Viewing page 19 of 116

This transcription has been completed. Contact us with corrections.

- 18 -

Whether Eastern would have to pay the handling cost of $1 per share, since the stock will not be issued on the market, is problematical. The Board recognized such costs in the Continental-Pioneer Acquisition Case, 10/ Assuming such costs are incurred by Eastern, the question arises as to whether these costs should be deducted from cost of stock, as Eastern has done, or be added to Eastern's consideration as an additional cost incidental to the acquisition of Colonial's assets. It could reasonably be concluded that it is one of the expenses which Eastern must pay and which it expects to recover through increased earnings.

National, in contending that Eastern would pay in excess of $13,000,000 for Colonial's assets, employs stock quotations as of June 30, 1955, to determine the value of the Eastern stock to be issued to Colonial, notwithstanding the fact that Eastern's offer was submitted December 20, 1954, and the agreement was signed January 28,1955. On June 30, 1955, Eastern's stock sold for $56.50 per share as compared to $37.15 per share for the 31 days ended December 19, 1954.

In selecting the date for evaluation of Eastern's stock several factors must be kept in mind. To peg the reasonableness of consideration on stock quotations subsequent to the date of the 

10/ Continental-Pioneer Acquisition Case, Docket No. 6457, et al., decided July 15, 1954.