22nd Century Group Inc (XXII)

[Justfactsmam]

On Oct 1st, 2013 (announcement date) British American Tobacco (BAT/BTI)...already bought an option to license up to 2028, the XXII's technology (28 patents including VLN). I have never read an announcement by XXII or BAT that that licensing option was terminated.

If I recall correctly...the terms effectively put a cap on XXII's profit of 25% (BAT 75% / XXII 25%).

BAT has up to October 1, 2017 to pull the trigger on that option which would give BAT a license effectively for the world-wide rights (including the US. and BAT's major markets...which could include China) to VLN through 2028.

So who is going to acquire XXII before October 1st, 2017...no one! (with the exception of BAT). No bidding war here.

But why would BAT want to buy XXII, when they have available the the technology via the exercise of the license option for the next 11 years?

Why buy the cow when you can simply buy the milk as needed?

Why buy XXII, when you don't know the future of "burn" tobacco, when they can simply license and use the technology via "pay as you go"?

No doubt, under a BAT "exercise" scenario, XXII would go up in value because of the revenue stream generated by the license given to BAT (and an additional payment of $7MM), but that SP increase is a far cry from where it could have gone if it were acquired via a bidding war.