246
The ACB hostile takeover offer for CMED just may throw a spanner in the works. ACB has offered CMED sharesholders an equivalent number of ACB shares such that the “value” is effectively $24 per CMED share – or about a 20% premium above the price of CMED as at time of writing.
As a shareholder of ACB, one must weigh the effect of further dilution for this all share transaction and particularly since ACB is paying a premium for CMED. Typically it is preferred to own the shares of the Acquiree and not of the Acquirer in the short term. So should shareholders of ACB sell their shares and buy CMED given the arbitrage that exists just as Canopy Growth shareholders were wise to do with respect to the Mettrum acquisition – especially since ACB has advised that they have 38% of existing CMED shares locked in to vote for their takeover. Maybe …CMED has
formally responded to the takeover offer by enacting its poison pill (“Shareholder Rights plan”). Referring to a plan as “rights” when the plan itself prevents shareholders from exercising what the right to choose and vote is for another discussion. It will be
interesting to see if ACB tests the legitimacy of the poison pill. We know the industry is a vibrant ecosystem that undergoes Ecoforming and this event can be seen as a micro-system undergoing its own Ecoforming event.
Assuming CMED continues to recommend against this offer the deal relies on shareholders being voting against that recommendation should they be allowed to vote at all. Furthermore, ACB has plainly stated that if CMED shareholders vote in favour of the HIP M&A then the offer is revoked.