TechKnow Sydney, page-292

Resmed would be happy to buy sleep app before RAP unveil its potential (after regulatory approval), IMO it is a bad idea for RAP.

- Will this deal have future benefits for RAP?
If it’s sold too cheap, NO! performance shares will issue, CR ruled out, RAP will lose its biggest asset/revenue stream sadly.

LT holders know OSA app worths $250m+ after approval, and potentially can yield many times more of that. Assume in 2nd qtr 2020 when CE/TGA approval received, RAP team wish to sell that part for performance shares. Problems here

1 Without any proven revenue from the app, there’s no way a buyer would commit to more than $100m - discounted as it is still in very early stage

2 Management have less than 3 month to close the deal including share holder voting.

3 Huge price gap impossible to make both buyer and share holders happy, notwithstanding those staff privy to performance shares excluded from voting

Buffett said high price can make any good deal a bad deal. If price is good enough Resmed will quickly decide to take over, more likely they rather initiate a startup program and see how they go first. For FIL and other holders including me, voting on less than $200m sales is not a hard job - NO!

To be realistic here, if BL dreams of the performance share he should focus on cough products deals not sleep app, as it is our biggest strategic asset should not be sold before mature.