Buyout is the hopeful dream of novice holders of many failing or stalled Med Tech startups -- CRDC, ARAY, MAKO, MELA, IMRS, STXS come to mind. Not so with NVDQ with all the pieces in place, FDA approvals, reimbursement codes, marketing partners, growing applications, on the cusp of profitable, cash positive expansion into major markets. A buyout today would not be in shareholder interest and is unlikely.
On the other hand, Novadaq and its current progress is on the screen of strategic merger groups throughout the industry. Beyond disinterest or wait and see, there could be one or two knowledgeable of the fundamentals and with a keen interest and the attitude, if ever, better now than later and a willingness to make an extraordinary preemptive offer.
And it could be that Dr. Menawhat and the Board fell they have accomplished the major task in bringing Novadaq from concept to it's present state, such that they might at least listen to something extraordinary.
What might be extraordinary? Considering Novadaq's $1 billion annual consumables potential and similar systems and service potential, an offer on the order of $400 to $500 million might do the trick, that is, $13 to $16 a share. Shareholders might say this is no more that what shares will be worth in the near future. But a bird in the hand....
Not likely, but possible. Regardless, the potential of a buyout will always be a component in the valuation of NVDQ shares.
I trust I have made clear the opinion that a buyout today would not be in shareholder interest -- untimely, unwanted, unlikely; save for an unexpected extraordinary offer, at best only remotely conceivable.Yet also consider: -- In 2008, KCI acquired LifeCell for $1.7B cash. -- On 9/2/10, LifeCell entered into a limited SPY sales and marketing agreement paying $4 million up front plus purchase of stock. -- On 7/11/11, Ajax Partners and others in turn took KCI private for $6.3B cash. -- Four months later, in 11/21 KCI entered into a second SPY agreement, paying $3 million up front. -- Through Lifecell and KCI, Ajax et all has a working relationship with Novadaq management, and operating familiarity with the company's fundamentals and potential. -- Ajax is ranked as the 11th largest Private Equity Firm, having raised $17B in capital over the past 5 years. -- As suggested earlier, an extraordinary offer might be on the order of $400 to $500. Highly unlikely.
Excellent post, thanks. The fact that there is only a relatively limited amount of shares outstanding is a great protection for us against a low ball buyout offer. Any idea how tightly held these shares are held institutionally? regards endo
Four institutions have been reported to own over 50% of NVDQ shares. These possibly include Fairfax Financial, $8B market cap, which held 18% incident to an earlier financing, HIG Ventures, and Gagnon Securities.In late 2010,
LifeCell purchased 280K shares in connection with it's marketing agreement.
ISRG has been a reported holder, quantity unknown.
On July 25. 2011, a block of >400K shares traded on the TSX for around $5.
NVDQ's market cap including subsequent financing has increased more than 1000% over the past four years such that some early holders might be amenable to cashing out.
With present limited volume, any major institution wishing to build a position would do well to approach present block holders rather to rely on the NASDAQ.