Jimmy Lathrop

Merger Arb Spreads: Still High, But Mellowing

It's always very interesting that Merger Arbitrage was trampled under the rush to buy into Commodities and play with ETFs and all of that nonsense. Now that the counterparties are insolvent and unwinding their trades, all of that quick money has evaporated. Then we had the completely unbelievable rumor that banks would never loan money again, which, combined with these unregulated institutions deleveraging, pushed the target shares into the basement. Now Paul posts this chart, and we have companies who are looking to boost their revenue through acquisitions, and you can only draw two conclusions. One, there must be really heavy selling pressure through redemptions to be unable to hold onto their shares and two, people have forgotten that investment banks weren't always driven by their nutty prop trading desks, but by actual INVESTMENT.