Replies to post #26182 on American Green Inc (ERBB)

[gregg99]

i think you can toss the naked short position out the window, unless they are now claiming that mmxt is also being shorted. it is simply an abundance of shares, and not enough buyers. there has been nowhere near enough real good news to compensate for the loss of the dividend, and the 90 million more shares. follow a chart from the shareholders meeting, and the proxy to issue 90 million more scmi shares, and tell me what you see.

[neilbolton]

threebabiesbusy

Could the company actually put measures in place to have these two companies pps trade realatively the same and at a low pps for reasons of ensuring that the merge does go thru

You are putting the cart before the horse.

Once the company announced their intention to merge at a 1:1 ratio, the shareprices should have had a negligible difference.

The fact that they haven't suggests certain things.

The market still does not believe the merger is a certainty. If they believed it to be 100% certain, they would always buy the lower priced. But anything less than 100% certainty, means they must attach a risk premium to the price of each share based on their assessments of what the effect on the respective company would be if the merger didn't go through. For example, they have to assess whether MMXT would be abandoned should there be no merger, with SunnCom deciding to bring back "marketing" under its control, like prior to the agreement coming into effect. Alternatively, they may decide that SCMI is such a liability because of its history that MMXT will simply buy the technology from them (but not buy the company) and the employees will just shift across to MMXT. Or they might continue as they are as two separate companies. So, believing that the merger is not 100% certain, investors will decide the likelyhood of each of the above and the many other outcomes that are possible. Depending on their assessments, they will favor one of the companies above the other. The fact that the divergence is so large, indicates to me that the market is far from certain that the merger will go through.

Another factor that may come into play is the liquidity of both stocks. MMXT seems mostly held by "insiders" (which includes SunnComm), so there is less liquidity in that stock. However, I think the uncertainty of the merger is the main factor for the difference.

There is no reason that the company needs to manipulate the prices to ensure the merger goes through as you were asking. After announcing the terms of the merger, it is not their fault (other than any action that adds to the uncertainty) that the prices still diverge. In fact to try and manipulate the prices would be a very dangerous, if not illegal. It would allow speculators who have wisened up to what is happening to make money through shorting or arbitrage. For example, if they thought the company was deliberately lowering the price of MMXT to bring it closer to SCMI, then they would start shorting MMXT in a big way, knowing the company's actions will make this easy money for them.