Merger Arbitrage With a High Spread / IRR

Seems like a done deal, with closing set for March 2026.

The company is being acquired by its partner, a giant industry player for whom this is a very strategic deal. The buyer already owns adjacent assets, has spent months on due diligence, and has even bumped the takeover price once. Regulatory risk looks minimal. As for shareholder approval, there are no large holders that could form anything close to a blocking stake. The offer comes at an enormous premium to pre-announcement prices and follows and strategic discussions with multiple parties, suggesting this takeover was likely the best option available. No competing bids have surfaced since. It is therefore hard to see why shareholders would vote this transaction down and risk substantial downside.

There is some noise on retail forums arguing the price is too low, but that is hardly unusual. Plenty of deals with loud online opposition still pass without much drama. On its own, that does not move the needle. The undervaluation arguments also do not strike me as compelling. Overall, I think the odds of outright rejection are fairly low. And even if resistance starts to gain traction, it would not be surprising to see the buyer come back with a sweeter offer, given the clear strategic fit and the fact that it has already shown a willingness to raise the price once before.

This post is for paid subscribers, to continue reading please log in or sign up.