Voodooking Posted February 20, 2018 Share Posted February 20, 2018 Unsure what to make of this merger arb opportunity: Genoptix, Inc. offer to acquire failing (but cheap in relation to book value) company. Deal is expected to close in the first calendar quarter of 2018 for a closing value of $10 million. Upon completion of the merger, shareholders of Rosetta Genomics will receive $0.6 per share in cash. Shares are currently trading at $0.44 USD, which means there's a potential for a 36.36% profit to be made if they receive enough shareholder votes and this closes. That means a 340.33% annualised profit if it closes by 31st March 2018! February 2, 2018: The management of Rosetta Genomics (ROSG) rescheduled the extraordinary shareholders meeting to vote on its proposed merger with Genoptix as they failed to get enough shareholder support in today’s meeting. February 15, 2018: The extraordinary general meeting of shareholders of Rosetta Genomics (ROSG) that was convened on February 15, 2018 has been adjourned to Thursday, February 22, 2018 in order to provide additional time for the solicitation of votes in favor of the proposed merger of the Company with a subsidiary of Genoptix. Is this worth a punt, or is it too risky in the event that (already beaten down) shareholders won't accept bottom dollar for shares they most likely bought at a higher purchase price in the past? Link to comment Share on other sites More sharing options...
hillfronter83 Posted February 20, 2018 Share Posted February 20, 2018 Unsure what to make of this merger arb opportunity: Genoptix, Inc. offer to acquire failing (but cheap in relation to book value) company. Deal is expected to close in the first calendar quarter of 2018 for a closing value of $10 million. Upon completion of the merger, shareholders of Rosetta Genomics will receive $0.6 per share in cash. Shares are currently trading at $0.44 USD, which means there's a potential for a 36.36% profit to be made if they receive enough shareholder votes and this closes. That means a 340.33% annualised profit if it closes by 31st March 2018! February 2, 2018: The management of Rosetta Genomics (ROSG) rescheduled the extraordinary shareholders meeting to vote on its proposed merger with Genoptix as they failed to get enough shareholder support in today’s meeting. February 15, 2018: The extraordinary general meeting of shareholders of Rosetta Genomics (ROSG) that was convened on February 15, 2018 has been adjourned to Thursday, February 22, 2018 in order to provide additional time for the solicitation of votes in favor of the proposed merger of the Company with a subsidiary of Genoptix. Is this worth a punt, or is it too risky in the event that (already beaten down) shareholders won't accept bottom dollar for shares they most likely bought at a higher purchase price in the past? For two months they were only able to get 1.9 million shares to vote Yes, even with additional effort. They need additional 1 million shares to vote, most of those people probably already sold long time ago and would not bother to vote. In any event, it's hard to handicap at the moment. I sold my shares after they postpone the voting for a second time. Link to comment Share on other sites More sharing options...
writser Posted February 20, 2018 Share Posted February 20, 2018 I sold as well but it might be a decent punt .. Some caveats: the $0.60 - $0.70 is an estimate and that if they burn through some more cash at historical rates the payout shrinks quickly. Also, the buyer is a senior lender so chances are they're happy picking up the intellectual property in a bankruptcy. And yeah, seems difficult to get the votes required. The puzzle has lots of pieces that are hard to handicap for me. Link to comment Share on other sites More sharing options...
writser Posted February 22, 2018 Share Posted February 22, 2018 ROSG disclosure is really subpar afaik. No press releases, no SEC filings (or way later) and IR isn't really helpful either. It's still trading all day and I have no clue what happened and what is going to happen. Link to comment Share on other sites More sharing options...
hillfronter83 Posted February 23, 2018 Share Posted February 23, 2018 ROSG disclosure is really subpar afaik. No press releases, no SEC filings (or way later) and IR isn't really helpful either. It's still trading all day and I have no clue what happened and what is going to happen. Deal didn't pass. How much does it worth in bankruptcy? Link to comment Share on other sites More sharing options...
