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Technology Stocks : Benchmarq Micro(BMRQ)
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To: bruce bell who wrote (297)3/23/1998 10:30:00 PM
From: Greg Thornton  Read Replies (1) of 313
 
The best way to answer your question is to discount the other two possibilities:

1) BMRQ will not trade for more than the value of UTR because it is worth at most one share of UTR (assuming one for one swap will occur in the future).

2) BMRQ will not trade for the same price as UTR because there is a small chance that the merger will not go through.

Hence, the stock trades below the price of UTR. The amount below is a function of how sure the market is that the merger will go through. You notice that today the spread between BMRQ and UTR is wider than it was yesterday -- this is because the bad news that BMRQ released makes it a little less likely that the merger will go through as planned.

As we get closer to the merger date (when it is announced) the price of BMRQ will more closely follow that of UTR.

For now, we are lucky to have the merger going for us, because if it was not still in the works (and mentioned as ongoing in the BMRQ announcement) BMRQ would have really tanked today, probably down to the $12-$13 level or lower. The fact that UTR held up today kept BMRQ from tanking. If you noticed, BMRQ saw its worse levels early this morning before UTR was open for trading (seemed like at least a 15 minute delay).

Greg
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