Rogers Communications (RCI-B.TO) Arb, mcap=$23.4bn, price C$58.87 vs C$59.01

$RCI / $SJR arb pitch:
– Merger arbitrage play via $RCI bonds.
– In Mar’21 Rogers agreed to acquire Shaw at C$40.5/share.
– Antitrust approval is still pending.
– Recently divestment increases the likelihood of merger closing.
– 3.75% 2029 Rogers bonds will be redeemed at $101 if the merger does not close before the end of 2022.
– Hedged pair trade with other bonds without redemption language creates an asymmetric bet with an upside/downside ratio of 6.2x.

Valuation:
– Equity arb spread stands at 10%.
– 2029 redeemable bonds trade in the low 90s and offer an 8.5% upside if the merger is terminated or does not close by the end of 2022.

Exp. gain: +8.5% if the merger fails.

Full $RCI-B.TO write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/ROGERS_COMMUNICATIONS__-CL_B/1014207789

Published on: August 2, 2022  •  Published by:
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