John and Thean
I spoke to the CFO of HDTC and to the CFO or his representative of RESP to confirm the terms of the merger. Each of them confirmed the terms that I posted. Your math is correct, but let me give an example in which you don't get the $24 value.
Remember the conversion ratio is based upon the average price of RESP for the 20 days before three days before the merger date. Thus if the AVERAGE price of RESP is 29, the conversion rate would be 24/29 or .8276. If on the effective date of the merger, RESP had fallen to $26, you would get value of $26*.8276 or about $21.5. Of course the reverse could happen, too, $26 average price with a $29 closing price would yield $29*.92 or $26.68! If you believe in RESP, it looks like a good speculation to buy the HDTC. The reason given (in Dow Jones) for HDTC's non-reaction is the antitrust concern. Each company confirmed it expected to make the Hart Scott Rodino filing with the FTC tomorrow or early next week. The FTC has 30 days to rule on the merger. It can ask for additional info and delay its deadline. If it sees no problems, we should know before Christmas if the merger is a go from the FTC perspective, then, if not sooner, HDTC should move much closer to the $24 price. |
