RE:16% Discount?! Frankly i I think it stems from a lot of confusion. I tried to explain numerous times yesterday that this deal is
not based on .465 of 1.80 share. For some reason people were convinced that it was based on the 1.80 vale of TWD share on the previous closing day and that you will only get .83 cents per BED share. As it sits at today's close the conversion rate for a BED share is .925 cents. So it's trading 12.5 cents below conversion value. Many are selling TWD and buying BED precisely because of this. Can't blame them.
The other issue is that BED released their Q results.... Not so stellar.
However it will all even out as we approach the merger date, and all will depend on where TWD is trading.
kayaman wrote: Anyone have an idea why BED is trading at such a big discount to the takeout price?
Are there no Arbs keeping this in line? or is TWD hard to short?
The deal seems pretty solid so not quite sure why there's such a sale going on in BED. 5% you'd expect with two months to closing, 16% is pretty crazy -- If TWD falls to 1.70 by closing you still breaking even buying BED here. But TWD exploded away from 1.80 and is hanging at 2.00 so it seems like 1.70 is a good entry point. I'm buying, I'm long a bunch.. I'm really confused.