BioAmber Inc (fka BIOAQ)

[MadScholar1]

Howdy, Biowin! Just fyi:

A two-step, stalking horse purchase process is a common strategy used in mergers and acquisitions, particularly in situations involving distressed or bankrupt companies.

Here's a brief overview:

1. Stalking Horse Bid: The buyer submits an initial bid, known as the "stalking horse bid," which sets the minimum price for the target company. This bid is usually negotiated with the target company's management or creditors.
2. Auction Process: The target company then conducts an auction, where other potential buyers can submit competing bids. The stalking horse bidder has the advantage of being the initial bidder and often has a higher chance of winning the auction.

Now, regarding how this factors in with the treatment of outstanding shares and debt:

In a two-step, stalking horse purchase process, the buyer typically acquires the target company's assets, including its equity, through a purchase agreement. The purchase agreement usually includes provisions for the assumption or repayment of the target company's debt.

The stalking horse bid typically includes a proposed purchase price, which may be adjusted based on the target company's debt and other liabilities. The buyer may also negotiate with the target company's creditors to assume or repay certain debts as part of the purchase agreement.

Outstanding shares in the target company are usually treated as part of the equity acquisition. The buyer may offer to purchase the outstanding shares from the target company's shareholders, either through a merger or a stock purchase agreement.

To illustrate this, let's revisit the previous example:

Suppose Company A submits a stalking horse bid to acquire Company B, which is facing financial difficulties. The bid includes a proposed purchase price of $80 million, which takes into account Company B's $20 million debt. The bid also includes a proposal to acquire all outstanding shares of Company B's stock.

During the auction process, Company A may negotiate with Company B's creditors to assume or repay certain debts. If Company A wins the auction, it will acquire Company B's assets, including its equity, and assume or repay the agreed-upon debts.

Keep in mind that the specifics of a two-step, stalking horse purchase process can vary greatly, and the treatment of outstanding shares and debt can depend on the terms of the deal and the negotiations between the parties involved.