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+--- Thread: SCG merger with D (/showthread.php?tid=1739)
SCG merger with D - elmagoayulin - 01-14-2018
Hello,
I am thinking of buying SCG to get D shares when they merge but I have the doubt if there is any issue about the merger so the regulators can ban it, what do you think? In case that the merger goes ahead it seems quite good for me.
At current prices if you buy SCG at $44 it would be equivalent to buy D at $65 (0.669 shares of D per each SCG). Taking into account that is trading around 75 it is around 13% discount. Is there anything I am missing?? for me it looks quite a good deal
Thanks for your thoughts!
RE: SCG merger with D - crimsonghost747 - 01-14-2018
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.