KAD,
Last time I checked DEC was at 56-9/16 but according to the deal it should trade at approx. 58-3/8=$30+(30-1/8*.945) so you see there is a difference that is close to $2, this is what the Arbs. are playing with by shorting CPQ and buying DEC. I think this is what u should do:
Example: Short CPQ 1000 shares==========> -$30,000.00
Buy DEC 1000 shares==========> +$56,000.00
At the closing of the deal you will get $30,000 cash(you cover your short with this) + .945*30*1000= $28,350.00=> your total recived will be $58,350.00, your profit will be $58,350-56,000=2,350.00. I think this how it works.
pierre |
