For LCI to do an all-stock deal for Elite is not currently possible. LCI does not have sufficient authorized shares, let alone outstanding shares, to do a reasonable deal. Reasonable being the operative word, it is based on the prospect of Elite gaining the prorated market shares (or the prospects thereof) for all their current drugs as well as the CNS ANDA they are supposedly working on - which is what Nasrat is counting on. LCI would have to increase their A/S, which is currently at 100 M, to about 300-400 M; not really a problem in and of itself, if LCI can sell the idea to approving shareholders that this is what it will take to get them to the $ 1 B in revenues by 2023-2024. Further, the acquisition of Elite would come with synergies - aka, a reduction in expenses, as I have explained before. So, the net profit margins would be greater for Elite than they are now. In truth, M&A will occur when companies believe they have the ability to achieve an ROI within 3-4 years. Given the CAGR of CNS drugs and an increased pipeline, that is entirely possible for LCI with the acquisition of Elite.
While we might watch what LCI does with its A/S, it remains they could do what they did before, assume debt. However, if such a tie up is to occur, I still expect it would be a combination of cash and stock (likely to still require an increase in A/S). What the percentage of each may be is a TBD. For those Elite shareholders wanting a simple all cash deal, that is unlikely with LCI. But if given stock in LCI all one needs do is sell it. Of course, if everyone sells at the same time this will drive down the p/s, which means a decision to sell or not. That much is obvious.
