Current Price – $3.4
Offer Price – $3.7
Upside – 9%
Expiration date – 28 October 2016
I am travelling, so this is a very quick note.
Monster Worldwide is being acquired by Randstadt at $3.4, however activist investor MediaNews is opposing the transaction and yesterday said it will launch tender offer for 10% of outstanding shares at $3.7.
I expect that shareholders will tender into Randstadt's offer and company will get acquired at $3.4 making the activist fight irrelevant. But there is always a small chance that shareholders will reject Randstadt's offer, at which point the share price will likely shoot up at least in the short term in hopes of higher offer from Randstadt.
With shares currently trading at Randstadt's acquisition price there is no downside risk. So the trade is to buy shares, agree to tender all at $3.4 and then wait for couple of days to see if shareholders approve the transaction. If Randstadt's takeover is approved, this trade results in zero, if it is rejected a small gain is likely.
So a small chance of gaining something without risk.
For further info:
There is always a risk that something completely unexpected happens, e.g. Randstadt walks away, tender is cancelled or Randstadt expresses no further interest in the company if tender is not approved by shareholders.