The following technical accounting question is I think highly relevant in assessing the likelihood that Lucent is actually discussing a takeover deal w/Tlabs, as rumored:
Can a deal that is planned, and then contracted for (with significant pre-closing conditions), well before the end of the two year post spin off "black out" period for pooling of interest treatment for subsequent mergers, but not closed until after the expiration of that period, qualify for Pooling treatment?
Surely there are some public company accountants on this thread who know, or can readily look up, the answer to this question. (I SUSPECT, using my securities attorney instincts) that the answer is NO, pooling denied for any deal inked before end of period.)
That, sports fans, is the nub of the issue. If the answer is no, in my opinion any rumored discussions are highly unlikely. The difference in accounting treatment for a 14 billion acquisition is that dramatic.
(By the way, I consider purchase accounting treatment of most mergers to be academic idiocy that very poorly reflects the economic realities of the entities which are cursed with such treatment.) Savvy investors evaluate companies that have been hit hard with such treatment in ways (they look at cash flow) that avoid the stupid accounting effects on earnings per share; nonetheless there is a substantial share impact, especially when only some companies in an industry, rather than the whole industry, feel major impact from these rules.
Doug |
