Originally Posted by
redblueskies
Look at the valuations, NWA is valued about what DAL is valued at but is 2/3 the size.
I've seen this "valuation" argument several times in the last few days.
I don't think the current share prices have anything to do with the value of the companies as seperate entities.
Investors read the newspaper. They know NWA shares are about to cease to exist. The market valuations are roughly equivalent right now because the market knows there is going to be a merger with a stock swap. NWA shares will be cancelled and new DAL common shares issued.
Its called arbitrage.
What you're seeing is the market value of "New Delta" reflected in the price of both NWA and DAL.