14%+ upside, closing expected in 1.5 months
This merger arbitrage was initially treated as a done deal, with the spread hovering around 2%. But it recently widened to 14%, likely due to market overreaction to regulatory news. It seems that investors may have misinterpreted the news as a potential material adverse effect (MAE), which could cause the buyer to walk away.
In reality, there are multiple strong arguments, which show that the news were immaterial and very unlikely to trigger MAE. The parties just filed the merger documentation, indicating the process is moving forward. Closing is expected in 1.5 months.
All things considered, the meger looks likely to close, and I’d expect the remaining spread to tighten quickly.
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