i-flex shares are trading cheaper than the Oracle buyback price. The futures are even cheaper than spot. Why ?
September 6th, 2008
i-flex shareholder asked:
There is a lot of confusing news about i-flex solutions stock. Oracle offered Rs. 2100 per share but the market fell to 1750 defying logic. Additionally the futures are trading even cheaper than spot further defying logic. The only way I can stitch a consistent story, based on what I see on the internet is:
There is a lot of confusing news about i-flex solutions stock. Oracle offered Rs. 2100 per share but the market fell to 1750 defying logic. Additionally the futures are trading even cheaper than spot further defying logic. The only way I can stitch a consistent story, based on what I see on the internet is:
1) First logic is that selling through stock exchange is tax advantageous compared to tendering shares to Oracle. This is bizzare. But if this is true, it explains why spot is at a discount to tender price. PErhaps no one wants to risk the refund from the taxman.
2) Second logic is that once Oracle acquires 90% controling stake, it can bully the remaining 10% minority shareholders. This bullying can for instance be in the form of giving preferential allocations to itself for further shares or call options, while not offering the same to minority shareholderss (thus diluting them).
If this is true, this is even more bizzare. Is there no protection for minority shareholders ?
LOCKETT
The deal completes and you get your 21 this is big difference so large part of it.
The prior valuation.