For parity, AUQ needs to rise while AGI slows down its rise; otherwise AUQ shareholders will lose money on the merger.
No, AUQ should be priced higher. If the merger happened today, AUQ shareholders will loose $$ if it the half shares are prices were AGI is. The more AGI pulls ahead, the more screwed AUQ shareholders will be. I'm not sure if it's the market or some manipulation that's keeping the two stocks closely tied. But the ideal situation when the merger happens is for AUQ to be priced so neither shareholders are pissed off.
I've been following the daily prices of AUQ and AGI since the merger was announced. It's interesting that the prices stay in a parallel relationship, so that after the merger AUQ shareholders (who will have 1/2 their current shares) will have the same dollar value of new shares. Depending on the new AGI's value, current AUQ holders may see a slight drop in their total value. Hopefully the new company will grow to make up their difference. Of course it all depends on the price of gold.
The merger requires a vote by shareholders so you have the opportunity to vote no. After the first day's boost to the share prices of both stocks, it now looks like the price of gold will determine what the new stock price will be come May/June. It could be we get screwed by this, half the shares at a price no different than the current price, or at least bound in same same short seller range.
I'm not sure you're wrong. But if AGI goes to say $10/share before merger, its shareholders get the same number of shares worth, I assume, $10 plus a penning a share. The idea being to keep the same dollar value. But AUQ, which will be nowhere near $10 at the time of the merger, will also see its shareholders getting stock worth $10 share, but half the number of shares they hold in AUQ. So a AGI share at $10 = MergerCo $10. AUQ share= $10/2. This may be the same dollar value for total AUQ shares held; it's hard to say right now. But I assume that's how it has to work, similar to a stock split, where total value remains the same despite more shares.
I'm not sure I understand why you're upset. Didn't you sell your AUQ for CDE months ago? Is there something in particular about the merger you think is a scam?
Is there a standard formula, based on the current prices at time of merger? AUQ shareholders will have half as many shares; so I would guess that the price would be adjusted up so the value remains the same. But the merger complicates the math.
Canada's Alamos Gold, AuRico Gold to merge in $1.5 bln deal
(Reuters) - Canadian gold miners Alamos Gold Inc and AuRico Gold Inc said they would merge in a deal valued at about $1.5 billion, combining high-yield assets such as the Mulatos mine in Mexico and the Young-Davidson mine in Ontario, Canada.
Alamos and AuRico expect the combined company, Alamos Gold Inc, to produce 375,000-425,000 ounces of gold in 2015 in Mexico and Canada.
Gold has dropped dramatically due to the strength of the dollar; that's not management's fault. Most gold miners are getting sold off. The recent positive jobs report sent fears that the Fed will raise interest rates, so most stocks have been dropping as well. Shorts take every advantage of bad news about gold and gold/silver miners, and sell short. They buy at the bottom and sell at the top, upon which they short again, rinse and repeat. If you want to blame something, blame the market; blame the "smart money" that's a few steps ahead of most small investors and blame the imbalance in the world's economy that still teeters on the slightest worry indicating it is still not fully recovered.