This post was just published on ZYX Buy Change Alert.
PBTH is a development stage biotech company. The company has received a takeout offer from OPK at $7 per share in OPK stock. The exchange ratio is 0.9951 OPK shares for one share of PBTH.
Deer Path Capital, a large holder of PBTH says that the offer is not adequate and PBTH is worth more than $10.
Here are the five scenarios.
- PBTH is bought out by OPK at $7 a share.
- A bidding war occurs and PBTH is bought out in the $9 to $10 range.
- The deal falls through and PBTH falls to $3.50 to $5 range.
- The deal falls through, PBTH falls and later down the road it is taken out by another company close to $10.
- PBTH is not bought out and its products fail. The company declares bankruptcy and the stock goes to zero.
Here is the way to properly invest in this situation. Consider starting a 10% tranche in the zone of $5.25 to $5.76. Unless there are significant adverse developments, the plan will be to add more as appropriate.
Stop zone $3.18 to $3.23.
This is a speculative position, please be sure to study Trade Management Guidelines for speculative positions before entering this position.
