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Old 10-08-2008, 04:45 PM   #113  
Carl Spackler
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Originally Posted by Check Essential View Post
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.
Here's the data:

Today's market cap of DAL: $1.717 billion
Today's market cap of NWA: $1.678 billion

On April 11, 2008 the Friday before the merger is announced the following Monday:

4-11-08 market cap of DAL: $3.042 billion
4-11-08 market cap of NWA: $2.899 billion

Once again this is in spite of the fact that NWA is and was 2/3 the size of DAL. There were days prior to the merger announcement and after the merger announcement where NWA's market cap exceeded that of DAL.

This was brought out by the NWALPA attorneys in arbitration and the DALPA experts agreed it was true. It's in the transcripts.

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