Let's look at below UTX/RTN merger as an example:
The merged companies will from that moment forward be known as Raytheon Technologies Corporation, and the stock of this new, merged entity will trade as ticker symbol "RTX" on the NYSE.
To effect the merger, each outstanding share of Raytheon Company will be converted into 2.3348 shares of Raytheon Technologies Corporation. Each outstanding share of United Technologies will simply be renamed as a share of Raytheon Technologies Corporation.
United Technologies Chairman and CEO Greg Hayes will lead the new company.
Immediately after the merger, Otis will spin off as a new NYSE-listed company under the ticker symbol "OTIS;" Carrier will similarly spin off and trade as "CARR," also on the NYSE. Each share of United Technologies that a shareholder owned on Thursday will become a separate share of Carrier and a separate 0.5 share of Otis on Friday.
I am trying to understand what the "fair price"(or more like a "reference price") of RTX should be after this complex corporate action. I understand the "fair price" here is a bit vague, but I imagine the street has to agree on some sort of pricing for various derivatives or indexes. For example, UTX is a Dow Jones constituent, so index provider has to consider the proper prices of RTX when re-balancing the index weights. Options exchange has to convert/settle the UTX options into RTX options somehow, etc, etc.
So the way I understand is, the market cap of RTX right after UTX and RTN merge, is just the sum of RTN and UTX. Then you have to subtract the market cap of CARR and OTIS. The number of shares of RTX should just be number of shares of UTX + 2.3348 * number of shares of RTN.
But then, how do you determine the "market cap" of OTIS, and CARR? There are when-issued trading for OTIS and CARR, but does the capital market really rely on the last-close of WI to determine their market caps?
Would appreciate any input.