....the acquiring company often offers a premium. Say, the old price was $10 per share. The acquiring company will pay $15 per share. Current market price is $14. Is there an arb opportunity here, or do I have to be a holder of the stock at some past date to get the $15 per share price?
2007-01-30 06:45:00 · 3 answers · asked by guiltphree 1 in Business & Finance ➔ Investing
This difference stems from two things:
1) Possibility that deal falls and you'll never get $15
2) Time value of money, the $15 you are being offered might take a long time for you to get them, some deals take up to a year to close
2007-01-30 08:42:55 · answer #1 · answered by Ruben G 2 · 0⤊ 0⤋
if you dont own the stock when it is taken over, you WILL NOT profit from the aquisition. Although, if you think the stock will go up after the take over, you certainly can purchase the stock at Market Value and make the difference when it goes up.
2007-01-30 14:50:21 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The Merger Fund takes advantage of this very situation, and they do it very well.
2007-01-30 22:53:20 · answer #3 · answered by gosh137 6 · 0⤊ 0⤋