the postannouncement cash SVAR of 15.6 percent multiplied by the 53
percent postmerger ownership percentage.
The selling shareholders in a fixed-value offer bear no price risk in
the preclosing period.In fact,the more that Buyer Inc.’s stock price falls,
the less synergy risk the selling shareholders assume after the closing.
With a 10 percent decrease in Buyer Inc.’s stock from $100 to $90, only
58.3 percent of the premium offer ($0.7 billion of the original $1.2 bil-
lion) remains at risk. Multiplying that percentage by the selling share-
holders’47 percent stake in the combined company yields a premium at
risk of 27.4 percent. Again, the question is ...