So David, Inel - What's the catch?
From Briefing the longer version:
As we cautioned earlier this week, while a deal was likely to get done between XLCT and Xerox, there was a possibility that it could be a take-under. That is exactly what has occurred. However, possibly in their haste to weigh the damage that the Intel warning has inflicted on their portfolios this morning, investors appear to be overlooking the fact that the acquisition agreements are all cash. As a result, a decline in XRX stock today would have no affect on the value of the deals. Hence, picking up INEL at its current price would appear to be an "easy money trade," with upside of approximately 5.7%, excluding transaction costs. Sometimes, the market isn't quite as efficient as you would think.
Volume is huge today. Already over 7M. So I guess the difference here reflects risk that it may not happen, current value of future transaction, opportunity cost of tying up capital and transaction costs. So it may be an opportunity, but not a huge one for me, I think.
Seriously, though thanks for pointing it out. It was worth a look. |
