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Gold/Mining/Energy : Mirant Corporation (MIR)
MIR 26.95-0.2%Jan 16 3:59 PM EST
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To: Gary Stern who wrote (723)9/3/2002 1:58:06 PM
From: Oeconomicus  Read Replies (1) of 903
 
The offer is for only 19.7 million shares, 4.9% of outstanding, while the float is 400 million shares. If you assume that any rational person would tender their shares as long as the price remains significantly below the offer, then you must also assume that all but a few of those shares tendered will not be accepted.

Also, the PR said that share certificates actually sent to the depository agent go to the front of the line and book-entry shares get accepted only after all physical certificates. I'd think institutions would be more likely to have their shares registered and have a physical certificate (or be able to get one quickly) compared to the average Joe with shares held in street name at his broker.

To buy today and then immediately tender, you'd have to assume that you acted fast enough to be near the front of the potentially very long line. Seems a bit too uncertain a payoff for arbs and hedge funds to jump all over it.

Lastly, the market's down sharply - focusing on other, less positive things.

What I wonder, though, is why they wouldn't just accumulate their 4.9% in the open market over a period of weeks instead of paying a 25% premium in a tender offer. Avg volume is over 5 million shares a day - surely they could get a better avg cost than $4.97.
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