Nastassia Samal
Summary
- Merger arbitrage spreads are wide.
- There are plenty of opportunities with spreads of up to 118%.
- This is a review of the most interesting transactions in the merger arbitrage space.
- Looking for more investing ideas like this one? Get them exclusively at Special Situation Investing. Learn More »
Merger arbitrage is an event-driven investment strategy of betting on a successful acquisition of a publicly-listed company. Generally, from the time a merger is announced until closing, there’s some uncertainty whether the transaction will close successfully. The spread between the target company’s trading price and the offer price is generally supposed to reflect the risk/uncertainty the market sees in the transaction. I find that quite often (especially in smaller cap deals) the market is mispricing those risks, which creates attractive investment opportunities.
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