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Concordia Healthcare Corp. T.CXR.R



TSX:CXR.R - Post by User

Post by Maolain1on Oct 24, 2016 11:51pm
142 Views
Post# 25381029

I can't see how Cinven isn't considering taking this out

I can't see how Cinven isn't considering taking this outJust the facts:
1) Cinven owns 8.49 million shares or 16.6% of the CXR stock (not sure if any sold since close)
2) Got paid $1.24 billion in cash consideraion for AML (CXR total market cap roughly $290M today)
3) Maximum earnout of $206.5 million payable 
4) Closed their Fund VI in June 2016 with commitment of ~USD$8 billion

Firstly, the 8.49 million shares owned are worth roughly $48 million today compared to a value at closing of roughly $231 million.  Unless they offloaded these over the past year (I don't know this), they have vested interest in making sure this Company doesn't go to zero and lose it to some vultures in a process.  This delcine isn't ideal for them...or is it??  They took cash consideration of $1.24 billion for AML and they could take all of Concordia's remaining shares for a value close to that today with a healthy premium.  The Company owes them roughly 70% of the current market cap value in earnout payments, which could serve as a nice offset to a potential offer in terms of cash consideration.  They are flush with cash in the new fund so coming up with payment is not an issue, unlike most takeover offers which are often contingent on financing.  I have not read their fund VI prospectus so I can't make any claims as to what they can and can't do.  That said, if they have the autonomy, this doesn't seem like a bad trade for them.  Take the Company private on the cheap, or risk their outstanding investment in shares and entitlements.  They could possibly renegotiate with terms with various debt holders since the debt holders would see them as a secure partner with deep pockets. 

Just a cursory review of some things I picked up on in the financials and their website, I suspect there is much more I haven't covered and so really just curious speculation on my part.  I think most of the analysts and retail investors would not say that this Company is worthless, but with the market sentiment and volitility (potential manipulation) this belongs in private hands for the time being.  


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