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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Merriwether who wrote (514)	10/5/1999 1:38:00 PM
From: Zirdu	Read Replies (1) \| Respond to of 6516

Why is GMST trading down on news of the merger with TVGIA? Here's one possibility: The two companies now trade as if joined at the hip. Arbitargures insure that TVGIA will trade at slightly less than .6753 times GMST price. So maybe it is TVGIA shareholders, and not GMST shareholders, who don't like the deal. They previously had a company with relatively high price to sales, long business history, stable revenue stream, etc (compared with GMST, at least.) Now they get a completely different kind of company, and what to them might seem a much higher risk type of situation. They are being bought out by a high flyer, a newcomer, with very high PE, PSR, etc. So they might be inclined to sell in large numbers. Selling in TVGIA will automatically manifest itself in selling in GMST, by the actions of the arbitragures.