Sale of National Holdings—Merger Discussion (Update 2)
On January 15, 2016, the first Merger Discussion Update (post #219) stated, "a Merger Agreement [should occur] in about a month or so."
As you read this second update, please keep in mind that National Holdings does NOT have a permanent CEO or President. Fagenson's employment agreement has now ended and may be extended only 30 days at a time. Goldwasser's employment agreement ends in 29 days, and it too may be extended only 30 days at a time. Also, remember that NHLD is no longer obligated to share any information with any of its "other potential interested parties" because there is no exclusivity agreement.
On February 29, 2016 NHLD said, "National and certain companies affiliated with officers and directors of CB Pharma continue to engage in discussions with respect to a business combination, [but not the blank check company, CB Pharma (CB), itself]. No assurances can be made at this time that such discussions, or discussions with any other potential interested parties, will result in an agreement as to a business combination."
Based on the Fairness Opinion prepared by NHLD's outside advisor, CB's original offer of $3.25 per share was not high enough. Unfortunately, CB, the blank check company, could not increase its offer because it did not have enough cash in its trust account. These machinations have caused a slight delay in NHLD's discussions with other interested parties, as well as the ensuing merger negotiations.
Here are the blank check company's specifics. NHLD said it was reluctance to enter into a transaction with CB as a result of some of the restrictions and risks inherent in dealing with a publicly-traded special purpose acquisition company. These "restriction and risks" centered around CB's inability to get more cash. CB's cash balance in its trust fund is equal to less than $3.50 per share of NHLD. While, it is possible for CB to stretch its offer price to as high as $6.75 per share of NHLD, this would assume half of NHLD's 12.5 million outstanding shares would actually be exchanged for CB stock rather than cash, which is not likely.
At this point, NHLD's Board recognizes that time is of the essence, and with its Fairness Opinion in hand, an agreement should be consummated sooner rather than later. NHLD's merger announcement will coincide with the signing of the FINAL Merger Agreement.
