Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Douglas V. Fant who wrote (21146)	5/2/1998 4:17:00 PM
From: Chuzzlewit	Read Replies (2) of 95453

Doug, I'm not sure, but you may be missing the point I was raising. OTOH I may be misunderstanding your post. When a merger occurs through a stock swap (forget cash consideration for the moment) you need to add the capitalized value of the two companies. That gives you the first cut at the numerator. Then you need to make the adjustment so that you are dealing with the same stock for the denominator, i.e. convert all of the CST shares to EVI and then add that to the number of EVI shares outstanding. That gives you the denominator. The numerator is always the tricky part in these deals. If the acquisition is accretive in the eyes of the street (i.e. has synergy) the total capitalized value will increase right after the acquisition is announced (less the PV of any cash payments which will need to be removed from the total capitalized value). Anybody reading this is probably so confused now, I think I'll stop. If you give me the numbers I can work out the math if you like. I need conversion rates, total shares o/s of each company, and the latest stock prices and expected cash payouts. TTFN, CTC

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