Pilgrim Petroleum Corp. (PGPM)

[Dallas66]

An unfortunate, but quite common method to avoid a mass dumpage of shares while people take any profits they can get is to restrict shares in the new company once the merger/share exchange is complete. I say unfortunate because more often than not when a merger/acquisition happens where one entity has a larger value increase, people will sell off quickly to take that profit. This will generally drive down the pps and instills a "take ANY profit" in the majority of retailers and you see a cascading drop in pps.

By restricting the transition shares, that allows the company to stabilize the company/pps and gives them and retailers a cooling off period to assess the true value of the company. It can also be a major detriment to the shareholders who are now locked in due to the restriction. If the company can't maintain that pps value, the shareholders that are locked in will see their value erode and are unable to do anything about it.

How ever one chooses to look at it, one must assume if the pps of the new company, or the value the old retail shareholders now have has increased substancially, there will be an effort to take some profit. This may have a negative effect on the pps, and will depend primarily on how transparent the company is in regards to asset value/ownership.