Deal leaves WIN with no cashMSD and WIN had combined cash and liquid investments of $325 million at the end of their last reported quarter.
The $200 million CD will still leave $280 million to pay for MSD.
This means the combined entity will have only $45 million in cash subsequent to the close of MSD.
This is chicken feed compared to the amount of cash needed by WIN to defend and litigate patent infringement.
From this perspective, the deal does not make much sense.
In addition, they have added $200 million in debt whose annual service costs will be $12 million.
This takes care of a large majority of MSD's cash flows.
The only conclusion that I can reach is that WIN is going to have to do a major equity financing ...at least $300 million...after the close, in order to have sufficient cash to run its litigation costs.
I think this is why Win's share price has dived, when this deal was announced.
The smart shareholders dumped very quickly.