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Technology Stocks : USRX
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To: Cogent who wrote (16881)3/26/1997 10:53:00 PM
From: Dwight E. Karlsen   of 18024
 
Cogent, you will excuse if no-one is quick to answer your question re the "discount" that USRX trades at with COMS below the 1.75 exchange rate. USRX has been trading at a 2-1/4 to 2-1/2 point discount since the first couple of days after the merger was announced, and this subject has been debated extensively on this thread. The consensus seems to be:

1) No-one knows for sure why the market does what it does.

2) Most probably the discount has to do with the fact that since the various regulatory agencies have not yet signed off their approval of the merger, the deal is not a "sure thing", and therefore a full 1.75 exchange ratio is not justified yet.

3) Merger & acquisition trading specialists are most likely causing this effect.

Whatever the case, we do know that this is a temporary phenomenon: If the merger goes through, USRX shareholders will receive 1.75 shares of COMS per USRX share. If the merger does not go through, the stocks will go their own ways.

DK
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