Voodooking Posted February 23, 2018 Author Share Posted February 23, 2018 I'm not sure. There is a compensation payment due towards the end of March. Presumably that should help a bit. Although they are well below the $1 minimum stock price limit, so they may end up being de-listed anyway. That'll teach me to try my hand at merger arb again! I've had a small amount of luck with it, but been burnt a few times too... https://www.genomeweb.com/molecular-diagnostics/rosetta-genomics-genoptix-merger-terminated Link to comment Share on other sites More sharing options...
hillfronter83 Posted February 28, 2018 Share Posted February 28, 2018 A new deal is back for vote at $0.4-0.45/share. Think third time is the charm? Link to comment Share on other sites More sharing options...
Hielko Posted February 28, 2018 Share Posted February 28, 2018 A new deal is back for vote at $0.4-0.45/share. Think third time is the charm? Tough to say. Lots of votes needed, and people who weren't enthusiastic about 0.60/share are presumably also not trilled about 0.40/share. Link to comment Share on other sites More sharing options...
hillfronter83 Posted April 11, 2018 Share Posted April 11, 2018 A new deal is back for vote at $0.4-0.45/share. Think third time is the charm? Looks like the payout may increase. The big question is whether they have enough votes. I bough a tiny position today and felt it's likely the deal will go through. Any thoughts? Link to comment Share on other sites More sharing options...
Voodooking Posted April 11, 2018 Author Share Posted April 11, 2018 I set a sell limit order at my buy price just after the failed merger from Genoptix after I started the thread. I was glad that I was able to break even and get back out without a loss. I don’t know enough and don’t have enough conviction to jump back into this one, I guess I’ll just have to hope my large TWX position works out... Link to comment Share on other sites More sharing options...
writser Posted April 17, 2018 Share Posted April 17, 2018 Surprise: another adjournment. They adjourned the vote a gazillion times, then it didn't pass, they renewed the record date and now they still cannot get enough votes? I really want to like this idea as a 'contrarian merger arb' or whatever you want to call it but management has proven to be so incompetent and this deal has been such a disaster so far that I don't have the guts to buy back in again at current prices. Happy to have sold a few weeks ago. Also, the equity payout is like a leveraged stub of the total deal so it's not exactly a risk-free bet even if the deal eventually succeeds. Just a few months ago the expected payout was $0.60 - $0.70. Link to comment Share on other sites More sharing options...
hillfronter83 Posted April 17, 2018 Share Posted April 17, 2018 Surprise: another adjournment. They adjourned the vote a gazillion times, then it didn't pass, they renewed the record date and now they still cannot get enough votes? I really want to like this idea as a 'contrarian merger arb' or whatever you want to call it but management has proven to be so incompetent and this deal has been such a disaster so far that I don't have the guts to buy back in again at current prices. Happy to have sold a few weeks ago. Also, the equity payout is like a leveraged stub of the total deal so it's not exactly a risk-free bet even if the deal eventually succeeds. Just a few months ago the expected payout was $0.60 - $0.70. So the price actually goes up on the news. Very weird. I still think good chance the deal goes through looking at the number of shares traded before record date. Link to comment Share on other sites More sharing options...
hillfronter83 Posted April 26, 2018 Share Posted April 26, 2018 Surprise: another adjournment. They adjourned the vote a gazillion times, then it didn't pass, they renewed the record date and now they still cannot get enough votes? I really want to like this idea as a 'contrarian merger arb' or whatever you want to call it but management has proven to be so incompetent and this deal has been such a disaster so far that I don't have the guts to buy back in again at current prices. Happy to have sold a few weeks ago. Also, the equity payout is like a leveraged stub of the total deal so it's not exactly a risk-free bet even if the deal eventually succeeds. Just a few months ago the expected payout was $0.60 - $0.70. So the price actually goes up on the news. Very weird. I still think good chance the deal goes through looking at the number of shares traded before record date. Deal approved Link to comment Share on other sites More sharing options...
