Once the exchange ratio is set in a straight stock-swap buyout, it no longer matters what PMCS stock does, up or down. No cash costs are involved. It costs PMCS xx.x% of the company (calculated from the number of shares outstanding) no matter what the stock does.
In fact, as PMCS's stock price rises, FUTURE stock swaps become less expensive since the 'stock currency' is more valuable.
However, the date the exchange ratio is set, the cost is also set. The exception is if the exchange ratio has collars. (I believe this one has no collars.) With an upper collar, if PMCS stock went above a certain price, then the exchange ratio starts to get adjusted downward, making the deal better (less costly) for PMCS.
Again, for this buyout, the cost to PMCS is not dollars cash, but percent of the company value. Whatever the stock price does, the percent of value of PMCS is fixed. |
