Can someone explain how merger work, please. Assume LU buy ASND for 14B done deal, that make ASND value around 70, but LU price at that time let say 69,can it happen? I don't want to think of 1 ASND for 1 LU :-).
Assuming LU purchase Asnd via the "polling" method:
At the time of the announcement, if LU's stock price is $70, and the term of the "stock"(not cash) purchase is One LU for One Asnd; then the purchase price, at that point, will be "artificially determined" to be $14B.
However, when market opens and both stocks start to trade, Asnd's share price will follow LU's accordingly until the date of merger completion. (There will be some Arb. difference and Asnd will trade LESS than LU)
For example, after the merger announcement, if LU goes up to $80, Asnd will follow and trade "close/(but less)" to $80, if Lu drops to $60, then Asnd will trade close(but less) to $60.
If the merger ratio is One Asnd share for .8 LU share, all the above calculations will follow accordingly. |
