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Strategies & Market Trends : Arbitrage Plays

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To: Allen Furlan who wrote (175)	2/16/2000 4:16:00 PM
From: Robert L. Jacobs	Read Replies (2) of 376

STRX discount to deal value widens. Can anyone shed some insight as to why the discount to merger deal value represented by the price of the STRX stock has increased to about 25% from about 21% earlier in the week?: $6.50/($22.31 X .3905) = 75%; i.e. 25% discount (I based calculations on the mean of the closing bid and asked prices today, 2/6, for both STRX and WAXZ.) Today, WAXZ was up $ 7/16, but STRX was off $ 5/16, rather than following WAXZ up as the deal value increased. This would normally be a sign that the market thinks this deal is in trouble. I can't figure out why it should be. A 25% discount for a deal that should close in a few months (with no financing issue, and I don't believe any antitrust issue) seems out of wack. Does anyone have any insights?

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