Compaq Message Board - Msg: 4023310

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Technology Stocks : Compaq

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To: Satyr who wrote (24175)	4/10/1998 12:40:00 AM
From: SDNA	Read Replies (2) of 97611

"The price of CPQ has nothing to do with the deal" How can you say that right after saying... "It calls for $30 and .945 shares of compaq for every share of DEC no matter what the price" The .945 part is what is affected by the price of CPQ stock on closing date, and that in turn affects the goodwill amount that may affect earnings depending on how it is treated..... In short, the price of CPQ stock does affect the value paid for DEC.. At the announcement date, the value of the deal was $9.5 Bil, right? At today's closing, the value of the deal is reflected by DEC's closing price times outstanding shares of about 147 mil shares, which is a bit over $7.5 bil. Even though that is a bit lower than the total of $30.00 cash plus .945 CPQ stock at today's price, the difference is what those arbitrage experts have been talking about in several occasions and different magazines... If the price of CPQ's stock did not affect the value of the deal, DEC's price would have been constant since the announcement...like in all cash deals.

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