Marcie, DEC's current price includes the $30/share. When the buyout was originally announced, it was explained that the purchase price for DEC was $30/share and 0.945 CPQ shares for each DEC share. However, when the deal closes, and if CPQ is trading at $20/share, you will get the following:
Assume you own 1000 DEC shares.
You than will receive (($30,000 + (945CPQ Shares x $20)) = $48,900. So by selling DEC at $60+/share, one receives $60,000+ dollars now. Of course, if CPQ goes up to $40/share by the time the deal closes, one would make more than the $60,000.
In effect, DEC's current price is determine by CPQ's stock price. If, by some chance, the deal isn't closed, DEC will drop like a brick.
Tax is not a problem as DEC shares are in my IRA account.
I may buy CPQ back when it drops to $25 and the market corrects. Keep in mind that this market has risen like a rocket over the past few weeks.
Stock Bull |
