RE:RE:RE:MyHealth and other acquisitions - share payment @ $9.80I think it does make a difference.
In the case of the MyHealth acquistion,
C$266.3M which was paid as follows: (i) $82M in cash on the closing date, subject to customary closing adjustments; (ii)
$94.3M through the issuance of
9.6M common shares in the capital of the Company on the closing date at a deemed price per share of
$9.80 per share, which represents a 38.1% premium to the volume weighted average trading price.
The share portion of the acquistion was for a fixed number of shares, not a fixed cash value of shares. It is preferable for WELL to acquire on that basis, for the reasons described below.
Cash Versus Stock Trade-Offs.
The main distinction between cash and stock transactions is this: In cash transactions, acquiring shareholders take on the entire risk that the expected synergy value embedded in the acquisition premium will not materialize. In stock transactions, that risk is shared with selling shareholders. More precisely, in stock transactions, the synergy risk is shared in proportion to the percentage of the combined company the acquiring and selling shareholders each will own.
Does the $9.80 price for WELL shares mean that MyHealth assumes the shares have an intrinsic value of at least $9.80? I would say: not necessarily, but probably. Remember that MyHealth is accountable to its shareholders. The transaction details go on record and the $9.80 designated value is recorded for all to see.
I think brandinvestor is suggesting that the two companies, Well Health and MyHealth may have colluded in the transaction to suggest to outside observers that WELL shares are worth 38 per cent more than currently being traded for. I think there are many reasons why that would not be prudent for either company, but particularly for MyHealth and the persons responsible for the sale. My two cents.