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Biotech / Medical : Somatogen (SMTG)
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To: jim thompson who wrote (433)3/10/1998 8:20:00 PM
From: John   of 442
 
Hey everyone! Does everyone realize that every time BAX stock goes up, we will get fewer BAX shares if this deal closes? Meanwhile our shares of SMTG are essentially locked up for months.

It is often possible to negotiate a conversion rate with protection on the downside for the target's shareholders which also allows them to keep the upside. In other words, if BAX stock dropped after the deal was reached, but before the closing, then the SMTG shareholders would get more BAX shares to make up the difference. If BAX stock went up instead, then SMTG shareholders would get that upside. It would make perfect sense in this case, where, ironically, the more of a steal Wall Street thinks BAX is getting, the more BAX shares rise, and the fewer shares SMTG shareholders get on closing day.

Anyone else voting no?
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