the mother of all deals, page-120

Thanks Schwarz,

I guess what I meant with 3 is what amount of equity are they willing to pay, but where the $ amount is more important than the % amount.

By illustration, say company A and B both want to RTO, and both have stable incomes, A with $10 mil pa B with $100 mil. An RTO deal for A might see them giving away 10% of their equity, but for B they would only give away 1%, since their equity is worth 10 times as much. Point being that the value of the company listing is not so much of a factor - since the more valuable the company the greater the dilution.

What they ultimately give away will be determined by supply & demand for shell companies and an upper limit is set by comparing to IPO costs, as mustard mentioned. My opinion is that I don't think this amount will differ much from the current market cap of ODN.

What this deal does have on its side is that Alex will be able to talk down Gridcomm's equity market value since they are still a growth stock. The market will hopefully set a higher value then what was implied in the trade. This discount factor will be the immediate return holders receive. I personally wouldn't bank on it being anything like 3x though, the numbers just aren't adding up for me atm. I am always a more of sceptic though...

Agreed with you on point 4. too by the way. Shareholders will accept whatever is given to them so this won't be a factor.