Just got this news alert on my phone. No article link through Atom+ app.
“Under the terms of the agreement, which has been unanimously approved by the Board of Directors of each company, each share of Livongo will be exchanged for 0.5920x shares of Teladoc Health plus cash consideration of $11.33 for each Livongo share, representing a value of $18.5 billion based on the closing price of Teladoc Health shares as of August 4, 2020. Upon completion of the merger, existing Teladoc Health shareholders will own approximately 58 percent and existing Livongo shareholders will own approximately 42 percent of the combined company.”
Under the terms of the agreement, which has been unanimously approved by the Board of Directors of each company, each share of Livongo will be exchanged for 0.5920x shares of Teladoc Health plus cash consideration of $11.33 for each Livongo share, representing a value of $18.5 billion based on the closing price of Teladoc Health shares as of August 4, 2020. Upon completion of the merger, existing Teladoc Health shareholders will own approximately 58 percent and existing Livongo shareholders will own approximately 42 percent of the combined company.
I figure that each LVGO share is valued at $159.00, up $14.46 from yesterday’s close, just a 10% premium. Since I’m long both I’m OK with that.
The medical establishment is huge and this combination is taking on this behemoth with non-traditional methods that impact the establishment’s revenue stream. The savings/benefits Livongo and Teladoc produce are at the expense of the healthcare establishment so expect pushback. Maybe we can call it disruptive innovation. Will the traditional healthcare providers be caught in the “Innovator’s Dilemma?”
LOL sold my TDOC holdings late last year to first invest in LVGO. I guess I’ve come full circle.
I really hope that Glen Tullman stays with the combined company. One of the reasons I got out of TDOC was that I had some questions about its leadership after the CFO and COO stepped down, and Tullman really seems to be a visionary who’s helped drive LVGO’s outstanding performance.
Great linkup of two companies, look forward to seeing what happens with the integration.
Yeh I have mixed feelings about this. It could be a very interesting digital health player but the rationale has me worried.
I can only surmise like Saul that Livongo recognise the saturation of the market place coming and at the same time Teladoc is struggling to gain leverage and a path towards profitability whilst telemedicine is increasingly seen as commoditised space.
Almost anything might potentially replace Teladoc I could imagine in the future from Zoom to Alexa.
Not sure how you calculated 10%. As of yesterday’s close LVGO’s market cap was ~14.1B. The deal is valued at 18.5B. I’m getting around a 31% premium over yesterday’s close. Am I looking at this wrong? 31% is not great but much better than 10%.
I dont feel very good for the news,
Since i learn a lots about livongo from the board
And i knew their management are doing well,
I dont think TDOC are better then them…
Anyway, we still need more information about the merge…
"Jason Gorevic, current CEO of Teladoc Health, will be the CEO of the combined company. Led by Teladoc Health chairman, David Snow, the newly combined Teladoc Health Board of Directors will be composed of eight members of the Teladoc Health Board and five members of the Livongo Board. "
So most likely Zane will be out of the company for sure, not sure about Glen Tullman though.
Could anyone lay out the process and timelines for this? I have never had a takeover before on my stocks!
Will teladoc shares automatically appear in our brokerage accounts and then the rest show up in cash in our accounts?
Are shares suspended for both companies whilst this takes place?
Do we carry the risk that even though our LVGO shares are being valued at £18b, teladoc stock might crash if a lot of LVGO shareholders all went to sell once this completes?
I did my calculation based not on market cap but on share price. I converted my LVGO to TDOC according to the terms of the agreement and I came away with $159 as the value of the converted shares including the cash I’ll be receiving.
First, because media gets stuff wrong and sensationalized, I go to the SEC.gov website. They have to file documents immediately, so I found it there by clicking “Company Filings” in the top right corner of sec.gov
Second, I enter the ticker of one of the two companies, in this case I entered LVGO. The search results window (newly improved, btw) shows results dynamically (and you should click on the one you want) and I went to the filings page for LVGO. (Looks like this. https://www.sec.gov/cgi-bin/browse-edgar?CIK=1639225 )
We see that two documents were filed today, so it’s going to be one of those and the other is the earnings release “Press Release”. (They also will file an official Quarterly Earnings document, 10-Q, in the coming days but they also must file a copy of the press release they crafted for announcing their earnings.)
