Deal May Be A Bitter Pill For Nynex Shareholders

If you are a Nynex Corp. shareholder, your only consolation today might be if you also own Bell Atlantic Corp. shares.

That’s because Nynex holders are being paid below market price for their shares in the $22 billion merger announced by the two companies.

Under the agreement approved by the companies last weekend, shareholders of each Baby Bell will swap their shares for stock in the new company. Bell Atlantic holders will receive 1.302 shares in the new company for each Bell Atlantic share. Nynex holders will get one share in the new company for each Nynex share.

Nynex shareholders had been hoping for a premium of between 5 percent and 10 percent above the market price of $53 on Friday. Instead, the transaction values their shares at about $50 each, a 6 percent discount.

“I think it’s a good merger, but the price stinks,” said Hersh Cohen, who runs Smith Barney Appreciation Fund, which owns about 700,000 shares of Nynex. “Holders are left holding the bag. It’s really annoying.”

Holders of stakes in both companies may find it easier to accept the companies’ logic that it is a merger of equals, making a premium unnecessary.

“Theoretically, there shouldn’t be a premium because holders of Nynex get the future benefits accrued by the merged companies,” said Jeffrey Heil, an analyst at Society Asset Management.