Tcel reverse merger1/9/2023 The company being acquired is known as the ‘shell company’.Ī reverse merger, on the other hand, is more of a non-conventional type of merger. A merger takes place when a smaller company unites with a larger one through the exchange of shares or a sum of money. The article discusses the concept, essential requirements, advantages, and disadvantages of this concept in addition to the benefits from a tax perspective.īy: Durga Girish, 4 TH year BBA.LLB, IFIM Law School Concepts of Merger and Reverse MergerĪ merger is a corporate strategy used by one company to unite with another company and operate as a single legal entity as a result of which the ownership, risk, assets, liabilities, and functions are also consolidated. It is the process of acquisition of a public company by a private company. CNBC's Christina Farr contributed to this report.It is a method used by companies that want to go public in a non-traditional manner. "But we caution investors will need to be patient as valuation is likely to draw significant scrutiny." "We believe TDOC's announced acquisition of LVGO is an interesting strategic deal that deepens the competitive moat of the combined company," Santangelo wrote. That's high relative to where Teladoc has traded historically, but Santangelo, who rates the stock a buy, said it's reasonable based on the company's expectation for annual sales growth of 30% to 40% over the next few years. The combined company will have a multiple of about 19 times revenue based on 2021 estimates, according to Glen Santangelo, an analyst at Guggenheim. Teladoc CEO Jason Gorevic will run the company and the board will consist of eight directors from Teladoc and five from Livongo. company this year, behind 7-eleven's purchase of Speedway gas stations and Analog Devices' acquisition of Maxim Integrated. The purchase price comes out to $18.5 billion and makes the deal the third-largest acquisition of a U.S. Teladoc is paying $11.33 for each Livongo share and exchanging 0.592 shares of Teladoc for each share of Livongo, which amounts to a 58% to 42% split in terms of control. Teladoc fell 19% to $202.01, and Livongo dropped 11% to $128.06īut as of Tuesday's close, Teladoc had tripled in value this year and Livongo was up almost six-fold. The companies said in Wednesday's press release that the merger will help people everywhere get "high quality, personalized, technology-enabled longitudinal care that improves outcomes and lowers costs across the full spectrum of health."īoth stocks fell sharply after the announcement on concern about the high price of the deal and the integration risks as competition rapidly picks up. Livongo, a provider of coaching services that help people manage chronic conditions, falls in the category of remote health management, which is also seeing soaring demand during the pandemic. Teladoc is among the leaders in the space and said last week that visits in the second quarter surged 203% from a year earlier. Telehealth has been one of the massive growth stories of the Covid-19 era, as patients - particularly in older age groups - avoid clinics and hospitals where they risk exposure to the coronavirus.
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