Kelly: Playing the Arbitrage on BEAS

Includes: BEAS, ORCL
by: Thomas Kelly
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Wednesday morning I decided to use a bit of my leverage to buy a decent sized position in (BEAS) at $18.46. This is an all cash deal from Oracle (NYSE:ORCL), and they obviously have the money to pay it. The two companies have been in discussions about this deal for months, and I think that insulates the deal from the risk of problems arising before the deal closes in mid-2008. In the meantime, BEAS is trading at about a 5% discount to the deal, and a 10% annualized gain with minimal risk seems like pretty low hanging fruit given the volatility of the market. I don’t think that is insignificant, and this looks like it will become a very attractive arbitrage opportunity for the big guys.