QQ - I think you make some good points about the differences between the postion RAP and PAA are in. I would add to your comments that RAP has products in the market, which makes it both more attractive as a takeover target (less risk) and easier to value. I would think PAA would still be viewed as promising but too speculative as a takeover target just yet. A BP might like to partner on the Phase 3 canine trial if the product was well aligned to their commercial needs, but I rate it us unlikely that they'd buy the whole show 'just in case' it was shown to work. Far easier and cheaper to enter into a partnering arrangement at this stage of the game.
I also rate the degree of difficulty associated with a takeover of PAA as far higher than your average little biotech, mostly due to the tight register (which only continues to tighten). A large number of SH's have been on the PAA train for years. They held on when the price hit an intraday high of 27 cents not so long ago and had ample opportunity to sell in the mid teens - but didn't. In fact, many of those holders just bought more. IMO, it will take a lot more than a 20 or 30 percent premium on the current price to wrench shares from the hands of those holders. If you consider the piddly volume traded over the past year or more and incredibly stable top 100 SH, I think it would be difficult to assemble the votes needed for a takeover to succeed without offering multiples (plural) of the current SP.
I was listening to an interview with Charlie Munger a few days ago - you can learn a lot from a 98 year old - in which he offered some observations about a company that was taken over in the US. The acquiring entity offered SHs a small premium on the current market price of their shares, which had been in a long and steady decline and were trading at close to an all-time low. Reluctantly, the offer was accepted by weary SHs and the company changed hands. Charlie reckoned that if you'd asked any of the SHs whether the price was fair, they would have said no - the company was worth multiples of the offer price. And yet they sold their shares anyway.
The point is, we all own part of a company. The market price is not the value of the company - it's just what someone is offering to pay you for your shares right now. I believe that most SH's see tremendous value in PAA that is not yet reflected in the SP.
I'll finish with another "Charlie-ism" - If you can't weather a 30 to 50 percent fluctuation in the price the market puts on a stock you own, you should probably get out of the market. Because the market is often wrong.
Have a great weekend all.
Cheers
Densy
PAA Price at posting:
9.2¢ Sentiment: Buy Disclosure: Held
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