Barbara, I disagree that the drop was due to arbitrage. Let's do some more arithmetic. Pre acquisition, HBOC was trading at around $33 with 429.7MM shares o/s for a market cap of $14,180MM. INMT was trading at around 16 1/4 with 9.78 MM shares o/s for a market cap of $158.9 MM. The total capitalization was therefore $14,339MM. Converting INMT shares to HBOC shares adds .84*9,780,000 or 8,215,200 for a total number of shares of 437,915,200. This would lead to an equilibrium price of around $32.75 per share for HBOC and $27.50 for IMNT. But the market has shaved about $2.53 billion in market capitalization from the combined entity.
Clearly, this drop was not the result of being "arbitraged" which should not result in any drop in the combined market capitalization. Either there is something else going on that we don't know about, or we will see a huge bounce tomorrow.
TTFN,
CTC (hoping for the huge bounce!) |
