Global Crossing - GX (formerly GBLX) Message Board

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Technology Stocks : Global Crossing - GX (formerly GBLX)

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To: Curtis E. Bemis who wrote (729)	4/27/1999 6:11:00 PM
From: Nazbuster	Read Replies (1) of 15615

For a novice, can you confirm my understanding of what you mean? Firm AAA announces an acquisition of ZZZ for some fixed price. ZZZ jumps in value, but not to the full acquisition price. Arbitrators short AAA and go long ZZZ. If the market rises, the AAA short loses, but the ZZZ gains. (The expectation is that both issues, AAA and ZZZ, will behave in tandem.) Correspondingly, if the market drops, the reverse happens. The profit is in the premium to be had as the value of ZZZ rises to the true acquisition price when the deal becomes real. Is this the process? Is there ususally a gap between market and conversion price?

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