Holding the little fish before a looming acquisition...

[thoughtanarchist]

I could use some advice on whether to let go or to keep on keepin' on...

Let's say you've been happily dripping into a http://finance.yahoo.com/q?s=kse">utility in a "set it and forget it" fashion.

Now let's say a http://finance.yahoo.com/q?s=ngg">bigger fish comes along and swallows up your little one with an acquisition that is slated to occur in 16 months at $42 a share.

My question is, what can I expect to happen to my shares of little fish? Will I own slightly less (but more valuable) shares of bigger fish in 16 months?

If so, why isn't the price of little fish pegged to big fish now that the terms of the acquisition are public? I'd expect a flat share price of $42 on this thing until the closing date.

Am I missing something? What am I not taking into account?

[FormerDittoHead]

1. The dollar difference reflects earnings between now and then. n/t

[thoughtanarchist]

2. Like in the form of distributions?

I see.

Thanks!

[FormerDittoHead]

3. Not distributions, but profit inbetween now and then.

It's now worth $41.

They make money between now and the time of merger.

We're talking profits above salaries, etc.

They could take the added cash put it in the bank, pay down debt, etc. The point is that it would add to the value of the stock in the next 16 months (if memory serves). That increase divided by the number of outstanding shares I'm thinking is the dollar.

I would expect the price to be exactly $42 come the time of final merger.