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Technology Stocks : Network Associates (NET)

NET 178.81

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11:28 AM EST

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To: Chuzzlewit who wrote (2979)	7/30/1998 8:06:00 AM
From: Geoff Nunn	Read Replies (2) of 6021

Chuz, re: <<Alien, this is a much preferred way to buy a company (cash),... >> I'm not sure I agree with you. If company XYZ is acquired in a merger, and it's shares are paid for in cash, XYZ shareholders are subject to immediate capital gains taxes. This will not be the case if the shares are obtained using stock in the acquiring firm. An exchange of stock for cash is a taxable event, whereas a pure stock for stock transaction is not. This suggests XYZ shareholders may be willing to accept a smaller takeover premium if they receive shares of the acquiring firm as payment. If that's the case, the acquiring firm is better off not to use cash. Geoff

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