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I'm interested in American Airlines stock (AAMRQ). Recently they announced a merger with US Airways. The resulting company is said to be worth $11B (USD). Tom Horton, the CEO, said that after creditors are paid out, stockholders of AAMRQ stand to receive 3.5% of the new company. If we assume an 11 billion dollar valuation, 3.5% of that would be $385,000,000. There are ~335,000,000 outstanding shares of AAMRQ. My math tells me these shares should be worth about $1.15/share. However, as of the merger announcement the shares of AAMRQ have shot up drastically from ~$1.20 to ~$2.53.

So my question is - how come the market thinks there's so much value in AAMRQ? A price of 2.50 gives the company a market cap of $837,000,000! Is it possible it will all come tumbling down in the next few days?

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I'm not sure why this is being downvoted? Is there a more appropriate forum for this question? – Eric Feb 16 '13 at 1:07
I did not down-vote, but this is close to off topic for the forum. And there may be no more appropriate stackexchange for it, as stackexchange does not purport to cover the entire world. – sdg Feb 18 '13 at 14:32
and in any case, even if not off topic, it is pretty much a wholly speculative answer you are asking for, with little longevity or future re-use. – sdg Feb 18 '13 at 14:33

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There are things that are clearly beyond me as well. Cash per share is $12.61 but the debt looks like $30 or so per share. I look at that, and the $22 negative book value and don't see where the shareholders are able to recoup anything.

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