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Technology Stocks : Intersolv News
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To: Joe Casey who wrote (920)6/24/1998 11:45:00 AM
From: Arrow Hd.  Read Replies (1) of 1069
 
FYI gave the answer that most applies to any delta between the
acquirer's stock price and that of the acquired. What has somewhat
surprised me is that since the spread has not narrowed, and I think
15% is too large a spread, why havent the arbitragers stepped back in
and start shorting MIFGY and buying ISLI at the same time to lock in
the delta. 15% over 90 days is not a bad return annualized. The
answer again is the fear it wont happen. I think there is relatively
little risk to ISLI holders on a one year basis since if it happens
then I see at least 19 and if it doesnt happen I think we still see
19 based upon improving fundementals. But we will still have to put
up with a lot of volatility. If it doesnt happen the arbs have to
unwind immediately which involves wholesale selling of ISLI which
would drive it back to 13 and change. So this is the dilemma we are
in. I believe the merger will happen. What I am really concerned
about is MIFGY no longer selling at the higher multiple but coming
down to meet the multiples that a lot of the Y2K stocks are now
selling at not because this combination is Y2K dependant but because
that is the perception and perception becomes reality. MIFGY's 52
week low of around 26 still provides a multiple that is somewhat in
the ISLI, VIAS, etc. range. So this 32/33 level is key. I am very
anxious to see MIFGY test the 38 level and SOON. I think if it does
it will invoke selling in ISLI which could widen the spread but it
would demonstrate fundemental strength and it would calm the technical
types who watch the charts. If it breaks the 32/33 area then we have
problems and a longer wait with anything a possibility. So this is
a dicey situation for a lot of reasons.
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