As you probably know, credit has really tightened and it is putting pressure on investors looking to make an arbitrage profit.
Let's revisit the BCE deal example. Let me first remind you that a deal has been signed to sell the company at C$ 42.75 in December 2008. However, the stock is now trading at C$ 33.00 on the Toronto Stock Exchange. The arbitrage profit looks very attractive, but with the credit crisis worsening, doubts about the financing of the transaction are getting bigger and bigger every day.
Still no news from Garda's review of strategic alternatives (and expected sale of its armoured car unit). Could tight credit conditions be the reason why a deal has yet to be signed?
Arbitrage profits aren't 100% "guaranteed" even if a deal is signed or highly expected. Merger and acquisition arbitrage is much "safer" when markets conditions are "normal" and there is a steady flow of M&A successfully completed.
No comments:
Post a Comment