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Hughes Electronics Corp. (GMH) Message Board

  • rpbossman rpbossman Feb 6, 2001 11:31 PM Flag

    45 Billion divided by 756 million

    shares = $59 per share. Tell me what I'm missing.

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    • "45 Billion divided by 756 million shares = $59 per share. Tell me what I'm missing."

      I don't think it's nearly as simple as this (dividing sales price by number of GMH shares). I think it's more like the following:

      To simplify (a little), assume round numbers as follows: 800M shares of GMH currently outstanding, 500M shares of GM currently outstanding; recent average price of GMH = $25, recent average price of GM = $60; NewsCorp offer to GM of $45B for purchase of all GMH "assets."

      GM must first buy in all GMH shares at 20% premium, payable in GM stock.
      (1.2)x($25) = $30

      $30/$60 = � share of GM (GMH shareholder receives � share of GM stock for each previous share of GMH

      (� share)x800M = 400M new shares of GM now floating

      $45B divided by (500M + 400M) shares of GM = $20 per share.

      Result - the (pre-sale) GM holders receive $20 increase value per original GM share (from $60 to $80), current GMH holders see $25 value of each pre-sale GMH share increase in value to $40 (i.e., � share of $80 GM stock)

    • there are 1,298,700 shares as of 12/31/01

 

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