doesnt make much sense. i assume most of the short position (3.5MM) is being covered which makes up for most of the volume but where is the rest coming from? speculation on a bidding war with a guaranteed floor of $31? seems like a considerable risk when the price had been trading over $31 for a good part of that volume.
firms are attacking this buyout hard and i would guess the deal will be challenged and possibly forced to be opened up for competitive bids. hard to believe due diligence was fully vetted in the interests of all shareholders with this deal.
when so much of the earnings/net income and energy the last three years was spent fighting Adiana legal issues instead of actively growing the Essure device - the PE multiple applied doesnt seem to tell the whole story. i still think this was a $60-80 stock once they hit critical mass and they were probably approaching that in the next year or two. with their cash position, market position, and position to finally capitalize on both - the premium offered seems heavily discounted and "rushed" by current mgmt/CEO who has only been with the company for 1.5-2 years.
i thought the current run was in anticipation of earnings tomorrow with the expected dump which has been its normal cycle. volume was not overly suspicious for this type of announcement so it must have been rather closely held.
earnings are already out. they were released yesterday morning around 2:00AM. they will probably provide more detail in the release this afternoon. the numbers were very solid on domestic and international and costs were down.
the price will continue to inch up if traders think there is a reasonable to strong chance that the deal will be nullified and the company forced to open up and take bids. with as many firms taking action and the volume generated - i would say there is a good chance it will be nullified. i am not buying on that as the risk/reward is not attractive to me already having a decent position.
I'll be signing up with one of the many law firms already advertizing class action investigations. Given this company just cleared away the competition, why in hell would it sell for such a low premium? I'm hoping they find some evidence of kickbacks to the board from Bayer or it's reps. THis pricing and timing is VERY unfavorable and unfair to current stockholders (one of which is me! ), IMHO.
Nice to see a pop to $31, but I agree the premium does not seem adequate. Looks like no one expects a challenge to this deal or another bidder, as the Nov $30 calls are trading at essentially no premium. Seems to me that if we see blowout earnings and guidance, then we could expect a material challenge to arise. Thesmalls and others (if there are any!), is this deal ironclad?
nothing is ever ironclad. unfortunately I know that from financially, painful experience. no matter how solid you think it is - someone can find a #$%$. that being said - i think WS definitely does NOT think this deal will hold as it is trading over the offer price and on very, very strong (ridiculous?) volume. the downside is $31 a share unless Bayer walks out due to the legal challenge. the upside is probably 1.25 to 3-4 times current deal. who knows in a bidding war.
this company is making solid money. has taken out the competition. there are no competitors even in trials. they havent hit their exponential growth curve (they were approaching that prior to Adiana launch). and they have favorable legislation that will open more doors, faster. that premium i do not think is factored in. a large organization that already has the sales organization and access to doctors/insurance providers can dramatically accelerate that curve. look what Hologic did with an inferior product, being late to market, and comparable pricing? what could a J&J do with their network, ability to push insurance providers for coverage, and lobbying efforts?
i think this is why we are seeing such an aggressive push from shareholders and seeing it very quickly. these shares are very, very tightly held. I have never been invested in a company that had stronger institutional support.
i have been contacted by several firms and probably will decide this evening. i will be joining the action. i still have not gotten through that filing but it was so damn long, and filled with so much subterfuge - you need a legal background to comprehend it.