writser Posted April 26, 2018 Share Posted April 26, 2018 Well done sir. Link to comment Share on other sites More sharing options...
writser Posted May 30, 2018 Share Posted May 30, 2018 https://finance.yahoo.com/news/rosetta-announces-completion-genoptix-transaction-215000003.html .. announced today that the pending of merger of a subsidiary of Genoptix, Inc. with the Company has not occurred as scheduled and that Genoptix has refused to provide assurances that it intends to complete the transaction. Unless the transaction is completed by May 30, 2018, the Company intends to file for bankruptcy protection in Israel and the United States. Trainwreck! Link to comment Share on other sites More sharing options...
hillfronter83 Posted May 30, 2018 Share Posted May 30, 2018 https://finance.yahoo.com/news/rosetta-announces-completion-genoptix-transaction-215000003.html .. announced today that the pending of merger of a subsidiary of Genoptix, Inc. with the Company has not occurred as scheduled and that Genoptix has refused to provide assurances that it intends to complete the transaction. Unless the transaction is completed by May 30, 2018, the Company intends to file for bankruptcy protection in Israel and the United States. Trainwreck! I have to say that I didn't see this coming. Felt "lucky" to grab some shares once they announced deal approval and was sitting on decent size profit % wise. In hinder sight, what prevented a disaster was portfolio sizing and being "greedy" (I had limit order not filled at $0.36/share until yesterday). I'll probably make similar bet given the opportunity and what I knew. But stuff like this certainly humbles me to be cautious about seemingly "done deal" and to size portfolio wisely. Link to comment Share on other sites More sharing options...
ulysses02 Posted May 31, 2018 Share Posted May 31, 2018 https://finance.yahoo.com/news/rosetta-announces-completion-genoptix-transaction-215000003.html .. announced today that the pending of merger of a subsidiary of Genoptix, Inc. with the Company has not occurred as scheduled and that Genoptix has refused to provide assurances that it intends to complete the transaction. Unless the transaction is completed by May 30, 2018, the Company intends to file for bankruptcy protection in Israel and the United States. Trainwreck! I have to say that I didn't see this coming. Felt "lucky" to grab some shares once they announced deal approval and was sitting on decent size profit % wise. In hinder sight, what prevented a disaster was portfolio sizing and being "greedy" (I had limit order not filled at $0.36/share until yesterday). I'll probably make similar bet given the opportunity and what I knew. But stuff like this certainly humbles me to be cautious about seemingly "done deal" and to size portfolio wisely. Had a brief conversation today with an institutional investor who's also in the situation and they expressed being similarly blind-sighted. Genoptix hasn't been the best actor in these merger proceedings, considering that Rosetta's bargain sale of PDx sale to them for $1M on February 27 appeared to be a sweetener of sorts to facilitate this new offer. In terms of portfolio sizing, I agree with your sentiment and note that this case presents a rather tricky post-mortem even so. I don't know that a "larger" size allocation would have been a mistake, since (1) the deal's conditions were met as of the past two weeks when shares traded hands at as low as $0.30, which presented decent odds even with the significant downside, (2) Generally, MAE clauses are rarely exercised and in this case specifically, the buyer (Ampersand Capital and 1315 Capital) didn't seem to have a history of bad faith dealings and (3) assuming the buyer had nefariously planned to acquire Rosetta in-bankruptcy all along, why even go through the trouble and expense of drawing up a merger bid etc... which implied that buyer had a strong reason to prefer an acquisition before bankruptcy (preserving NOLs, administrative expediency, etc). Thus, a priori, the facts and likelihood of merger close from such facts suggested a rather satisfactory chance of merger success. The result, IMO, simply deviated from what the facts and reasoning would suggest on average. In other words, an outlier. Link to comment Share on other sites More sharing options...
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