CAL’s equity is being purchased by UAUA for roughly 22.90 per share. So why is the stock soaring (up 2%) to around 23.50? Shouldn’t it approach the buy-out price?
competing offer? Arb opp?
The shareholders have already approved, and I see nothing about a competing offer… Hmm…
The stock-for-stock transaction is valued at approximately $3.15 billion. Under the terms of the definitive merger agreement entered into by the parties, each outstanding share of Continental common stock will be converted into the right to receive 1.05 shares of United common stock… 22.40*1.05=23.52
Shoot.
Alright, now it’s trading at 24.26… one would think it would revert back to 23.52 but the price just keeps rising. Maybe I have this merger thing all wrong…
@ Stranger: United’s trading price is not fixed…now it is trading at around $23.10, so the $24.26 for CAL shares makes sense. CAL shares will trade a roughly a 5% premium to UAL shares based on the above description provided by db_4life