Even worse, this negotiation has been going on for six weeks, and for all six weeks Livongo knew they were having huge revenue growth. Why did they even enter into the negotiations???
Would Crowdstrike, or Fastly, or Datadog, or Zoom, knowing that their business was growing at over 120%, enter into negotiations to be bought out??? Stop and think about that!
The only answer I have to that is that the stock price had already run up sooooo much that an additional 10% premium may have been good in light of that.
With that said, I also exited my 8.5% position at the market open this morning.
“I suspect TDOC was planning to enter the chronic disease space. With +51.5 million paying members already, compared to 410,000 for LVGO it was going to be a bloodbath. So instead of competing ferociously, they decided to merge.”
Maybe a noob question but why selling out of your position entirely and not waiting for the merger to be finalized? No conviction in TDOC bringing the kind of growth we’re all looking for at this board?
Maybe a noob question but why selling out of your position entirely and not waiting for the merger to be finalized? No conviction in TDOC bringing the kind of growth we’re all looking for at this board?
The combined entity is a slower grower. I’ve moved on the greener pastures.
As an owner of both LVGO and TDOC, and a believer in both their growth prospects, I took the opportunity to add to my TDOC holding at a 17% discount this morning. It appears to be bouncing off the day low. Hopefully this was a good long-term decision, but obviously only time will tell.
I just can’t imagine how the merging of 2 great, high growth disruptors is going to yield negative results when the dust settles.
I do not see this negative… it seems lot more positive to me.
remember TDOC also bought InTouch which deals with sensors in healthtech… imagine LVGO is able to offer additional services with InTouch sensors in many more situations…
TDOC’s own organic revenue growth accelerated through this pandemic and jumped above 80%… so it is not a throw-away company to look down upon… in fact, that level of growth belongs to the top tier of stocks favored by this board right alongwith LVGO…
10% premium may just be incidental as both these companies’ stock has been moving a lot in last month… quite possible when they did the deal and set the ratio, the premium looked quite different…
Seeing this 10% as proof of something wrong is just to shallow a look…
I see this deal as creating a behemoth in virtual health sector… which is probably needed and help accelerate both of these companies… .
I am impressed by TDOC CEO Jason Gorevic’s ability to relentlessly work on building TDOC and put together a real force in health care that can deal with entrenched forces like insurers and hospitals… you need a large size to be effective in this business…
wont be surprising to see TDOC coming up with its health insurance in not far future…
Not impossible to see such a company ultimately ends up with Amazon / BirkShire / JPM initiative of creating independent health services…
With LVGO being my largest position and I started buying TDOC after last earning, I may reduce my overall combined position for portfolio management but I intend to hold really large position in merged company… I see it as real answer to many of health care problems in this country and very positive by many angles.
Yesterday I grew tired of watching my limit orders for LVGO fail to be triggered because the share price just didn’t pull back enough. So I pulled the trigger myself yesterday afternoon, having failed to buy at much lower prices when I initially decided I wanted some shares. Lesson learned: easy to miss out on growth if you are waiting for a pullback. This strategy has served me well over the years, but not so much with hypergrowth cos.
So, I find myself in the situation of owning a piece of a company for less than 18 hours before it gets sold out from under me. Seems about right for the year of the pandemic! The share price has dropped a bit since the merger / acquisition was announced, suggesting that the market’s initial reaction is less than positive.
But what is behind the pullback? There seem to be a few reasons expressed here:
Some are selling because they don’t see sum being equal to the parts.
Some are selling for asset allocation reasons – don’t want so many eggs in a single basket, even if portfolio concentration seems to be the norm for many on this board.
Some are selling because, while they see the combined company as a decent investment, they don’t see it as a hypergrowth investment. In other words, they believe there are greener pastures elsewhere that make it worth the tax hit many will take, even if they pay short-term capital gains.
Some are selling because they don’t have the same confidence in the new management that they have in LVGO’s current management.
At the same time, someone is buying those shares that folks here seem to be unloading, and the dust is far from settled. I’ll continue to hold my tiny position of <.2% for the time being, if only to keep me paying attention. If others are adding shares at this point, I’d be curious to hear your thinking.
Looks like a 2nd largest Livongo shareholder is onboard with the merger.
Kinnevik Backs Teladoc Health, Livongo Health Merger
7:07 am ET August 5, 2020 (Dow Jones) Print
By Dominic Chopping
STOCKHOLM–Swedish investment firm Kinnevik AB said Wednesday that it supports the proposed merger between Teladoc Health Inc. and Livongo Health Inc.
Kinnevik is the second largest shareholder in Livongo, holding 13% of the outstanding shares and corresponding to 11% on a fully diluted basis. It has undertaken to vote in favor of the merger and retain the main portion of its stake in Livongo until completion.
Kinnevik will receive $143 million in cash and 7.5 million shares in the combined company, corresponding to a 4.5% economic stake on a fully diluted basis.
The merger consideration values Kinnevik’s stake in Livongo at approximately $2.0 billion in total, based on the closing price of Teladoc on August 4, 2020.
“With the proposed merger, Kinnevik recoups almost our entire invested capital in Livongo in cash, and becomes a significant shareholder in the only consumer centered virtual care platform for a full spectrum of health needs,” Kinnevik Chief Executive Georgi Ganev said.
The TDOC LVGO combo seems a stronger business proposition. Give advice hints nudges, if that does not work we have tele docs available. But stronger may still not be very good post Covid. The combined company will have to do great to warrant TDOC price. LVGO was getting close to saturating the insurance company market and TDOC has lots of local competitors, docs that can see you in person if needed and may be part of a trusted network. So I got out this AM.