Warrants are basically rights to buy the stock at $5.5 until 10/2011. Their value is comprised like options of a time-premium and intrinsic-value.
Right now there is almost 0% chance the acquisition does not go through. What is unknown is how many IPO shareholders (roughly 10M shares) will choose to liquidate at $7.01, but the company has cash to pay the ones who do.
So the cash-after-acquisition will range from 20-25M and 100M. The share-count after acquisition will range from 23M to 33M or so.
For the company to make their 2009 performance-bonus of 1M shares, it needs a net income of 42M (15M in 1h 09 but second half is usually stronger). If it makes the 42M target, that means $1.8 EPS if 23M shares or $1.27 if 33M shares (but 100M cash balance, or $3 per share).
So the warrant to buy at $5.5 would be a P/E of 3 or 4.33 under those EPS numbers.
The fact is, just the TIME value of the warrants alone will be worth more than the current $0.40 level.
-Fernando