Intervest Bancshares: Market Correctly Reflects Merger Risks - No Mispricing
- The market is currently fairly pricing the spread of the IBCA / OZRK merger transaction.
- The spread between current market price and acquisition price is attributed to a number of risk factors relating specific to this deal as well as general merger arbitrage situations.
- The potential upside of max 5% in 6 months is not worth taking, keeping in mind that finally realized upside might be even lower.
- The downside in this case is 17.5%, which is where the share price traded before the acquisition.