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Strategies & Market Trends : From the Trading Desk
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To: Lost in New York who wrote (3471)8/12/1998 12:33:00 PM
From: Todd N  Read Replies (1) of 4969
 
Thanks, I finally called CBOE and this is what I found out.

When I followed your link, I happened to notice they had an a phone number for "answers to complex questions such as mergers", something I didn't notice yesterday when I was all over the site.

I am posting this for the benefit of others on the thread.

I called and talked to a real helpful guy that basically said the following:

The repricing is purely based on an individual basis, after the merger is voted on and approved. There is no conversion formula to make it easy to value in the mean time.

Once the merger is approved, all the exchanges that trade the issue get together and come up with a fair settlement. Stike prices, expiration dates, volitilities, and conversion factors are all taken into consideration. He said that sometimes it involves both cash and stock, sometimes new issues are created. (He mentioned that the Telebras breakup into 12 parts has been a nightmare.)

He also said that a research report will be posted on the website within an hour of CBOE getting the merger documents. They can be accessed under "Research Reports" and doing a symbol search.

So basically, nobody knows until the merger is approved, but he assured me it would be equitable.

Hope this can be helpful to someone else.

Todd
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