STBI:TDFX Price Correlation
I ran an analysis of the correlation between the two stocks' closing prices since the merger was announced.
The proposed STBI:TDFX swap ratio will be 0.65:1. The measured ratio since the announcement averages out to 0.55:1, or a difference of about 10%. While this sounds out of line at the moment, I am confident the ratio will gradually get closer as March nears.
I ran the identical analysis on the numbers from when Alcatel (ALA) announced its buyout of DSC Communications (DIGI) between 6/4/98-9/4/98. The DIGI:ALA swap ratio was 0.815:1. For the first 13 sessions after their announcement (the same number of sessions since STBI/TDFX was announced), the average ratio was 0.71:1, also a difference of about 10% from the proposed actual ratio. As the finalization of the DIGI/ALA deal got closer, the measured ratio neared the proposed ratio, until it was essentially the same on the final pre-merger day. There were a couple of anomalous days in which the measured ratio diverged from its almost linear trend toward the proposed ratio, but these were days that the prices themselves had major percentage changes.
Keep in mind that while I'm confident the price ratio will eventually go to the proposed ratio (assuming the deal doesn't fall through), there's no guarantee that prices will go up. In fact, DIGI lost about three points from announcement to merger, and ALA lost about 4½.
Piranha |
