Trxade Health (NASDAQ: MEDS) stock is up 68% this morning. This is all in reaction to a deal announced Friday: TRxADE HEALTH (NASDAQ:MEDS) said on Friday that it had signed a binding letter of intent to acquire Superlatus. After the closing of the deal, Superlatus shareholders will receive 3.8M shares of MEDS, valued at $58.61/share.
Other significant closing conditions for the deal include the acquisition of Sapientia by Superlatus. MEDS plans to shift its focus and branding after the merger, and divest its existing operating business and assets.
And, well, that might be very exciting but it's not, not in a real sense, the acquisition of Superlatus by Trxade Health. That's the takeover of the MEDS quotation by Superlatus. It's a reverse takeover, not a takeover. Think on it - who owns the vast majority after completion? That would be the current owners of Superlatus. So, who is taking over whom?
Trxade Health share price from NASDAQ
This is, of course, only one part of the price excitement at MEDS. Last week we had this about Trxade Health: “The explanation is here: “ TRxADE Health, Inc. (Nasdaq: MEDS) (the “Company”), on Monday announced that its board of directors has approved a 1-for-15 reverse stock split of its common stock. The reverse stock split will take effect at 11:59 p.m. Eastern Time on June 21, 2023 and will be effective at the open of business on June 22, 2023 (the “Effective Time”). As a result, at the Effective Time the Company's 10,210,878 outstanding shares of common stock will be reduced to 680,726.””
We should probably accept that this was part of the same overall deal.
The real interest - in the wider sense at least - here is that SPAC companies were supposed to have taken over from these sorts of reverse takeovers into shell companies. That the reverse takeover is now reviving - this is the second we've seen in the past week. The earlier one was Aeglea Therapeutics.
We do think this is interesting. There are hundreds of SPACs still, all looking for a deal, yet the reverse takeover is now taking place again. So, why? One answer could be that the shine is coming off the whole SPAC idea. Another could be that these are deals too bad even for a SPAC to consider. No doubt we'll find out which is correct soon enough.