Titan Medical Inc (TMDIF)

[Honeycomb777]

https://corporatefinanceinstitute.com/resources/knowledge/valuation/share-exchange-ratio/


A higher shareprice (after target co. reverse splits) simply looks better for the acquirer.

1) Say a 1-3 r/s happens at a $4 PPS - well that would be $12 PPS then. Optically, it looks better for say an MDT. Also, their shareholders will see and think the acquisition is a stronger move because PPS of target was HIGHER / more respectable! Over $5 is when most institutions can buy as well.

Often times in a BO, the acquiring firms PPS drops as the target's goes up - it may help stakeholders of MDT feel less pain even though the tuck-in is still rather small. Could help limit downside pressure on MDT right afterwards

2) Reverse splits have a negative stigma attached to them. FACT Hence, this act would likely keep PPS more stable and limit the chances of it shooting up above BO PPS levels until deal closes. MDT is obviously fearful of another Mazor situation and it would help guard against that IMO. Should any stock awards be given to Mgt by Mgt in the time period between announcement and actually closing - the execs (especially Titan's) would prefer a more stable PPS, not one trading higher than BO equivalent PPS. They would want their last freebies to count and make a lil (not lose)