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Rare Merger

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The story goes like this: a venture capitalist buys a public air conditioner company and sells off all the assets, changes the company name, changes the Nasdaq ticker symbol, and changes the company to a Web consulting shop. Stock price rises to $90+ and then later falls to one dollar and some change. The air conditioner maker turned Web consultant loans $50 million to a wireless network builder who uses most of the money to buy the Web company that just loaned them the money.

That’s the saga of Rare Medium in a nutshell. Motient, the aforementioned wireless company, is using $13 million of the loan to buy Rare. Motient will essentially pay themselves back another $25 million of the loan once the merger goes through. And in all of this, Motient gets the substantial cash that Rare has in the bank, which is $100+ million.

It’s not often that a company pays you to buy it.


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