Medicago Inc MDCGF

RE: Re: Philips Morris

[amorak]

The dilution is one thing. Giving up control of MDG is the big problem. PMI will be able to veto every deal coming down the pike. Worse, MDG has placed a value on itself and that value is less than 40 cents. If trials are successful, and if you owned 60% of the company, would you allow the share price to go up to a buck or two? You'd force a sale before that could happen. We are in competition against PMI for ownership of MDG and PMI has made a deal for majority ownership. We'll lose any fight that PMI wants us to lose.

The value to PMI is immense. No matter what happens in trials, PMI can keep MDG alive just for the optics of a tobacco company using tobacco for public good. Few people, rightly or wrongly, trust the tobacco companies. They have huge problems with credibility. MDG will share the same credibility issues as its majority owner.

A tobacco company is maybe the only company that would pay a premium for MDG. The tobacco companies cannot advertise tobacco products. Go to PMI's home page. Most everything there is touting PMI's efforts to discourage the use of its tobacco products, yet the share price of $50 is dependent on sales of those  products. So now, PMI can advertise its name and tobacco-based medical products. Imagine Rothmans Flu Vaccine!

So the question arises, how much of PMI's price for MDG is actually marketing and advertising value and how much is value of the IP, not in MDG's opinion, but in PMI's opinion. We know this, nobody else was willing to pay this price for over 60% of MDG.

Finally, the marketing and hype have already started. The Globe and Mail would never have covered this story if a similar deal had been made with a pharmaceutical. It's news because it was Phillip Morris and that is exactly what PMI wanted. It's a Faustian deal for Medicago. It's good for the employees and PMI, but for the rest of us, we're toast.

I'll keep my warrants, but that's all.