America On-Line (AOL) Message Board

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Technology Stocks : America On-Line (AOL)

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To: RocketMan who wrote (4236)	2/2/1999 12:51:00 PM
From: Chuzzlewit	Read Replies (2) of 41369

I wonder why they don't just pay cash for it? A couple of reasons. If you pay cash for an acquisition you cannot treat it as a "pooling of interest" merger. That means that holders of MoveiFone would have to pay capital gains taxes, and it also means that "earnings" (that wonderful invention accountants have dreamed up) would be constrained by the amortization of goodwill. Since these companies have very little in the way of assets relative to the price you need to pay, merger rules favor "pooling of interests" Second, if AOL views its stock as inflated by the market, it would behove the company to buy using an inflated asset rather than cash. TTFN, CTC

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