best case outcome here imo is a very large price cut to the deal - 20%? more?. Cosette has them over a barrel. The definition of MAC specifically says $10.8mm EBITDA hit a year, versus 'maintainable EBITDA over a 12-month period' - meaning they can argue run-rate earnings as evidenced by 3Q (and likely 4Q) numbers are a lot lower than what they thought when they signed the deal. MYX has no leverage bec post the FDA letter, and Trump's war on drug prices, they know that absent this deal the earnings power of their in-market drugs next year will but have to be a good deal lower than what they guided to this year (even absent the one-timers like the lawsuit, FDA letter risk, etc).
MAC litigations are generally quite rare and hard to prove. but there's a ton for the bidder to work with here and a lot of leverage. this explains why MYX mgmt basically said - in the announcement this morning - 'we are happy to work towards resolving the issues' which is code for 'we will cut the price of this deal to get it done'.
personalyl i think it has to be a massive cut for Cosette to want to close, really. this is all about fixed cost leverage and with likely straight cuts on prices (thanks Trump) and the effects on Nexsellis from marketing restrictions post FDA, etc, its not hard to see how EBITDA at wholeco isnt structurally screwed.
so yes. think downside here in a true deal break is much, much lower than $4.5 and think best case is a recut deal in the $5.5-6 range...so...be careful out there.
MYX Price at posting:
$4.54 Sentiment: Sell Disclosure: Not Held
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