Stefan, prior to the actual mix of stock and cash being disclosed the market usually centers around a discount of about 3-4% from the actual deal price (about 21 3/8 in this case). The people cashing out early (i.e., those selling yesterday at 21) lose a little more by not waiting. Since ALRI buyers can get more or less than $21.97 of value in the end of the period, the sellers give up a relatively
large premium (3%-4% over a month and a half).
Once we're into the period during which the average is calculated, the
value of ALRI moves in some proportional to the price of LGND (higher LGND = higher ALRI, lower LGND = lower ALRI). This is because the "average" value used in the calculation will include the "current"
price of LGND. The amount of the movement dependant on how much information is know about the exchange, and of course a degree of speculation about the final "average value". At all times, a buyer will normally need to be compensated for the risk associated with the time remaining to the conversion.
ALRI shareholders would love LGND to finish at its all time high on Nov. 3, contrary to what people have said previously. This would gaurantee a market value >= 21.97 for their shares on the open market.
But for the time being, with a small movement in LGND, you're probably expecting too much to see the price of LGND reflected in the price of ALRI. Also, remember, the people shouldn't really be concerned about number of LGND shares they get, only the present value of their ALRI shares.
Stew |
