Market reaction is result of 11.5% dilution, plus disappointment of no deal.
92.3 million shares before at $5.56 comes to $512 million market cap.
Market is pricing in potential dilution as a result of the total $69 million ($60 million plus $9 million option) being converted to shares at $5.76 which would create 12 million additional shares. Total outstanding shares would therefore be 104 million. Dividing pre-offering market cap of company of $512.5 by new total potential shares outstanding brings price per share to $4.91 automatically.
Shareholders got diluted and still no deal. Was that the best Citigroup and Protalix management could do?
If it is, and big pharma is not interested, I say license this technology to every country that wants to make their own drugs cheaper and get out from under the boot heels of the greedy pharma monopolies.
$50 million license per drug. Brazil (or other socialized medicine country) builds their own facility for each drug and funds their own clinical trials while giving patients free biosimilar drugs for treatment.
Private company agreed to note, with options to purchase at 5.76, putting the value after dilution at 5.76 with a market cap well above current levels 570+ million. A buyout may still be in works, but this was actually a good deal done by the company at current levels.
Market cap does not go up every time a company issues shares or potential shares. The value of the company stays the same while the number of shares increases. Thus dilution of current shareholder value and the stock goes down.
P.S. Those who are shorting want to get the stock as cheap as possible in order to control more shares when they but it back. The underlying motivation is they either want a quick sell of the company or a hostile (or non-hostile) take over. They understand the value of the company, its potential, its pipeline, and the underlying platform and its value. We are living in the molecular age and I suspect that the truth is not what we hear but what we don't. I am almost certain they are talking if not already preparing the next generation of cholesterol lowering drugs, PCSK inhibitors alongside other big boys. Why do you think federated which is one of the biggest share holders also has a big stake in BMY? Don't you think they are working on backdoor relationships and partnerships that are yet not public knowledge?!?
I agree. See the number of shortable shares decreasing. This is an example of shorts coming in early and trying to get the best price they can, then the smart money comes in and eats up the available float.