Microsoft/Yahoo: Tracking the Deal "Spread"

One month ago Microsoft announced its unsolicited bid for Yahoo. It pegged the bid at the then-effective price of $31, but it also put it at a specific ratio of Microsoft to Yahoo shares. If you used the ratio the current value of the bid has tumbled to $25.86, which is why Microsoft made clear again today that it is sticking to the value of the original offer, or $31 per Yahoo share. Let’s look at the spread between Yahoo’s share price and the $31 pegged price offered by Microsoft. A big discount would suggest that the market doesn’t think the deal will be done; while a big premium would suggest a raised bid or another bidder. A lock at $31 would make it a done deal, at least from the market’s point of view. …
Original Source

  3 March, 2008| Economy | @ 22:31

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