Don't they just re-adjust the shares accordingly to the price they are willing to pay, which is where the 0.815 calculation would come into play.
No.
CNBC reported 20 million shares would be sold to pay for it by ALA,
20 million shares of ALA ($40/share) won't pay for much of this deal.
This is a pure stock swap. ALA price goes down, so does the value to DIGI holders. DIGI holders will get .815 ALA shares, period. Unless there is some provision to raise the .815 multiplier in the event of ALA collapse. I have heard of no provision. Both boards likely feel one is not necessary, as ALA will not tank, and the original premium was high to begin with.
Pulled from the press release (notice use of term implied value):
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, DSC
shareholders will receive upon consummation of the transaction 0.815 of an Alcatel ADS (American Depositary Shares) which
represents 0.163 Alcatel ordinary share, for each outstanding DSC share. Based on the approximately 125 million fully diluted DSC
shares outstanding and the closing price of Alcatel's ADS on Wednesday, June 3, 1998 ($43 7/16), the transaction has an implied value
of approximately $4.4 billion. This represents a premium of approximately 80 % over DSC's closing price per share on June 3, 1998 and
8 % over DSC 's twelve months high of $32.75.
Gary |
