tamaracktop wrote: Magicmike67 wrote:
Approximately 32.8 x 2020 revenue of 4.75M?
Am I right?
No. That is incorrect. Xebec acquired HyGear for a total consideration of $159 million in cash and stock, plus the assumption of 18 million Euros of HyGear debt. The deal closed on December 31st.
At the time, HyGear's trailing revenues were 11.4 million Euros. Approximately equivalent to $17.87 million Canadian dollars using the prevailing exchange rate of 1.5684 on that date. Xebec acquired HyGear for 8.8 times trailing revenues.
It's interesting to note that the other hydrogen plays are right back to the levels they were trading at around December 31st, so their multiples, which I cited in earlier posts were also the prevailing multiples at the time of the Hygear acquisition. Xebec paid a bargain price for HyGear.
The HyGear acquisition was completed for a total consideration of $65.2 million in cash, and the balance in treasury shares of Xebec, based on the weighted average price of Xebec shares in the 15 days prior to December 8th. This price was later determined to be $6.03. Xebec then offered 10,301,824 treasury shares to complete the acquisition. This number is very nearly the same number as the number of shorts currently on the books. The shareholders of HyGear received their shares with an inherited adjusted cost base of $6.03.
On December 31st, the date of closing, Xebec shares closed at $9. HyGear shareholders, previously saddled with illiquid shares, were already up 50%. Approximately 80% of those shareholders were subject to a four-month lockdown agreement. They couldn't sell their shares.
They could, however, lock in their profits by shorting shares, which they did, much like we see in the event of a new issue that goes to a premium before the offer closes.
Xebec shares reached their all-time high on January 18th, exactly two weeks after trading resumed in the new year, It's my belief that shorting by former HyGear shareholders contributed to the weakness in the days and weeks leading up to the disappointing earnings report, and as a result, this news was received into a market that had already been pressured lower by largely mechanical selling.
In other words, were it not for HtGear shareholders having already been selling, Xebec would have been trading higher when the news came out, and would never have traded as low as it did.
It was a perfect storm for Xebec.