Singapore eDevelopment's (SeD) share swap with a New York-listed company has gotten shareholder approval from both sides.

So what is the value of the shares of Document Security Systems (DSS) that SeD will receive?

To back up a bit, Global BioMedical, a wholly owned subsidiary of SeD, sold all the shares it holds of Impact BioMedical, its wholly-owned subsidiary to DSS via a share swap. 

On 26 June 2020, SeD shareholders approved the share swap, as did DSS shareholders more recently, on 10 Aug 2020.

The total consideration is US$50.0 million.

It is fulfilled by DSS through a combination of issuance of new common stocks and perpetual convertible preferred stocks in DSS.

So what is the current market value of these?

SeD gave an illustration:

1. Based on the assumption that there is no prescribed conversion limit, should Global BioMedical convert all 46,868 perpetual convertible preferred stocks it owns, it will receive 7,232,716 new DSS common stocks.

2. Based on a recent price of DSS of US$10.46 per share, an aggregate of 7,716,050 DSS common stocks (inclusive of 483,334 DSS stocks issued upon completion of the Transaction) represents a market value of US$80.7 million (S$110.6 million). 

Note that the trading price of DSS has been quite volatile in recent times.

In comparison, the market cap of SeD is S$129 million based on a recent share price of 8.3 Singapore cents.

The value of DSS will, in future, track the value of Impact Biomedical if and when it goes for a listing (more on that below), as well as its stake in a network marketing company, Sharing Services Global. (See Seeking Alpha article: DSS: $12 In Cash And Equivalents Trading $8 With A Covid-19 Kicker )

ChanHengFai SeDChan Heng Fai, Chairman and CEOExecutive Chairman and CEO of Singapore eDevelopment Limited, Mr. Chan Heng Fai, said, “As we enter into the final phase of the proposed share swap with DSS, this pivotal milestone marks the beginning of a new era of growth for the Group.

"The newly formed strategic relationship with NYSE-listed DSS will not only allow us to unlock value from and realise the full potential of Impact BioMedical without further investment of crucial cash resources, but also serve as a platform for the Company to establish itself as a global corporation.”

Following the completion of the share swap, DSS has indicated plans to take Impact BioMedical public in an initial public offering.

The Company had on 23 April 2020 announced that Impact Biomedical’s ownership of its suite of antiviral and medical technologies had been valued at US$382.0 million (S$542.0 million) by Destum Partners, known globally for its high level of expertise and capability in independently valuing and advising on pharmaceutical technology.

On 1 June 2020, the Company further announced that it had received a valuation of US$933.0 million (S$1.32 billion) for Impact BioMedical’s ownership of its suite of technologies from a different independent valuation firm.

Unlike the previous valuation, the new valuation took into consideration numerous additional disease applications of the suite of antiviral and medical technologies.

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