Are we having fun yet?
Before we get started let’s review some facts regarding the proposed Livongo Teladoc merger and notice we said proposed merger as this is far from a done deal.
1. The Street hates this deal. The trading isn’t over yet but again today shares in both companies continue to sell off.
2. No one inside the diabetes community can believe Livongo pulled this off as they like us knew this house of cards would eventually collapse.
3. It’s beginning to dawn on people that Teladoc is vastly overpaying for Livongo.
Now here’s where the fun begins as the Street aren’t the only unhappy campers. Today two law firms have initiated investigations into this deal. Per respective press releases;
“Halper Sadeh LLP, a global investor rights law firm, is investigating:
Livongo Health, Inc. (NASDAQ:LVGO) concerning potential violations of the federal securities laws and/or breaches of fiduciary duties relating to its sale to Teladoc Health, Inc. Under the terms of the agreement, each Livongo share will be exchanged for 0.5920x shares of Teladoc plus cash consideration of $11.33 for each Livongo share.
Levi & Korsinsky, LLP Notifies Investors of an Investigation Regarding Whether the Merger of Teladoc Health, Inc. and Livongo Health, Inc. is Fair to TDOC Shareholders”
Given that it’s still early in the day who knows if other shareholder rights firms will jump on the let’s investigate and possible initiate a class action lawsuit bandwagon. Frankly as we noted before we aren’t surprised that Teladoc shareholders aren’t doing the happy dance as besides vastly overpaying for Livongo and watching their investment in Teladoc shrink. They get a double whammy given the dilution they will experience IF this deal actually closes.
Now we won’t lie as we are truly enjoying all of this as ironically we could be right twice about Livongo. From the start we said one of two things would happen, either Livongo gets bought or they become the greatest short ever. Well as it turns out we were right they would get bought and could be right a second time for should this deal collapse shares of Livongo will collapse making it the greatest short ever. Listen Momma Kliff was already proud of her son but should this scenario develop even Mom would be impressed and impressing Momma Kliff is not easy.
About the only people happy about this deal, other than the folk at Livongo a happiness that could turn to sadness in a hurry – are the other players in digital health and of course the lawyers. Should this deal collapse these digital health companies who have seen their valuations skyrocket overnight will experience a reversal of fortune. A fortune that would be shifted to the lawyers should they proceed and win their lawsuits.
We can only imagine what’s going on at Teladoc as the euphoria they once felt has turned to trepidation. Not like we have any sympathy for the Teladoc CEO, but he’s got to be thinking how the hell does he get out of this mess without looking like a complete idiot. Therefore we shall offer some great advice from none other than brother Blutarsky who famously said; “My advice to you is to start drinking heavily.”