From the WHT message board at Yahoo! -------
Small effects of today's announcement
by: irishlass797
Long-Term Sentiment: Strong Buy 02/07/05 08:50 pm
Msg: 179861 of 179880
Let’s do a little unscientific math analysis of the effect on all three merger players of today’s new proposed offer by Glamis to Goldcorp:
The three players closing prices on the trading day before the new offer announcement, and on the trading day after the new offer announcement (today), were:
WHT = 3.29; 3.11
GG = 13.89; 13.42
GLG = 16.36; 15.80
Anyone who is trading these stocks would be closely watching the ‘spread’ between the company’s actual trading price and the price at which it would be trading if the proposed merger succeeded.
On the first trading day noted above, WHT’s actual closing price was 3.29, and, if the WHT/GG merger were to go through, it would have been worth 13.89/4=3.47. So the ‘spread’ between the two prices was .18.
On the first trading day noted above, GG’s actual closing price was 13.89, and, if the GG/GLG merger were to go through, it would have been worth 16.36x.89=14.56. So the ‘spread’ between the two prices was .67.
Today, after the new GLG offer announcement, WHT’s actual closing price was 3.11, and, if the WHT/GG merger were to go through, it would have been worth 13.42/4=3.35. So the ‘spread’ between the two prices was .24. An increase over yesterday of .06, or 33%.
Today, after the new GLG offer announcement, GG’s actual closing price was 13.42, and, if the GG/GLG merger were to go through, it would have been worth 15.80x.92=14.54. So the ‘spread’ between the two prices was 1.12. An increase over yesterday of .45, or 67%.
The percent increase in the spread between GG’s actual closing price today, and its theoretical value, should the GLG/GG merger consummate, was TWICE the percent increase in the spread between WHT’s actual closing price today, and its theoretical value, should the WHT/GG merger consummate (67% vs. 33%).
Which at least suggests that, if anything, the new offer announced today caused little or no positive response in trading, and, if anything, appeared to be a negative influence.
I’m still banking on the WHT/GG merger going through, and the market doesn’t appear to believe that Glamis has upped its chances of acquiring Goldcorp by adding its paltry new three-cent incentive. You can’t make a silk purse out of a sow’s ear, so matter how you continue to embellish it.
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