10), or even a private placement. However, that might not result in the one-day increase in market share of $300M to $600M that you are suggesting . . . which, of course, is simply hoping for a get-rich-quick approach by promoting speculation in the stock. The new company would be burning through its cash pretty fast without ANADAC to keep the lights on. And I'd be invested in a much shakier proposition than I am now. There is no way to recover if that new spinoff doesn't hit a home run quickly. (Admittedly, the old shell wouldn't be affected if the spinoff went belly up.) I may as well hope for a speculative runup in IDX without a spinoff, so I get to capture more of the equity. Or the quick home run you want the spinoff to hit. * * * How do the numbers work if IDX shareholders collectively get 5M rather than 15M shares? That would represent one share for every 6 IDX owned, and at $31/share for Identixactor, another $5.16 to add to the other $8, for a not so great total of $13/share -- after an IPO. Your numbers work only if the IDX shareholders get a lion's share of the spinoff. We won't. We get a lion's share if IDX does a secondary, and get diluted to the max if there is a spinoff. The only way that scenario wins is if there is a buying panic for the stock due to hype.