The 2nd one is the merger announcement, I have found out, by reading the first one. The 8-K doc is not what you want to read, though. On the 2nd page of the 8-K filing doc is a link to the announcement document…
Now, I like to search in my browser window for the word “close” as in “When will this deal close?”
Skipping through 3 incidences of the word “close” I read: “The transaction is expected to close by the end of Q4 2020, subject to regulatory and Teladoc Health and Livongo shareholder approvals and other customary closing conditions. The newly combined company will be called Teladoc Health and will be headquartered in Purchase, New York.”
Okay so that answers that. “Is my money held in ‘stasis’ until October at the earliest?!?” (Your next question.)
Answer: No. Now they will both trade but there will be a linkage between the two of them that allows savvy, speedy investors to arbitrage small differences between the deal and the price of LVGO based on the price of TDOC…
Will teladoc shares automatically appear in our brokerage accounts and then the rest show up in cash in our accounts?
Yes.
Are shares suspended for both companies whilst this takes place?
No.
Do we carry the risk that even though our LVGO shares are being valued at £18b, teladoc stock might crash if a lot of LVGO shareholders all went to sell once this completes?
I think so but they can sell LVGO at any time so I think the worry “as stated” is unwarranted.
We just went over Dexcom as a competitor and “associate”… why wouldn’t someone like that want “In” on what Livongo is doing? (IF, in fact, Livongo is doing Something.)
I did my calculation based not on market cap but on share price. I converted my LVGO to TDOC according to the terms of the agreement and I came away with $159 as the value of the converted shares including the cash I’ll be receiving.
So Denny, does that means you need to keep the LVGO shares until the disbursement of cash to realize the full gain?
I believe this will tie LVGO trading to TDOCs share price.
Under the terms of the agreement, which has been unanimously approved by the Board of Directors of each company, each share of Livongo will be exchanged for 0.5920x shares of Teladoc Health plus cash consideration of $11.33 for each Livongo share, representing a value of $18.5 billion based on the closing price of Teladoc Health shares as of August 4, 2020. Upon completion of the merger, existing Teladoc Health shareholders will own approximately 58 percent and existing Livongo shareholders will own approximately 42 percent of the combined company.
This valuation is based on today’s price but the ratio is fixed, the valuation upon closing is likely depending on the price of TDOC at the time of the transaction. At least that is how I have seen these before. This is a valuation based on “ of $18.5 billion based on the closing price of Teladoc Health shares as of August 4, 2020.”
But what about the share price at the end of the year when this is expected to close? I think the valuation is variable depending on TDOC stare price
Based on a different stock merger I had LVGO will most probably trade based on TDOC performance going forward. If TDOC has a bad quarter and SP falls, LVGO would fall as well. I also came up with premium of 10% but feel that is significantly less than what I would have expected. Since all of my gain is currently Short term may hold but am tempted to sell except for the tax consequences which will be substantial. I am thinking this is saying LVGO management was not as confident about the future as the SP seemed to imply which is why they did not hold out for a higher premium. Also do not think there are other bidders as the BOD would have to do their DD to ensure they got highest price and if there was any interest from Dexcom or others they could have leveraged that. All in all a negative event for me and puts me on the fence for holding this going forward.
So Denny, does that means you need to keep the LVGO shares until the disbursement of cash to realize the full gain?
No. As of today LVGO will track TDOC. Pre market it is already $153.90 while TDOC is down to $240.00. There will be some arbitrage but I don’t expect much.
It seems the market is not liking the merger. I must admit that I had more conviction in Livongo than in Teladoc but TDOC kind of exceeded my expectations. Since I’m long both I’m not going to do any trading unless I discover some new news. My internet connection is a bit flaky his morning and I was not able to listen to the Livongo earnings call. The only tidbit I got was that Livongo will have access to 70 million Teladoc medical histories to sharpen its AI learning. There might be more synergies in the merger than meet the eye at first sight.
The argument that “anyone can do it” is also true for every high tech company but there are forces at work in increasing returns businesses that give the leader a huge portion of the market, often well above 50%. Why does Google have half the search market when anyone can build a search robot? I would urge people to research “Path Dependence,” “Innovator’s Dilemma,” “Increasing Returns,” and “Positioning (marketing)” which underly these forces. These are not simple if/then propositions, they are the so called “emergent properties” of complex systems. A great book to get you started is Complexity: The Emerging Science at the Edge of Order and Chaos by Mitchell Waldrop, an easy to read and most entertaining book. It was my gateway to complex systems: