Merger Arb Idea

All things excellent are as difficult as they are rare. – Spinoza

Scanning the merger arb tables today (1/18), ADAM caught my eye.

http://www.bloomberg.com/news/2011-01-03/arbitrage-profit-in-u-s-takeovers-pending-on-jan-3-table-.html?cmpid=yhoo

  • Target: ADAM (7.63/share)
  • Acquirer: EBIX (25.27/share)
  • Terms: .3122 shares of EBIX for each share of ADAM = 7.89 at current market price
  • Premium: 7.89/7.63 = 1.034.
  • Close date: 1/31/11
  • Details: 3.5mm termination fee.

I don’t think I need to tell you that 3.4% in <2 weeks is a nice chunk of change. Especially seeing as how you could’ve grabbed ADAM for 7.50 (5.2% premium) today.

1/14: Curious as to the figures around VRGY and LTXC.

1/18 Update: Nothing doing. VRGY/LTXC are involved in an interesting situation where VRGY offered to buy LTXC, then another company offered to buy VRGY, without LTXC. I thought about longing both, but the offer for LTXC is in VRGY which inflated the premiums.

1/14: ARG looks interesting…

1/18 Update: ARG has a huge premium and the board is retarded to oppose that bid. Still, it’s a gamble.

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