First let me say that I am in the camp of those who don't believe this halt is about a buyout. The reasons have been discussed; I don't need to repeat them here.
That having said, a buyout offer could come anytime – independently of the current halt.
We should be prepared!
What does that mean? Some acquirer could come around and offer you $x for each of your POET shares. Do you accept and tender your shares? Or don't you? Ultimately this will depend on the value of x.
Each of us should think about how big that x should be at least, so that he would accept the offer. If you have that number in your mind and in your heart, and then a bidder comes around with a lower offer:
Just say no!
As long as we really know what we have and agree to say "no" to any low-ball offer, we won't be hijacked by a buyout. Retail holds the majority of this stock, so it is us to decide whether a buyout will be successful or not. However, it is crucial that we are informed and do not sell too low!
So what would a fair x? Here's my conservative approach:
- The Pellegrino II valuation came out with an estimate of about $10. This in my opinion is the absolute minimum. No discussion below that mark! Ever!
- However, Pellegrino II only takes into account what POET Technologies has achieved until 2014-03-01. Everything past this date is excluded, and that means everything POET has achieved during the past two years. That's a lot! Off the top of my head, i.e. incomplete: downscaling to 100 nm, downscaling to 40 nm, successful lab-to-fab initiative, new business strategy (Pellegrino II assumes licensing model, now we are going to sell products), focusing on high-growth optical markets, new patents, next to none photodetector, (probably) next to none VCSEL, VCSEL transceiver underway. – How much might all this add to the $10 above? Difficult! Without a proper valuation model we really cannot come up with a founded answer. All we have is the rule of thumb. Let's add another $10, giving a total of $20. Now this would be a more realistic minimum price. If an offer is above that $20, one could at least ponder it.
Of course you could also take the much simpler and not necessarily wrong "Whatsapp" approach: If you think POET Technologies should have the same price tag as Whatsapp, take that $19 billion, divide by, well, 230 million, and you get the price per share: $82 – which, by the way, is well in the $70+ range.
I think we should all understand and internalize these numbers – or at least the order of magnitude of these numbers. And each and everyone of us should draw his and her own line in the sand somewhere between $20 and $82 (and possibly even above that). If we do that, I think we are well protected against a buyout at a dumping price.
