Mergers and Acquisitions Arbitrage Activity


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The merger arbitrage activity has been slow of late and it is no surprise. I mentioned in January that I expected mergers and acquisitions to slow down as financing became difficult to acquire.

In particular, merger arbitrage opportunities have been scarce ever since the failed EMAG deal with Stanford (my theory anyways) and the spread for other mergers have not been wide enough to offer any real decent returns.

I invest in mergers when it is close to finalized in order to reduce as much risk as possible. Step 5 is usually a good time to invest in a merger if the spread is still decent on an absolute basis after considering fees.

I do not invest after a merger announcement as there are too many variables to consider.

  1. Due diligence by both parties
  2. Financing and regulator approval
  3. Get preliminary shareholder sentiment (or controlling shareholder approval)
  4. Obtain regulator (SEC, FCC, any and all) approval
  5. Get final shareholder approval at a meeting called for that purpose
  6. Insiders continually vesting or buying shares

Pending Merger Acquisition Arbitrage List

Looking at this list, there isn’t much to take advantage of. Disk has far too much risk involved and the company fundamentals are terrible for it to be a standalone company.

Fat Pitch Financials recently tweeted about an initiation of ENPT which does seem to be the best merger at the moment.

As always you can find the latest pending details at MergerInvesting

SymbolAnnounced DateClosing ValueLast PriceClosing DateProfitAnnualized Profit
DISK11/20/2008$2.75$1.584/6/200974.05%0.00%
ACBA9/10/2008$5.14$6.044/30/2009-14.97%-237.58%
FRBK11/10/2008$7.12$7.604/30/2009-6.26%-99.31%
NTMD1/27/2009$0.80$0.754/30/20096.67%105.80%
BFBC11/10/2008$9.21$9.684/30/2009-4.86%-77.07%
CVTX3/12/2009$20.00$19.944/30/20090.30%4.78%
EQ10/27/2008$37.94$37.386/30/20091.49%6.46%
CYCL11/7/2008$8.50$8.326/30/20092.16%9.40%
ZICA2/26/2009$0.81$0.776/30/20094.68%20.32%
ABNJ12/15/2008$7.83$9.506/30/2009-17.57%-76.35%
PBKS12/19/2008$8.07$7.526/30/20097.29%31.67%
AANB1/2/2009$2.38 $2.25 6/30/20095.87%25.53%
SWIM1/8/2009$8.89$8.756/30/20091.58%6.86%
AVNX1/27/2009$28.97$2.146/30/20091253.96%5448.77%
NCX2/23/2009$6.00$5.836/30/20092.92%12.67%
GVHR3/5/2009$4.00$4.016/30/2009-0.25%-1.08%
ENPT3/11/2009$2.50 $2.05 6/30/200921.95%95.38%
LIMC4/3/2009$2.48 $2.25 8/15/200910.44%29.32%
MXGL3/2/2009$16.77$16.489/30/20091.78%3.69%
MV4/1/2009$25.72$25.049/30/20092.71%5.61%
WYE1/26/2009$46.35 $42.48 10/31/20099.10%16.05%
TKTM2/10/2009$3.88$3.8111/15/20091.71%2.81%
SGP3/9/2009$25.63 $23.20 12/31/200910.49%14.28%
FCVA4/3/2009$9.25 $8.00 12/31/200915.62%21.27%

Disclosure

No positions held at time of writing

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