Upfront disclosure: I am long SWS and TWGP. TWGP is a distressed insurance company, and if their merger agreement were to fall through there is a significant chance of capital impairment. This article is intended for informational purposes only. Please do your own research.
Quick summary: At today's price of $2.80, the market is pricing in a significant chance that TWGP's merger agreement will fall through, leaving shareholders holding a seriously distressed insurer with limited options. However, a shareholder guarantee and Tower's significant upside potential to ACP and their related parties significantly increase the odds of the deal going through, providing shareholders with equity like returns (over 7% gross, or over 17% annualized) through a merger arb stock.
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