I think this is bad news for DECN. As the article states, the margins of the acquiring company can be much lower than what Johnson & Johnson expects.
That basically means that any acquiring company can lower its sales price point. As it is, the DECN does not appear to be working on a high margin. DECN’s cost of goods from the financials are pathetic.
Assuming Johnson & Johnson has a concrete deal to sell all the diabetes products
(Which is more than just strips), DECN would have a much more serious problem with price competition. Pricing is DECN’s only selling point. One touch could now be price competitive and have the brand recognition and millions of loyal customers.
As to the lawsuit, Johnson does not like DECN and appears to believe it can win. Johnson can taking Sophie indemnify the acquired from damages and keep the same legal team. They could also offer DECN a nominal settlement. We have also seen the $300-$500 down to $100 million and now down to $25-$50 million according to Decn insiders that Bozo Berman feeds propaganda to.
In any event the acquiring company will be untethered to offer price points much lower than Johnson and Johnson, that should definitely hurt DECN’s chances for any sales traction. The acquirer will be able to produce goods at a much lower price point than DECN, who barely does sales equal to a neighborhood drycleaner even though they have a laughable global market.
Also, printing boxes and blurring out an area and leaving enough showing to give the impression they are being sold in CVS is bush league, typical Bozo Berman. Even if they were sold in all the big box stores there is not much hope for the stock. Fully diluted I wouldn’t be surprised if there are over 200 million shares and would expect more coming.
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