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Technology Stocks : Qwest Communications (Q) (formerly QWST)
Q 82.62-1.6%11:24 AM EST
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To: Jerry Miller who wrote (607)1/17/1998 1:14:00 PM
From: nic  Read Replies (1) of 6846
 
these concerns that QWST trade at a certain price, at a certain time so that this deal can go though seem, to me, something less than a genuine concern for shareholder value.

I wouldn't worry - it's standard practice in such deals. What it essentially says is: "QWST & PHX agree that at this point, $60 is fair value for QWST, and $.79 is fair value for PHX." Should QWST be valued very differently when the merger is closed, the deal will be adjusted to compensate - the assumption being that such a deviation would result from swings in the market rather than new fundamental developments with QWST.

Note that the merger is in no way conditioned upon QWST share price - there is only an automatic adjustment in the value of the deal. Another way of looking at it is: QWST is willing to pay more than 28.5M for PHX in case its share price goes above 67.5, and correspondingly less if it goes below 52.5. Thus PHX shareholders assume some of the QWST speculative risk, which serves to align their interest with that of QWST. Standard practice for this sort of thing.

What I can't figure out is what purpose those weird buffer zones (47.5-52.5 and 67.5-72.5) are supposed to serve...

- nic
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