Long-time RGT holder here. Have worked in crypto since the 2015. I was an m&a banker in New York before that.
I respect both the FEI and RGT teams and believe the sum of FEI + RARI can be far greater than its parts. But this deal is dog.
Here are some basic facts:
RGT is down 25% since the announcement of this deal. It is down even more in terms of ETH. So the price decline is not solely due to broader market movements
i.e., this deal destroys value for RGT holders versus running the protocol as a standalone entity.
The buyout price GFX proposed was based on a token price that was depressed from the announcement of this deal. i.e.,
FEI + RGT announced this deal
GFX appointed itself a "neutral" broker
GFTX priced the RGT at a discount to its stand-alone value before the deal was announced
So, RGT token holders would have been better off selling their tokens on Coinbase or Uniswap before this deal was announced or before GFX proposed a price. i.e., Nobody would have sold at the price proposed by GFX before this deal was announced and GFX proposed a price.
3. The original Reverie and Llama price proposal included a cash-out for RGT holders at a discount to the market price. Again, this is less than token holders could have received selling RGT on Coinbase or Uniswap.
This is value destroying to RGT holders and transfers value to holders of TRIBE.
The buyout price is paid in TRIBE. This is not USDC or ETH. It is a governance token with less liquidity that can only be sold into the market in size at a substantial discount to market price.
RGT holders are giving up control of their protocol in exchange for a minority interest in TRIBE. This usually requires a premium to market price because it effectively makes all holders passive minorities.
There is only a discount here.
TRIBE holders have an exit right but RGT holder do not. This offers RGT holders no minority protections, while giving extra rights to TRIBE holders who will remain in control. This is highly unusual (if not unheard of) because controlling holders can just sell their tokens in the market.
Exiting RGT holders can be expected to dump into the market, furthering depressing TRIBE and RGT prices into and after the deal because of the deal structure.. This will destroy more value for RGT holders.
Investment banks work for the target (or the acquirer) and their job is mostly to get a good price in the deal. Usually, an investment bank does this by running an auction, reaching out to potential acquirers, vetting deal structures and creating a competitive process to fetch the highest possible price. This is especially common when the bank represents a target that will become the minority.
GFX does not appear to be doing these things for RGT here.
Investment banks also give an opinion that the buyout price is fair and take legal liability for it. This is critically important in traditional finance because of concerns that management or a conflicted shareholder will sell the company at too low a price. It is needed to protect minorities.
GFX does not appear to have done this.
The teams are conflicted through cross-holdings of TRIBE and RGT. Their incentives do not match those of regular token holders. In the meatspace world, there is substantial corporate law designed to protect minorities in these situations. There are no protections here.
Some insiders were notified of this transaction before announcement and could sell their RGT. Regular holders could not. This means that certain team members, VCs, and advisors could front run this deal and exit when the price of RGT was still high. Regular RGT token holders could not.
Again, there is substantial law to prevent this sort of behavior in the meatspace world.
And I could go on, but do I really need to?
This deal cost RGT holders 25-50% in USDC or ETH vs pre-announcement. GFX, Llama and Reverie are not acting in the interests of RGT holders.
Let kill this deal or replace it with something that actually creates value for both protocols and gets RGT holders at least the pre-deal, stand-alone price of their tokens!
