Shares of Semler Scientific (SMLR) finished at $32.06, significantly below the $86.30 implied value associated with its recent all-stock acquisition by Strive (ASST). This disparity has been noted by Benchmark analyst Mark Palmer, who attributes the current share price to both skepticism surrounding the deal and potential opportunities amid a rising trend in bitcoin treasury mergers and acquisitions.
Palmer maintained his buy rating on Semler but lowered his price target for the stock from $101 to $86 to align with the terms of the Strive acquisition. The deal features a fixed exchange ratio of 21.05 Strive shares for each Semler share, indicating a lucrative arbitrage opportunity for investors. Crucially, both companies’ boards have already approved the deal, which Palmer believes may not fully reflect the long-term benefits of consolidating companies with substantial bitcoin holdings.
Strive, which recently announced it possesses 5,886 bitcoin, would acquire Semler’s 5,021 BTC, resulting in a combined total of 10,907 tokens. This quantity would position them as the twelfth largest public entity holding bitcoin, trailing only the company Strategy, as highlighted in the report.
In addition to expanding crypto reserves, the merger would transfer ownership of Semler’s diagnostics business to Strive, with the plan to monetize or potentially spin off this asset post-transaction. This cash-generating business could provide Strive with more operational flexibility than companies focused solely on bitcoin acquisitions.
The merger represents a significant step in what Benchmark anticipates will lead to a broader trend of stock-for-stock bitcoin treasury mergers. By utilizing its equity, Strive is attempting to acquire BTC at beneficial prices while avoiding the risks commonly associated with debt-financed strategies, such as maturity and margin pressures.
However, several risks accompany the deal, particularly the need for a successful S-4 registration and subsequent approval from Semler shareholders. A sharp decline in either Strive’s share price or bitcoin’s value before the shareholder vote could complicate the situation. As noted in the report, if Strive’s share price drops significantly leading up to the vote, it could reduce the implied value for SMLR, potentially leading to renegotiation or worsening arbitrage conditions.
In premarket trading, shares of SMLR saw a 2.5% increase, rising to $32.86, while shares of ASST fell by 4.9% to $3.90.
