We will be able to trade these like options or warrants which is of great benefit to those who don't want to wait several years before it fully pays out. My guess would be that they would be trading in the neighborhood of $4 since $3 is almost certain to occur with FDA approval over the next year. The other $3 may be valued at $1 IMO since there is no guarantee those revenues will be met and its a few years out. Nonetheless, if one doesn't want to wait past the FDA $3.50 payout they will most likely be able to sell their CVR rights for around $1 IMO. If one wants to make a large bet the other way and doesn't mind holding the CVR rights they may want to buy more around $1 and get the $3 on revenue milestones 3-4 years out for a nice triple!
From most recent WMGI S-4/A filing today page 89
"It is a condition to the completion of the merger that the CVRs issued in the merger will be approved for listing on The NASDAQ Global Select Market or The NASDAQ Global Market.
Shareholder Vote is scheduled for February 26 from what I read in most recent filing.
Great insight, I've thought about acquiring more of the CVRs after the merger, but I dont think the CVRs will trade at such levels and should deteriorate with time. I could see them trade at $3.00 to start with, then go down. I'd be interested getting in for $2.00 before the FDA Approval.
The Milestone payments worry me some. Milestone payment #1 & #2 expire on the 2nd and 3rd Anniversery of the Merger....so can we say 3/10/2015 and 3/10/16.
So we are dependant on 1) getting FDA Approval soon and 2) having Wright ramp up and start selling ASAP.
This whole deal smells less agreeable each time I look into it.
cjcollins, I have given a lot of thought to the CVR's as well. I believe they will be pricing in the $3.50 FDA approval at a minimum but I could be wrong. I would load up on them at $2 when the deal closes and FDA still hasn't approved by then. I seriously doubt they will trade that cheap! Once the $3.50 is paid the CVR's will trade around $1 IMO. Of course what the markets price things at and what they are worth are a different story! As time goes by they actually could go up in value as their payout date becomes nearer.
The milestone payments do not expire for 6 years, "...The CVRs will terminate on the earlier of the sixth anniversary of the completion of the merger or the payment date for the second product sales milestone." per the S4/A just filed by Wright. They also filed an EFFECT which means the SEC has given its blessing and the deal will close one to two weeks after the vote.
The volume traded today and even this past week shows there is still interest and value at these levels. Most of us who already own will not try to play for another 25%-33% ($10/share) almost sure thing (based on $3.50 milestone being paid within the next year on FDA approval) since we probably own enough shares but its an interesting play for those late in the game as the full potential is almost $13 per share after all CVR's are paid and not counting any WMGI share price appreciation/depreciation.
There is also the outside chance someone else could come in last minute and make a higher bid but since it hasn't happened already I doubt there is anyone at this point who would be willing since the process with Wright is very far along now (basically a much higher bid would have to come in to make management reconsider) IMO.
No problem twelve I appreciate your posts as well. Will you be holding your WMGI shares post merger or just the CVRs? I have not decided yet as I want to get a handle on how they plan on launching and what they see revenue the first couple years. Wright could actually be a takeover target post approval although the premium paid would probably not be more than 30% IMO.