RDA: A Unique Merger Arbitrage Opportunity With Great Return Potential
- Going long on RDA Microelectronics could generate a decent annualized return given the 8.76% premium and the estimated closing time of 2 months.
- The acquisition is highly likely to go through since it's part of government's efforts to consolidate the fabless semiconductor industry. A competing bid further reduces the downside risk.
- A market multiples analysis indicates the stand-alone stock is undervalued even after the price jumps since the acquisition talk.