Alski,
I'm not a financial expert and I think I stated this earlier on.. but there are some glaring oversights - I believe. The one I've pointed to is:
The pooling issue does not apply to cash purchases and given COMS cash position I believe the pooling assumption becomes a non-issue...
But also the writer has made other assumptions which I think are a little too black and white... I for one am not an expert here but I think we owe it to the FASB to do the required due diligence... our assumptions and opinions are just that...
What about...
it is well-settled that an "equity carve-out," of the type planned by Palm Computing, will be more successful (from a pricing
viewpoint) if, at the time of the offering, the market is informed that the subsidiary will, via an ensuing spinoff, become an independent
entity
Well, EB has not committed to this... leaving open the possibility that the remaining 80% is not distributed.
The rules also prohibit the spinoff of a corporation where control of that corporation was acquired during the five-year predistribution
period. In this case, 3Com acquired control of Palm Computing in 1997.
Well, COMS hasn't had control of PALM for 5 years yet... the writer states as much...
However, to qualify for pooling, there can be no "intention or plan" to dispose of a significant portion of the assets of either combining
company within two years after the combination,
This is at the core of the second argument I've made... that pooling (which the writer doesn't define at all) can only be used for a company planning to divest a portion of the company. This leaves an acquisition open to a suitor that doesn't wish to divest assets. SO the two year rule only applies to those suitors that have product overlap probably. THis has been a problem for COMS in the past and probably the only reason they haven't been purchased already.. in fact I've been making this very argument since September. BUT, with their cash position this issue changes. A suitor, given the cash reserves would now be willing to hold undesirable business for 2 years. The cash makes the decision easier. This is the problem with looking at this from a financial position only. Still...
other than disposals in the ordinary course of business or to eliminate duplicate facilities
or excess capacity.
Product overlap will be handled via anti-trust and become a non-taxable and legal divistiture.
I think there are a few other assumptions the writer has made that are not written in stone... this is problem with business accounting practices and business law... It's simply not black and white and there are all kinds of issues which I believe could be argued with the writers position.
OG
OG |
