RE:RE:RE:RE:I Think Managment Should Accept A Take-Over Offer of $50+
Some additional comments on this topic1) From what Ive seen in the past, companies only announce a review of strategic alternatives if one of the alternatives is the sale of the company (or a merger of equals into a larger entity). For example, over the past year, many small cap Canadian energy companies have been restructuring their debt, but they dont announce strategic review committees before doing so: They may provide an indication beforehand that they are in the midst of trying to alter the terms of their obligations, but in general, they simply go to their lenders, try to renegotiate their debts / covenants, then announce the restructured terms of the debt if an agreement is reached. Same with entering into cooperative agreements with other companies: They negotiate such agreements, then issue a press release and/or hold a press conference to outline the details of the deal..2) As far as the claim that the shorts will win goes: Any party that shorted CXR at $45, $40, $35 CAD or less and had not covered yet would lose if a deal to sell CXR at $50 CAD was announced as the stock price would almost certainly surge to around the $49 mark almost immediately on the news and likely stay in this trading range (or go higher) unless the deal was subsequently taken off the table / rejected by shareholdersI find BNN guests to be a pretty good source for proposing investment ideas that may be interesting, but obviously they are only a starting point for further due diligence: I watch the Market Call shows on occasion, and almost all of the guests have been dead wrong on some/many of the calls theyve made, and even the ones who are bullish on CXR at $35 - $40 a share doesnt mean that they would still be bullish if the stock was trading at $50 a share at some point in the future. In fact, many of these bulls would likely declare victory if they recommended CXR at say $35 a share and it was taken out at $50 a share..With regard to the idea that existing large shareholders with a lot of skin in the game (mutual fund managers, high net worth investors, etc.) not willing to sell at $50 CAD: Why dont we find out by giving those shareholders a chance to have their say by voting on a $50+ takeover offer if one does in fact exist from Apollo or another party? It also appears all is not well among large CXR investors: As previously mentioned, at the recent AGM shareholders withheld over 23% of their votes for CEO Michael Thompson and over 36% of the votes for Ed Borkowski, so obviously there are some large shareholders who are less than satisfied with the performance of these individuals..Concerning leaks: The effect of leaks can run both ways, and in this instance, they seem to run in favour of CXR. When the names of some of the alleged buyers (Blackstone, The Carlyle Group, Apollo) were leaked, it seemed to stop the bleeding of the share price descent and likely caused a number of shorters to cover in fear/anticipation of a takeover, resulting in a share price that rose to over $44 a share before falling again on the news that the strategic review will continue instead of an announcement that a takeover deal had been struckFinally, the idea that CXR is a slam dunk to eventually surpass $50 CAD a share should it reject a $50 CAD offer now is far from assured: First, if CXR announces that the strategic review has ended and they are no longer looking for a buyer, the share price will likely drop some more, so you are now at an ever lower starting point. Secondly, though CXR has not to my knowledge been accused of price gouging in the U.S., its British subsidiary Amdipharm Mercury has been identified as having increased the prices of some medications by 5 to 14 times in the U.K. (e.g. eye drops used to combat bacterial conjunctivitis, ear drops, hyperthyroid medication, etc.). I suspect CXR will likely be allowed to maintain the dramatic price increases of these medicines, but going forward, CXRs expected rise in future earnings / guidance will not be solely reliant on increased sales volume. Price increases will almost certainly form part of the earnings projections/ guidance. In fact, I believe that during the latest conference call, it was either Mr. Thompson or Mr. Borkowski who stated that future earnings projections are based on a combination of volume and price increases. Third, there are also many unknowns going forward that could further impair earnings growth: Great Britain may put price caps on generic drugs in their country given the recent concerns over dramatically rising drug costs, the U.S. government under a potential Hillary Clinton administration (with a the sudden celebrity of Bernie Sanders leading the charge from the Senate) may pass legislation allowing health providers in the U.S. to buy medication in bulk at a discount, institute similar price cap rules, etc..Bottom line: If there is an offer on the table for the purchase of CXR shares at $50 CAD or more, I think it would be an outrage if the CXR Board rejected it outright and refused to put the proposal to a shareholder vote. If large shareholders truly think this is an insulting offer, they could simply vote against the sale and the deal would die. Either way, we would find out for sure what the owners of the company really think about a $50+ offer.