![]() The bet here is to go long EMC, which is valued under the sticker price, and go short VMware. (For the uninitiated, going short means you borrow shares, sell them immediately, then buy them back later, hoping for a lower price in the future.) “I see there being a pretty large arb opportunity here,” says Angelo Zino, an analyst with the research firm S&P Capital IQ, which just upgraded EMC shares to buy, with a $30 price target. Since then, the deal has dominated trading in shares of EMC and its subsidiary VMware, whose shares have dropped by nearly a third since early October.Īnd there’s still a lot of money to be made by the savvy (and lost by the unwary) on Michael Dell’s highly-leveraged gambit to become the largest purveyor of PCs, other hardware and related software and services. ![]() That’s because from the moment news of the merger hit the market, the price and structure of the transaction created an arbitrage trading opportunity that has been seized-upon by investors able to recognize it. While the sticker price says EMC should be worth around $33 a share, the market is today saying it’s worth 24% less. That’s never good for business and it adds risks to the stocks involved.īut there’s more going on with the trading action betting on this mammoth deal. SAN FRANCISCO - If EMC announced three weeks ago that Dell was going to acquire the storage-equipment maker for $67 billion, why did the company’s stock market valuation start this week at $51 billion?Īn obvious answer is that mergers of this size usually get discounted between announcement and completion dates because they often create uncertainty and confusion among employees, customers and partners.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |