Seeking Alpha
Bonds, long-term horizon, dividend investing, macro
Profile| Send Message| ()  

For investors interested in capturing the spread between cash tender offers and the price at which the takeover target is currently trading, here are three possibilities:

Amgen (AMGN) is offering $11.00 per share in cash to shareholders of Micromet (MITI). The tender offer expires Thursday, March 1, 2012. Micromet is currently trading at $10.93. The expected closing date for this deal is sometime in the first quarter of 2012. An investor purchasing Micromet at $10.93 on Monday, February 6, 2012 with a settlement date on the purchase of Thursday, February 9, 2012 would realize a 4.50% annualized gain if the deal closes on March 31, 2012. If it closes sooner, of course the annualized gain would be higher.

Bristol-Myers Squibb (BMY) is offering $26.00 per share in cash to shareholders of Inhibitex (INHX). The tender offer expires this Friday, February 10, 2012 with a response deadline likely on Wednesday or Thursday, depending on the broker. Inhibitex is currently trading at $25.74. The most recent expected closing date is March 1, 2012. An investor purchasing Inhibitex at $25.74 on Monday, February 6, 2012 with a settlement date on the purchase of Thursday, February 9, 2012 would realize a 17.55% annualized gain if the deal closes on the expected date.

SAP (SAP) is offering $40.00 per share in cash to shareholders of SuccessFactors (SFSF). The tender offer expires this Wednesday, February 8, 2012 with a response deadline likely on Monday or Tuesday, depending on the broker. Given that settlement for shares purchased on Monday would be after the tender offer deadline, brokers are likely to tell investors that shares will be tendered on a "best efforts" basis. Therefore, investors interested in this arbitrage opportunity would need to act quickly and might not be guaranteed the ability to take part in the tender offer. The tender offer was recently extended because the companies are awaiting approval for the deal from the Committee on Foreign Investment in the United States. It is possible for the tender offer to be extended again.

SuccessFactors is currently trading at $39.83. The expected closing date for this deal is sometime in the first quarter of 2012. An investor purchasing SuccessFactors at $39.83 on Monday, February 6, 2012 with a settlement date on the purchase of Thursday, February 9, 2012 would realize a 3.0% annualized gain if the deal closes on March 31, 2012. If it closes sooner, of course, the annualized gain would be higher.

In closing, please keep in mind there is no guarantee any of these deals will close on time or close at all. Should a deal fail to go through as expected, there could be adverse consequences for shareholders in any of the companies mentioned in this article.

Source: 3 M&A Arbitrage Opportunities