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Author: Jognils One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2674  
Subject: MVL Price Date: 9/10/2009 5:05 PM
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Hey guys,

I know the board has been extremely quiet lately, but if anyone still checks this regularly, I've got a discussion starter. I've been closely following the news of Disney's buyout of Marvel Entertainment, and one thing that has confused me is MVL's price since the announcement. Perhaps someone (Aaron?) can enlighten me. Here's my reasoning: the deal is that MVL shareholders will receive $30/shr. in cash and 0.745 shares of DIS stock per share of MVL stock.

If the market is at least somewhat efficient, then MVL's price movements leading up to the exchange should almost exactly track those of Disney to prevent instant profits from arbitraging (simultaneously buying and selling a stock) when the trade takes place.

In my thinking, MVL's shares should be trading at or very close to $30+(.745)(DIS Price), which is what MVL shareholders will receive at the completion of the buyout. At today's DIS price of $28.36, that should put Marvel's share price at about $51.13. Marvel closed today at $49.85.

So my question is, why aren't investors bidding up Marvel's price to take advantage of a potential $1.28/shr. instant profit? What am I not considering that other investors clearly are?

Jordan
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Author: awesomestockdude Three stars, 500 posts Ticker Guide Supernova Odyssey 1
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Subject: Re: MVL Price Date: 9/10/2009 6:34 PM
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So my question is, why aren't investors bidding up Marvel's price to take advantage of a potential $1.28/shr. instant profit? What am I not considering that other investors clearly are?

I have been really busy lately because of school, but also have noticed this and ended up canceling my limit order on MVL (after I missed it by just 2% to where I would have more than doubled my money!). I think the simple answer to this is that the market in the short-term is unpredictable and most anything can happen. This is my thinking though:

Maybe the price isn't up at $51.13 because investors think that if they invest in DIS the price will still go up and they will make more money. It also might not go up high because the share price of DIS fluctuates in the daily market too. Therefore, what investors will make out of the acquisition will still change each day, so nothing is really certain for the final price until the day of. But I really don't know. There are so many factors that come into play when determining a proper share price that figuring out what it should be is nearly impossible.

I'm just going to go with my original answer and say that the price isn't making much sense because the short-term market is unpredictable.

It's a good question, and I wish I had a better answer!

Aaron

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Author: wealthdivawannab Big red star, 1000 posts Old School Fool Ticker Guide CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2639 of 2674
Subject: Re: MVL Price Date: 9/10/2009 8:00 PM
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So my question is, why aren't investors bidding up Marvel's price to take advantage of a potential $1.28/shr. instant profit? What am I not considering that other investors clearly are?


Hi guys,

This is pretty typical for other companies I've had that have been bought out. The stock sits close to the closing price (but not quite there) until the buy out is final. The risk of trying to jump in to catch the difference is that you could end up with the other company (Disney in this case) because the close sometimes comes suddenly.

I hold MVL and am having to decide whether I want to sell now for a bit less than at the closing OR end up with some Disney. Disney is a much bigger, much slower growing stock and is very different from MVL. Decisions. Decisions.

JB
mom of teen/MVL owner

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Author: TMFElleMoran Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2658 of 2674
Subject: Re: MVL Price Date: 6/14/2011 10:44 PM
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Hi Jordan,

Valid observation. Typically, some degree of spread exists between the market price and the takeover price of an acquisition candidate. Sometimes it's even negative (acquired company trading higher than the acquirers bid).

This spread reflects uncertainty around the details of the deal. Deals sometimes fall through. Sometimes shareholders of the acquisition target demand a higher price and renegotiate the deal.

Until the deal is closed, nothing is 100% certain. My guess here is that the spread reflects a high level of perceived risk that the deal won't be completed as planned. Additionally, large institutional MVL owners may be taking profits, putting pressure on the stock price.

Elle

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