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Technology Stocks : Qwest Communications (Q) (formerly QWST) -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Miller who wrote (622)	1/18/1998 9:26:00 AM
From: nic	Respond to of 6846

open interest seems to be centered around the April 60 calls, coincidentally enough. No coincidence... it is my understanding that in merger negotiations both companies have to give full disclosure to each other, including their evaluation of the near future. The deal indicates that QWST itself believes (conservatively) its price will be in the 52.5-67.5 range in April - and the market so far believes QWST. Thanks for the CBOE link! Regarding my question about the "buffer zones", I should have been more specific: I was wondering why they had 5 different price ranges when just 3 would have been sufficient. The extra buffer zones create a weird nonlinearity whereby under certain circumstances (e.g., QWST slightly above 72.5 three weeks before closure of the deal) it may be in the interest of PHX shareholders to short QWST. This runs counter to the "alignment of interest" which is the whole point of making a stock (as oppposed to all-cash) deal. This brings up yet another way to interpret the structure of the deal: it is all-cash if QWST stays in the 52.5-67.5 range, and half-cash/half-stock if QWST is above 72.5 or below 47.5. It is all-stock in the remaining two little buffer zones, wish I knew why... - nic