To: Mad2 who wrote (4012 ) 11/28/2001 10:34:59 PM From: DanZ Read Replies (1) | Respond to Dr. Davidson gave up some of his rights to the decision making when Biodelivery Technologies merged with Zengen. There are other people in the picture now. That is one answer to your question. Perhaps more importantly, the operating agreement between Gum Tech and BDT gave Gum Tech the right to buy the remaining 40% after certain conditions were met. Those conditions were met and Gum Tech exercised their right. That is the answer to the question "Why did Davidson (eg Bio-Delivery guys) sell out. They didn't have a choice. The price at which Zengen agreed to sell their 40% can be debated either way. As a Gum Tech Shareholder, I am glad that they paid only $17 million for the remaining 40%. Would it have been better for them to pay $100 million for it? If they had done that you would have been the first to lament them for paying too much. You always have something negative to say. If they pay too much you complain about that. If they get a good deal, the seller must have wanted out at any cost. Like other people that bash this company, you never give them credit when they do something good. The market says that Gum Tech got a steal since the market cap is about the same as when the deal was announced, implying that the market thinks GUMM is worth a lot more than what they paid for the remaining 40% of Gel Tech. That is a simplistic view, however, because there is more to Gum Tech than Gel Tech. They still own nicotine gum assets and the potential to make royalties on three gum products from Wrigley that you keep forgetting about. There's no way to determine precisely how much value the market is putting on those assets, but it isn't zero. Regarding Zengen selling out at what you call a discount, they might have done it because they wanted to pursue other interests and needed cash. One could make the same argument about why Gum Tech sold the gum business to Wrigley for $25 million. I personally think that was a discount to it's true value, but Gum Tech sold it for that because they wanted the cash to pursue other interests and they thought there was too much risk waiting for P&G to launch Crest Dental Gum. Using your logic, Wrigley was foolish for buying Gum Tech's gum business, but I have no doubt that Wrigley management knows more about what they are doing than you.
