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Ebb & Flow

ID Biomedical'sdecision to raise $100 million in a bought deal less than a week after pulling a proposed follow-on because it thought the price too low could have left some scratching their heads. The deals were remarkably close in price, especially after accounting for the warrants IDBE sold in the bought deal.

Indeed, the bought deal also dilutes shareholders more than the follow-on would have, even though IDBE had said the follow-on did not make sense for its shareholders at the prices being discussed (see "ID Biomedical Chronicles").

The shunned follow-on price was not disclosed, and IDBE has only said that it was substantially below current market prices at the time. But according to Canaccord banker Jean-Yves Bourgeois, the proposed price of the follow-on and of the bought deal were "pretty similar." Canaccord co-led the final deal along with original follow-on banker CIBC World Markets, and also was on the follow-on syndicate.

Bourgeois said the bought deal price "was a tad higher." At the end of the day, IDBE sold 5.8 million units at $17.37, less than $1 above its price of $16.42 on Oct. 2 prior to pulling the follow-on. In the bought deal, IDBE sold units consisting of a common share and a half-share warrant, with each whole warrant exercisable over four years at $25.

Backing out a value for the warrant brings the price down, depending on the discount rate applied to the likelihood the warrant will get in the money. Scuttlebutt suggests the warrants are worth about $2 each. Backing out the implied half-warrant value brings the price of the common share in the unit to $16.37, which is $0.05 below its price prior to pulling the follow-on.

However, IDBE's goal was to raise $100 million - which it would not have been able to do in the follow-on. Canaccord approached the company with a bought deal that would.

"We were interested in raising $100 million. Canaccord came to us with a bought deal and

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