An new S-4/A out 21 Oct, it now lists the date of the VM shareholder meeting to vote on the merger as November 24, 2009 at 9:00 a.m., local time, at the Courtyard by Marriott Basking Ridge, 595 Martinsville Road, Basking Ridge, New Jersey 07920
It also notes the BOD has chosen the close of business on October 22, 2009 as the “record date” that will determine the stockholders who are entitled to receive notice of, and to vote at the meeting.
If you read between the lines on this and consider the exchange ratio as it relates to pps of S, you can formulate a theory on why S is trading low. Consider also how VM has traded lately.
I just lost a lengthy post due to a Windows "update"...when the update was complete...post was gone. :(
So...I'm not going to go into the examples again but...with respect to your assertion that...
<<If you read between the lines on this and consider the exchange ratio as it relates to pps of S, you can formulate a theory on why S is trading low.>>...
a Sprint price per share of less than $4.02 does not result in a lesser fractional share (1 Sprint share plus a fractional Sprint share for each Virgin Mobil share) to the Virgin Mobil shareholder.
Here is the deal:
"Each public stockholder, holding in aggregate approximately 39.7 million shares on a fully diluted basis or 43.3% ownership, will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile USA share, subject to the collar referenced below."
"The exchange ratio for public stockholders will be based on Sprint’s 10-day average closing share price ending two trading days prior to closing."
"The exchange ratio will be subject to a collar such that in no event will the exchange ratio be lower than 1.0630 or higher than 1.3668."
$5.50 divided by $1.3668 is $4.024...SO SPRINT STOCK CAN GO TO 4.024 (10 day average at 2 days before the deal closes) WITHOUT AFFECTING THE FRACTIONAL NUMBER OF SPRINT SHARES TRANSFERRED FOR 1 VIRGIN MOBILE SHARE.
A lower price per share would result in a ratio that exceeds 1.3668 (not allowed) and therefore would not result in any gain (in terms of Sprint shares for Virgin Mobil shares) to a Virgin Mobile shareholder.
Conversely, the ratio of Sprint shares per Virgin Mobil shares is guaranteed not to be lower than 1.0630. $5.50 divided by 1.0630 equals a Sprint share price of $5.17. Therefore, it does not matter how much above $5.17, the 10 day average Sprint p.p.s. is...because a higher p.p.s. than $5.17 results in a lower ratio than 1.0630, which is not allowed.
Bottom line is that the size of the fractional
(one Sprint share plus a fractional share for each share of Virgin Mobile stock)
Sprint share will only change if the 10 day average Sprint price per share (at 2 days before the deal closes) is BETWEEN $4.02 and $5.17.
If the 10 day average Sprint share price is at $4.02 or below... the Virgin Mobil shareholder will get the largest fractional share (per the "collar") for each share of Virgin Mobile. As the Sprint share price increases above $4.02, that fractional share of Sprint becomes smaller...and smaller...up to $5.17. After $5.17, the fractional share of Sprint for each VM share does not continue to get smaller...because the minimum ratio is guaranteed at 1.0630.
So...the Virgin Mobile "collar" should have nothing to do with the Sprint price per share being below $4.02.
What is important is that Sprint has removed the "roadblocks" (see link below) that would have prevented the VM acquisition.
I guess bigger is better...and we're not talking about the Extends commercials. S would boost thier position in the prepaid arena. which I view as a good thing. I know of quite a few ppl that have gone to prepay and they seem to like it. wonder if they'll keep the Virgin Mobile name ( maybe they could get Madonna to star in a commercial...lol)
Sprint has tried their own pre-paid many times in the past and always fails at it. The irony is that while Virgin mobile and iPCS did a 1/2way decent job of it, none of them are making exceeding profits. ATT actually had a reseller account for a time because they could get cheaper rates through Sprint than through their OWN COMPANY, but even they failed at it because they couldn't get enough customers.. Don't expect buying resellers to prop up profits, but it will cause litigation to go down.