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Motorola Mobility Holdings, Inc. Message Board

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  • mistertoaster mistertoaster Aug 26, 2011 1:54 PM Flag

    Why is MMI trading at 38?

    In addition to the time value of money previously mentioned, you have a few other factors:

    1. The justice department anti-trust folks have been fairly aggressive since 2008. There has been some rumblings of anti-trust concerns on this deal. I suspect those will get resolved, but the threat of material divesment of assets and corresponding price adjustments will hang over any deal involving a company as large and dominant as Google.

    2. A severe economic contraction can cause parties to reconsider a "done deal". You may want to Google Dow Chemical/Rohm and Hass for a bit of history in that regard. That deal ultimately closed, but not before a lot of court time and a $20 swing in ROH's stock. In that regard, you may want to read the Material Adverse Effect clause in the merger agreement.

    I am not saying either of these events will materialize in this case, but with the economy in the dooldrums and the general anti-business tone of the Justice Department, you can certainly see why a 5% premium remains on this deal.

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