Rite Aid (RAD) and Fred’s (FRED) – Merger Arbitrage With Hedge – 9% upside
Current Price –$8.25
Offer Price – $9.00
Upside – 9.0%
Expiration Date - Jan 2017
This is another large cap merger arbitrage deal where the spread of 9% is mostly due to pending regulatory approval. Recent developments suggest the deal is likely to close. At the same time there is opportunity to hedge the risk of the deal failing.