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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: jhg_in_kc who wrote (36884)	1/10/2000 1:02:00 PM
From: SLSUSMA	Respond to of 41369

The deal for now is that AOL sharesholders get 1 AOL-TWX share for each AOL share. TWX shareholders get 1.5 AOL-TWX shares for each TWX share. So if you have 500 shares of AOL, you will get 500 shares of AOL-TWX. If you have 333 shares of TWX, you will get 1.5333 or about 500 shares of AOL-TWX. Since you have 100 shares of AOL (equals 100 shares of AOL-TWX), you will need 67 shares of TWX to get the same amount of AOL-TWX (671.5 or 100.5 shares). If you sell your AOL you will get about $76100 or $7600. If you take the same money to buy TWX it will cost you $9467 or $6300. You will pocket the $1300 difference and in the end, your ownership of AOL0-TWX will be the same. I assume you are not paying taxes for selling AOL due to capital gains.

To: jhg_in_kc who wrote (36884)	1/10/2000 1:31:00 PM
From: David E. Taylor	Respond to of 41369

The premium right now is about 19-20%. AOL is at 73, 73 x 1.5 is 109.5, while TWX is only at 92. The 20% premium represents the market's present view of the likelihood that the deal may fall apart. So, if you intend to buy/hold into this for the long term, buy/hold TWX. When the deal closes (and it almost certainly will), you'll have whatever appreciation occurs in AOL's stock between now and the time the deal closes, plus the 20% premium. If you buy AOL, you get just the AOL appreciation and not the 20%, so it's a no-brainer if you're convinced the deal will go through. What's the risk? It's the risk the deal will fall apart, at which point TWX would lose around 50% of its value instantly. Right now, the market is allocating the 20% premium to that risk. If I didn't hold a ton of AOL already (in anticipation of 100-120 easily this year), I'd be a buyer of TWX here for a core holding. As it is , I'll almost certainly sell all my AOL (after the dust settles), buy a much smaller $$ amount of TWX, and put the rest of the $$ to work in some higher potential gain positions. Good luck to all AOL longs with this dramatic change in the landscape. David T.