A poster on the Yahoo board who said it better than I (preposterous li'l ol' me) could: (care to rebut?)
The French proposal results in 20% ownership for them; they are paying $1.23 per share. If this deal goes through, you will own 80% of what you had last week and the share price will remain the same. I guess that the management must have consulted their major shareholders (Genzyme, Soros, etc.) about this deal and got the green light. The retail owners are definitely getting screwed. The share price will not go up from here (except for fleeting blips on exciting news) because two more tranchets will go to the French for 1.23 between now and January. The good news is that the price will not go down either, unless there is some company/science setback, which is always a possible risk.
The deal also involves a lOAN of $5M. IN SIX YEARS, the loan will get rolled into a further stock dilution should the share price double by then. To me, this means a small chance that it will, but in either case the French either get their cash (plus 2% per year interest) back or the stock.
By the end of this deal, there will be about 90 million shares outstanding. Do the math - If sometime in the future, there is 100M in sales for the GTCB portfolio of drugs, and their margin is 15%, that would equal a gross income of 15M (16 cents per share) and that is before subtracting operational costs (which is about 15M). Most of their products are far far away from clinical sales. It is also clear that there will be more and more dilution, as the managers raise cash to guarantee their own salaries and those of their employees.
It is not only the goats that are getting milked, it is also the naive retail investor who invested in this great science one, two, five or more years ago. Yes, the science is great, but the small guy is paying for it and will never recoup the principal investment.
In the end, the French will probably buy the company for a song, plus a few golden exec parachutes (could that be why part of their deal is board membership). And you will still get screwed. Welcome to big business capitalism.
VOTE NO FOR THIS DEAL! They should make deals based on milestone payments and profit sharing without giving away the store! JMHO.