The way I see it, (with BRY now at $44.29), $10,000 in BRY will get you 226 shares that will convert to 282 shares of LNCO in June. The same $10,000 in LNCO (here at $37.60) will get you 266 shares. The extra 16 shares are worth $602 (here at $37.60), which is 6% of $10,000. Assuming the deal is going to go through, this seems like a steal.
There is a distinct possibility that the new holders from BRY might just want to cash in their stock right after the deal completes - (however, to discount a future monthly distribution for an immediate-term gain would be extremely short-sighted;)... Either way it is a win-win scenario for long-term holds even if a limited reduction in p/s should occur... We shall see what happens... I'm curious how rlp derives a specific 5% p/s reduction - What metric is he using? My technicals can give a range of possibilities but they are entirely contingent upon the p/s of BRY/LNCO @ the time of acquisition - not at the present because of fluid nature of these 2 stocks...
BRY hit 44.20 low today but even now is 44.92.
80 shares of BRY at 44.92 equals 100 shares of LNCO at 35.93.
The risk would be that the deal does not happen and the BRY shares plunge when it fails to happen.
Buying BRY up to 45 gets you LNCO at 36.
Cramer at The Street wrote about why the large spread between prices.