ahm IS AT 755P IF YOU LONG IT ON SPREADBET A 350PP BET WILL TAKE 13212 MARGIN,WE ALL KNOW THAT IT WILL GET TO 800P THE GE BID PRICE SO YOUR RETURN WILL BE 15750 PROFIT WITHOUT ANY RISK.

"Without any risk"

I was going to say that there was a risk in the GE price moving, and in currency movements, but it looks like they've pretty much ring-fenced those:

" The Acquisition will be made in exchange for New GE Shares based on an
Exchange Ratio which will be finally determined at Completion. The Exchange
Ratio is subject to certain adjustments depending on movements in the Sterling
GE Price up to the Completion Date.

- If the Sterling GE Price at Completion is below the Sterling GE Price at
Announcement, the Exchange Ratio will increase to provide that Amersham
Shareholders continue to receive New GE Shares with a value in sterling of 800
pence, save that in no circumstances shall GE deliver pursuant to the
Acquisition more than the Maximum Exchange Ratio of 0.5571 New GE Shares per
Amersham Share.

- The Maximum Exchange Ratio would be reached if the Sterling GE Price at
Completion declined to #14.36, which is 21.6 per cent. lower than the Sterling
GE Price at Announcement.

- If the Sterling GE Price at Completion is above the Sterling GE Price at
Posting (the period between Posting and Completion is expected to be
approximately 6 weeks), the Exchange Ratio (as determined at Posting) will
remain fixed until the value in sterling of the New GE Shares to be received
equals 808 pence per Amersham Share and will then be reduced proportionately to
maintain a maximum value in sterling of 808 pence per Amersham Share at
Completion. The Exchange Ratio at Posting will be set out in the Acquisition
Document.

- Once the value per Amersham Share determined by the Exchange Ratio has
reached 808 pence there will be no limit to the proportionate reduction in the
number of New GE Shares which would be received under the Acquisition as the
Sterling GE Price increases.
... "

Is the GBP equivalent price based on the pre-dilution number of GE shares? And for that matter, anyone know hoe many shares GE has? This deal would require roughly 306m new shares to be issued.

Looks like the only significant risk is if the UK equivalent price drops below 14.36 - currently trading at ~17.66, which equates to 771p

On the face of it, this looks like a pretty good trade - wonder if the opportunity will still be there on Monday?

-- zarif, the logic is that the current price is 755p, but the bid is (under nearly all circumstances) going to be 800-808p, so there's a 45p (almost) guaranteed profit in the trade.

-- hijeff, nice spot.

It is as simple as it seems. Nice that AMH got the 800p stablised. Only trouble is the regulators in the US could take 6 months to pass this all through, hence the discount to bid. Normally the discount might be only 20p in a shares issue bid .

glad you like this one guys.the two companys have no overlaps so the deal WILL get the goahead,only fly in ointment is someone may offer more!

most interesting,
but as someone not ready to chance spreadbetting, would i still make a few quid by going the conventional route? ie just buying some shares?

superrod,the beauty of spreadbetting is you only pay 5% for your shares.and any1 will tell you a 100% on your money is a good return over a couple of months.
zarif your email returned,hope that the other posts have answered your questions.

hijeff,
i appreciate that but if the market moves the wrong way losses accumulate on a pro rata basis?
5% on a couple of months would do me as im not into serious gambling ie spreadbetting

Another path into this one is Covered Warrants - there is one call (G142, I think) - trading at around 360p with delta of 0.8. There's (say) another 50p movement in AHM, so another 50p*.8=40p in the warrant which is 11% for little to no risk (compared to 7.5% in AHM) - not huge leverage, but better than nothing. Big caveat - haven't looked at the expiry date or the time decay rate yet, so this might be counted out because of that

Correction to those figures - AHM is 760p mid, G142 call warrant is trading at 283/303.

This gives potential 40p rise in AHM, or 5%, excluding dealing costs. At 0.8 delta, there is a potential 32p gain (to 335), or 10.5%, offer-offer. Assuming the same 20p spread on the warrant at close of the deal, the bid would be about 315 - giving an offer-bid gain of only 3.9%. Doesn't look particularly attractive after all. With a June 2004 expiry, and a time to clear the deal of perhaps 6-9 months, that looks a bit close for comfort as well.

Ah well, nice idea - back to the drawing board!

the prediction came true,any1 bother taking some?