Lpath, Inc. (NASDAQ: LPTN)
Lpath Technologies is having an incredibly strong day in the market today, and for good reason. The company announced that it has entered into a definitive merger agreement under which it will be acquired. As we know, nothing seems to excite investors quite like acquisitions. So naturally, we’re seeing some strong movement in the stock in the current trading session. Today, we’ll talk about the acquisition news, what we’re seeing from the stock, and what we can expect to see from LPTN moving forward.
LPTN Announces Merger Agreement
As mentioned above, Lpath is having an incredibly strong day in the market today after announcing that it has entered into a definitive merger agreement. According to the announcement, the company will merge with Apollo Endosurgery, Inc. Following the acquisition, Apollo will become the majority shareholder in the company.
According to the agreement, The combined company will be owned with a split of 95.8% to Apollo and 4.2% to LPTN. Under the terms of the agreement, Apollo will be investing quite a bit of money into the new company. In fact, Apollo’s major investors have already committed to invest about $29 million of new equity in the combined company. Larger investors involved in the deal include PTV Healthcare Capital, H.I.G. BioHealth Partners, Remeditex Ventures, Novo A/S, and CPMG Inc.
It is expected that the transaction between the companies, creating the single entity will take place in the fourth quarter of 2016. When this transaction is complete, LPTN has agreed to change its name to Apollo Endosurgery, Inc. The company also announced that the new combined company will be applying to be listed on the NASDAQ Global Market under a new trading symbol.
In a statement with regard to the news, Todd Newton, CEO at Apollo had the following to offer…
“Executing this transaction with Lpath is an expedient way to introduce our company to the public market. With the additional equity support we will receive from Apollo’s major investors as part of this transaction, we will have the resources to meet our near-term business needs.”
That statement was followed up by Gary Atkinson, CEO at LPTN. Here’s what he had to offer…
“Following an extensive and thorough review of strategic alternatives, we have chosen to merge with Apollo because we believe the transaction provides Lpath stockholders with an attractive opportunity for value appreciation.”
How The Stock Reacted To The News
As investors we know that the news moves the market. In fact, news of acquisitions almost always leads to big movement. So naturally, LPTN is having a strong day in the market today. Currently (2:54), the stock is trading at $2.72 per share after a gain of $0.22 per share or 8.80% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see. What I do know is that LPTN needed to find a way to return value to shareholders, and they believe that they have done just that. So, overall the opinion is positive. However, once the merger takes place, it will be interesting to see how the new Apollo works out in the market. At the end of the day, this one will be an interesting one to follow!
What Do You Think?
Where do you think LPTN is headed moving forward? Join the discussion in the comments below!