AT & T Canada (ATTC) is a merger arbitrage situation where AT & T Corporation has a contractual obligation to purchase shares of ATTC to the escalating price formula. However, business ATTC is performing poorly, and its bonds are trading at great discount prices on high. Given AT & T Corporation meet its obligations, shares of ATTC, appears at an attractive price. The case is the situation in terms of the value of an investor who is trying to decide what position to take in the action ATTC and its bonds.
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by Andre F. Perold, Kwame C. Van Leeuwen Source: Harvard Business School 15 pages. Publication Date: October 28, 2003. Prod. #: 204087-HCB-ENG