VLO: Valero Energy Corp. Message Board

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Gold/Mining/Energy : VLO: Valero Energy Corp.

VLO 181.78

+3.4%

Nov 14 9:30 AM EST

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To: Paul Senior who wrote (19)	4/25/2005 2:05:50 PM
From: Wyätt Gwyön	Read Replies (1) of 299

yes, the cash remains the same. according to the VLO PR: " Under the terms of the merger agreement, Premcor shareholders will have the right to receive either 0.99 shares of Valero common stock, or $72.76 in cash for each share". that is within the context of the overall deal consisting of "50% of consideration in cash--$3.43 billion" and "50% of consideration in stock--46.7 million shares". VLO also stated, i believe, that they expect to close the deal by year-end. if that happens, and to the extent that VLO is above the cash value, then it would seem to me that PCO should trade midway between the arb-adjusted cash value and the arb-adjusted 99% of VLO's current quote. the unknowns here are if the deal will get regulatory approval (VLO has the option to walk away free if the FTC tries to force a divestiture of Delaware, which is a key reason for doing this deal), and if another party outbids Valero substantially. there is a $150 million termination fee. i don't think there's a sliding scale such as you describe in this deal.

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