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Strategies & Market Trends : Arbitrage Plays -- Ignore unavailable to you. Want to Upgrade?

To: Odysseus who wrote (69)	10/8/1999 12:31:00 PM
From: Allen Furlan	Read Replies (1) \| Respond to of 376

Odysseus, Update on UMG. I received the proxy,quite interesting but convoluted set of conditions. The following is my reading and anyone interested should get the proxy. If T is at 45 then cash election receives 85, stock selection receives 75.60 and standard selection(stock and cash receives 79.02. This per page III-2 of prospectus. Now the kicker, if too much cash is requested then a pro-ration scheme goes into effect. Assuming investors are rational a vast majority will elect cash and the kicker will go into effect so that cash and stock is received. The inflection point is T at 51.30 where all 3 options receive 85.00. To simplify analysis one can assume that T is significantly below 51.30(If T above 51.30 any option gets 85 or more) With T at the lower price the standard option receives 36.27 plus .95 shares of T. At a current price of UMG at 72 the deal would be positive for T above (72-36.27)/.95=37.61. Companies are aiming for end of March next year but could go until end of June. Since T paid a 1.5 billion termination fee to Comcast and considering the giant egos in the executive suite at T (as evidenced by firing of their cable executive) I would say that this deal is a 90% probable with the most likely deal breaker being a collapse of T or an unexpected set of conditions by the regulators.