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Stock question
Old 04-04-2006, 10:16 AM   #1
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Stock question

I have some LU stock left over from my days of working at LU. How do I determine if it is worth selling now before it is swapped out by Alcatel due to the merger? Or should I wait?

I bought most of it thru the employee stock purchase program back in 2001-2002 so it is significantly under water. I was hoping LU would hit $10 or $20 one day and I could sell it.

Now they are merging with Alcatel and doing a stock swap, 1 LU for .192 or something.

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Re: Stock question
Old 04-04-2006, 10:21 AM   #2
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Re: Stock question

Assuming the deal goes through (no idea how likely this is), you take .192 times Alcatel's share price and that tells you the future value of LU's stock. Usually there is a discount to that number based on how likely the deal is and how long until it happens. Within a few weeks, the discount usually narrows as the arbitrageurs do their thing, so you can sell any time you like and get a fair price for the stock.
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