a scrip takeover masquerading as a merger

I was thinking about this deal, and realised that if a company (OIP) MERGES with another company that has no cash (GGX), what is effectively happening is it is like a scrip takeover.

Because all that is happening is that the cashless company's (GGX's) assets are being acquired by the cashed-up company (OIP), in return for the cashed-up company's (OIP's) scrip.

Now, if you are going to use scrip to acquire assets, and your share price is very low, you are effectively paying a great deal more for those assets than if your share price was higher. So companies with a low share price generally do not seek to acquire assets using under-priced scrip.

IT IS LIKE SELLING AT THE BOTTOM OF THE MARKET - Cashing in your scrip for assets, when your scrip is at its lowest point.

At current prices, OIP is trading just above their cash position. So the market is valuing OIP's assets at ZERO. There is no EV reflected in OIP's scrip. Just the value of its cash.

Do you sell companies just above their cash position? Or do you wait until near-term exploration reveals the value, and pushes up the price?

So why would you EXCHANGE your shares under the same circustances?

YOU WOULDN'T


So let's be clear in our minds what is being proposed here. It is not a MERGER. OIP is using its scrip to buy all of GGX's asset, when that OIP scrip is at its lowest ebb.

Do not be fooled. This is a conflicted grab for cash, masquerading as a merger of equals.

Y