MEDRELEAF CORP T.LEAF

RE:What happens

[leveragedbuyout]

Nothing will happen. The offer is not $29.44. That is only an implied price based on the 20-day VWAP. This number is completely meaningless. It is used for illustration only. 

The offer is 3.575 SHARES of Aurora for 1 share of Medreleaf. You do not receive any cash, nor will you at any point unless the offer changes. Your value is based on whatever ACB is trading for at the time. If it goes to $12.00 your value would be $42.90/share. If it goes to $6.00 your value would be $21.45/share. The shares will track pretty much in sync. However because it is an all stock offer the spread will close over time as the merg arb crowd will short ACB and buy Medreleaf. 

There is approx 10% profit in this trade right now. However the only way you lock this in is if you sell ACB now as well. Then your risk is simply whether or not the deal closes.  

Though depending on how long the close is and your margin requirements and cost to short ACB it may not be worth doing this at all. 

Example:

Buy Leaf Shares	1,000
Price	$25.41
Cost	$25,410
Conversion Ratio	3.575
Acb shares	3,575
Price	$7.81
Proceeds	$27,921
Profit	$2,511
%	9.88%

 

Belltech1275 wrote: What happens if Medrelief stock goes up more til August than the offered price by Aurora. The Aurora offer is $29.44 as of Monday May 14  $24.90 price. Will they have to raise the premium.