01-14-2018, 04:03 PM
I'm not familiar with this particular deal. However I have mingled with mergers before.
There are a few things you need to consider. First is if the deal will actually happen. Now the boards of both companies have probably said "yes" at this point but the shareholders of SCG still need to approve the deal. And then all of the regulators need to approve it.
Then there is the timeframe. If it goes through, how long will that take? Even in the best case scenario we are talking months but it could be a year or more.
Then there is the thing that since it's not a cash transaction, what exactly are you getting? So it's 0.669 shares of D, but how much will that be worth when the deal goes through? Are there some failsafes, such as increasing the amount of D shares gained per one share of SCG if the price of D falls below a certain level?
Mergers can be good opportunities but there are a lot of things that can happen between now and whenever the deal will officially close. So you need to be aware of the different situations and how they will affect the outcome of your trade, especially since we are not talking about a cash transaction.
There are a few things you need to consider. First is if the deal will actually happen. Now the boards of both companies have probably said "yes" at this point but the shareholders of SCG still need to approve the deal. And then all of the regulators need to approve it.
Then there is the timeframe. If it goes through, how long will that take? Even in the best case scenario we are talking months but it could be a year or more.
Then there is the thing that since it's not a cash transaction, what exactly are you getting? So it's 0.669 shares of D, but how much will that be worth when the deal goes through? Are there some failsafes, such as increasing the amount of D shares gained per one share of SCG if the price of D falls below a certain level?
Mergers can be good opportunities but there are a lot of things that can happen between now and whenever the deal will officially close. So you need to be aware of the different situations and how they will affect the outcome of your trade, especially since we are not talking about a cash transaction.