What happened
Next-generation digital healthcare company Babylon Holdings (BBLN) went to great lengths today to quash rumors of a takeover. As a result, investors who were disappointed that the stock wasn't likely to pop on the announcement of a deal traded it down by over 5% on Tuesday.
So what
When companies want to dampen speculation of a buyout, they usually issue one tersely worded communication on the matter. Babylon published two.
Monday afternoon, one minute before market close, the specialty healthcare company went the terse route. It issued a two-sentence news release stating that "it is not engaged in nor has it had contact or discussions with any potential acquirer."
Then this morning, Babylon released an accompanying statement that strongly implied it'll continue on its own, thank you very much.
"Babylon will continue to take further steps and consider opportunities to maximize value for shareholders," the meat of that press release read. "The company's focus will remain on delivering on its promise, maintaining its quality and moving closer to profitability. Babylon believes the stock price will reflect these efforts over time."
The company is reacting to a report published by Bloomberg Monday morning. The article, citing "people familiar with the matter," said that Babylon CEO Ali Parsa has been engaged in preliminary discussions with a number of investors on how to shore up the stock price. Among the options being talked about, reportedly, is a deal with a strategic partner.
The article's sources did not identify any potential partner.
Now what
While Babylon has an intriguing business model and certainly shows potential, it hasn't been a very successful stock following its market debut last October. It's not unusual for a company in a position like that to consult with outsiders as to how to get the share price moving north again. So at the moment, any potential deal is pure speculation, and investors should be very wary about trading on this basis.
