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RE:RE:RE:Should I hold or sell Cannimed

[MartialArts]

StayInCash wrote: There is no reason to sell CMED at these prices unless you bought them very low and want to be sure you get cash.

Here are the numbers. Say everyone, by default, select the "all in shares" option.  That's means the full $140M is available to those who select the cash+share options.  There's about 24.5M fully dilluted shares out there not owned by "Aurora or it's representative".

If $5.70 is for 0.45 ACB shares, and you get $42.99 CASH per share if nobody else elects the cash, that means that $140M/42.99 = 3.256M shares can be exchanged for full cash at $42.99

Now if there are more than 3.256M shares going for the cash, the $140M is "prorationed" beween those who want cash+shares.  Aurora could elect to revise the "offer" since that's stipulated in the agreement but given the markets, they won't short term.

As a summary that might be easier to understand, let's take the possible scenarios the the current offer as it stands today:

A. Assuming 3.256M (or less) only elect cash = That's $43 cash for their shares + 0 ACB shares
B. Assuming 6.125M shares elect cash (25%) = That's $22.86 cash plus 1.6 ACB shares
C. Assuming 12.25M shares elect cash (50%) = That's $11.43 cash plus  2.5 ACB shares
D. Assuming 18.375M shares elect cash (75%) = That's $7.62 cash plus 2.81 ACB shares
E. Assuming all 24.5M shares elect cash (100%) = That $5.70 cash plus 3.4 ACB shares

Realistically, I'm expecting between 25% and 75% of CMED holders electing the cash option.  The rest will swap in shares since ACB shareholders are more bullish than CMED shareholders. We can see this as the market is undervaluating CMED in relation to ACB. There's a 9% premium on ACB shares.

As of closing yesterday ACB at $8.50*3.4=$28.90 CMED but the market has the value of CMED currently at $26.45

If we extrapolate the above scenarios with today's ACB price of $8.50, you get the value for each

A. $43 cash  + 0 ACB shares = $43 in value (possible scenario but unlikely)
B. $22.86 cash plus 1.6 ACB shares = $22.86+(1.6*8.50) = $36.46
C. $11.43 cash plus  2.5 ACB shares = $11.43+(2.5*8.50) =  $32.68
D. $7.62 cash plus 2.81 ACB shares = $7.62+(2.81*8.50) =  $31.51
E. $5.70 cash plus 3.4 ACB shares = $5.70+(2.9493*8.50) = $30.76 (impossible scenario really)

From what I can see this past week, the market wide bear scare got the CMED bulls to lock in their profits as a result of the very high gains we have seen in the past 6 months.  Those who were in at lower prices said to themselves, "I'll lock in my cash now selling until things become clearer". Cash now is the 100% sure thing. The rest is "levels of speculation".

If I was a holder of CMED from anything from below $15, I would have taken profits because gains are not real until you take cash off the table. Especially during this bear season turning into a possible longer term bear season.

When you think about it, those low entry holders can leave the table very satisfied leaving this whole "mess" to be sorted out by new entrants.  Like me! Maybe. 

What's clear based on the numbers if CMED holders have little faith in ACB's share price.
The the numbers clearly indicates the shares of ACB would have to drop to very low stock prices to justify CMED's current low stock price.

$5.70+(2.9493*n) = $26.45
n=$7.05 for ACB's correction

Or, more likely scenario is 50% of shares elect cash so:
$11.43+(2.5*n) =  $26.45
n=$6.01 for ACB's correction

Is that possible? Perhaps but I can't see ACB staying at these ultra low levels for any period of time given all the assets, Aurora Sky's grow license and the potential in this space both in Canada and worldwide.

So I agree with those who feel that anything less than $30 for CMED is an easy decision but the bears have to slow their advances before I would call this a "no brainer".

Best post of the weekend, I snipped the key postions but I wanted to quote it to bring it to the forefront.  Thank you for putting the effort to put this together!