Talaris Therapeutics (NASDAQ: TALS) stock should rise 1,000% at the open today. TALS stock should also fall by $15.118. It’s the combination of the two that will lead to the final and new stock price level for Talaris. This is all a part and parcel of the merger with Tourmaline of course.
As to what’s done at Talaris: “Talaris Therapeutics, Inc. operates as a late-clinical stage cell therapy company in the United States. The company engages in developing a method of allogeneic hematopoietic stem cell transplantation to transform the standard of care in solid organ transplantation and severe autoimmune diseases, as well as severe blood, immune, and metabolic disorders.”
Today’s stock price moves really aren’t about that at all. Rather, this: “Talaris Therapeutics has entered a definitive agreement to merge with late-stage clinical biotechnology company Tourmaline Bio. The merged company will operate under the Tourmaline Bio name.” That’s a slightly complicated deal which is leading to the two varied changes.
Talaris Therapeutics stock price from Google Finance
The complexity is: “Talaris added that the merger deal calls for a special cash dividend of $1.5118 per Talaris share. As a result of the reverse stock split, shareholders of record as of Oct. 16 who hold their shares until market open on Oct. 20 will be entitled to a dividend of $15.118 per share of the combined company’s stock.”
So, there’s the merger, along with the return of excess capital to stockholders. OK. But with the price around $2.70 and a $1.15 cash dividend, that would put the combined stock price quite close to the $1 minimum bid price for Nasdaq and the continued listing on that market. So, necessary to do something to raise that nominal share price. Well, not necessary, but wide perhaps. So, declare a reverse stock split. 10 old shares become one new one. So, mechanically, the stock price rises 1,000% or 10x. To, perhaps, $26 or so (we’re using rough numbers here). Then pay out the $15 cash dividend, the final stock price for TALS will be in the $10 to $11 range.
It is all a little weird and complex but each stage is sensible enough in itself. There’s no point in having the merger at a nominal stock price that leads to losing the Nasdaq listing after all.
So, yes, Talaris stock should rise 1,000% today and then drop $15 as well.
