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Motorola Mobility Holdings, Inc. Message Board

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  • xchange55 xchange55 Aug 29, 2011 9:05 AM Flag

    Why is MMI trading at 38?

    It's risk + time value.

    Both GOOG and MMI have clauses to opt out of the buyout. Each compnay would have to pay the other a large sum to excercise this right. Then you have potential regulatory issues; the deal could get blocked. I don't think it's likely, but you never know.

    The other aspect is time value. If you have $38 tied up in MMI, that max payout you will receive is $40 and nothing more. Using those figures that's roughly a 5.25% gain. But this deal will not get approval for at least 6-8 months and possibly even longer; 12-16 months. During that time your money has the potential to return much more than 5.25%.

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