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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: NickSE who wrote (26913)	6/1/1998 12:59:00 PM
From: Charles Skeen	Read Replies (2) \| Respond to of 97611

When the merger was announced, arbitragers bought DEC and sold CPQ short to take advantage of the current prices vs terms of the merger. This spread was sometimes as much as $4, sometimes down to $1 per share of DEC (not sure where it is now). The arbitragers borrowed the CPQ from brokers and other institutions. When the merger goes through the arbs will receive cash plus 0.945 CPQ shares for each DEC share submitted. They will then give the CPQ stock back to the brokers and institutions to close out the transaction and nail down their profits. The brokers will put the CPQ back in customers margin accounts and the institutions will put in back in their accounts. There will be little or no impact on the trading of CPQ at this time and the short interest will decline. Since there were 150 million of so DEC shares, the short interest will decline by about 15 million if the arbs held only 10% of DEC stock, or by 37 million if the arbs hold 25%. Hope this helps. Charlie.