As I write this, the valuations on Coinmarketcap would seem to imply a naive marketcap-based allocation of about 10% to PTS, 10% to AGS, and 80% to BTSX. Here is a summary of the main reasons why this would be grossly unfair to PTS/AGS:
1. The proposed merger is in essence like an unsolicited takeover, to use the company metaphor, and PTS and AGS are not being given a chance to vote their approval. (I don't call it a "hostile" takeover because there is no management team for PTS/AGS in place to oppose it). Academic studies of large samples of corporate takeovers have shown that unsolicited takeovers typically require substantial premiums, say 40% or more, above the average pre-offer share price.
2. The coinmarketcap valuation of PTS likely understates the true fundamental value of Protoshares (and, by extension, Angelshares). This is because PTS is far less liquid than BTSX. Whether you look at dollar volume of trade or the order book on BTer, the conclusion is the same: PTS has a large built-in illiquidity discount relative to BTSX.
3. The proposed merger would basically discard the original social consensus (and perhaps try to forge a new one). The social consensus is an inherent property of PTS and AGS, and BTSX has certainly derived some value from "free riding" on it. None of what we have now would be possible without the cornerstone laid by PTS and AGS. Getting rid of the social consensus has a price that should also be factored in.
4. The new BTS entity being formed is not just BTSX 2.0. It is a much broader conglomerate that goes beyond banking and exchange. From this perspective, it is more like a merger of equals than a one-sided acquisition. Based on Bytemaster's recent views, we can expect that (1) a separately developed VOTE DAC would achieve a valuation equaling or exceeding BTSX, and (2) in the future, with a trillion dollar industry, the value would be spread evenly among a dozen or so different DACS rather than being concentrated in BTSX.
So, PTS and AGS should be fully compensated for the substantial value that they are giving up. A simple example may help illustrate. Suppose that, without the merger, eventually BTSX = 100 and VOTE = 100. Suppose conservatively that all future DACS, large and small, would together be 200 (we can exclude DNS and MUSIC since the snapshots already occurred and we're focusing on future valuation). Now suppose that, with the merger, the combined BTS is 250 (there are additional synergies from eliminating competition between BTSX and VOTE). Finally, let's suppose chains inherit 10% (or 20% in the case of BTS).
Scenario A: a merger and a 80/10/10 allocation of BTS:
BTSX gets: 80%*250 + 80%*20%*200 = 232
PTS/AGS get: 20%*250 + 20%*20%*200 = 58
Scenario B: without a merger, VOTE is developed as competitor to BTSX, and PTS, AGS each get 30%:
BTSX gets: 100
PTS/AGS get: 60%*100 + 20%*200 = 100
The gains from the merger in Scenario A should be measured relative to values in the no-merger Scenario B, which is the default/fallback outcome (i.e., what would happen if the merger were not feasible). The relevant issue is, how much do parties gain or lose from choosing Scenario A versus Scenario B? Even if you adjust the numbers a bit, it's clear the 80/10/10 is woefully inadequate to compensate PTS and AGS for moving to Scenario A from Scenario B. And it becomes even more unfair the greater the assumed value of all future DACS.
So, the bottom line is, absolutely the merger should be done. It will yield great benefits in terms of branding, marketing, and incentives. But let's make sure we compensate PTS and AGS fairly and generously for the right to buy them out and eliminate them from the face of the earth.
Topic: What does a fair allocation of Bitshares to BTSX/AGS/PTS holders look like? (Read 24274 times)
