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Contrarian, Deep Value, long/short equity, special situations

Intervest Bancshares: Market Correctly Reflects Merger Risks - No Mispricing

A recent article by Yuanxi Zhang identified the mispricing in Intervest Bancshares Corp. (NASDAQ:IBCA) merger, and recommended participating in the arbitrage opportunity. Having looked at the same deal, I believe his recommendation is flawed on several aspects and do not think the risks outweigh the potential return.

Merger consideration - only 5% upside in 6 months

The author of the previous article does not reveal the exact calculations, so I present them for the readers:

Total merger consideration $228.5m Option Cash out -$3.2m Total cash to be paid for common holders $224.3m Total shares outstanding (Jun, 2014) 22.02m Restricted share outstanding 0.44m Total shares outstanding upon merger 22.46m Merger payout per share $9.98 2 quarterly dividends (after tax) ...
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