Titan Medical Inc (TMDIF)

[Geo2014]

I think you are getting lost in your dream of a 1 for 1 stock transaction.

Let's say Titan stock is at $1 and the buyout amount will be $5 billion. The RS has NOTHING to do with the buyout price. Titan/SPORT is worth X ($5 billion in this example) number of dollars.

So let's say Titan has 100 million OS. At 100 million OS and a $5 bil purchase price, that means Titan is bought for $50 per share. Before the buyout and before a RS let's say you own 50,000 shares. That means your holdings are worth $50k ($1 per share) before buyout and at buyout you then have $2.5 million (50k shares × 50 = $2,500,000).

Now, let's say a 1:10 RS occurs before buyout. So now Titan shares are worth $10 each (not $1 each) and Titan now has 10 million OS (not 100 mil OS). You now have 5000 shares instead of 50,000. If the buyout price is still $5 billion then the share price after the RS is $500 per share, not $50 per share. So you now have 5000 shares at $500 per share which still equals $2,500,000.

After a RS your price per share changes (before buyout price x 10), but your total $ doesn't change because you have 10 times the amount per share after the RS but you own 1/10th of the shares you had before the RS.