Risk arbitrage/merger arbitrage
Risk arbitrage, also called merger arbitrage, is a form of speculation on the outcome of takeover bids. It is essentially an absolute return strategy and should usually be market neutral.
Risk arbitrage
Speculation on perceived mispriced securities, usually in connection with merger and
acquisition deals. Mike Donatelli, John Demasi, Frank Cohane, and Scott Lewis are all hardcore arbs. They ...
Risk arbitrage
The practice of buying the stock of takeover targets after a merger is publicly announced and hold the stock until the deal is officially accomplished. ...
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risk arbitrage
Event driven trading strategies seek to exploit relative mispricings between securities whose issuers are involved in mergers, divestures, restructurings or other corporate events.
ARBITRAGE (RISK ARBITRAGE) - Simultaneous purchase of a security and sale of another to generate a risk...
ARBITRAGE BONDS - Municipality issued bonds issued intended to gain an interest rate advantage by refun...
Risk arbitrage
Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer.
risk arbitrage
arbitrage involving risk, as in the simultaneous purchase of stock in a company being acquired and sale of stock in its proposed acquirer. Also called takeover arbitrage.
Risk Arbitrage - Is a form of trading whereby the risk arbitrageur attempts to profit from issues involved in merger/acquisitions. The underlying rationale is that the current price after the announcement is still below the bid price.
Often used in risk arbitrage. Firm that has been chosen as attractive for takeover by a potential acquirer.
Often used in risk arbitrage. Antitrust act administered by U.S. Department of Justice and the FTC that requires an investor to file a form with the government before he acquires an economic interest in the lesser amount of $15 million or 15% of the ...
Often used in risk arbitrage. Hostile takeover attempt in which the acquirer offers an exceptionally large premium over the market value of the acquiree's share so as to as to squeeze (hug) the target into acceptance.
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Often used in risk arbitrage. Plan by a target company to restructure its capitalization (debt and equity) in a way to ward off a hostile or potential suitor.
Recapture ...
Often used in risk arbitrage. Firm chosen as an attractive takeover candidate by a potential acquirer.
Stub
Often used in risk arbitrage. Piece of equity security left over from a major cash or security distribution from a recapitalization.
Safe harbor Often used in risk arbitrage as a form of shark repellent. A target company acquires a business so onerously regulated that it makes the target less attractive, giving it, in effect, a safe harbor.
Parking violation Often used in risk arbitrage. Illegal holding of stock by a third party, or the financing of such a stock, in which the third party's sole reason for holding the stock is to conceal ownership or control of a raider, ...
Cash offer Often used in risk arbitrage. Proposal, either hostile or friendly, to acquire a target company through the payment of cash for the stock of the target. Compare to exchange offer.
Recapitalization proposal Often used in risk arbitrage. Plan by a target company to restructure its capitalization (debt and equity) in a way to ward off a hostile or potential suitor.
In play Often used in risk arbitrage. Company that has become the target of a takeover, and whose stock has now become a speculative issue. In-the-money option An option that has value. In & out Refers to over-the-counter trading.
Risk arbitrage focuses on of whether or not an announced merger or acquisition will actually be consummated in a timely manner independent of market prices.
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Often used in risk arbitrage. Auction system in which the price of an item (stock) is gradually lowered until it meets a responsive bid (government T-bills) or offer (corporate repurchase) and is sold.
Definition: [crh] Often used in risk arbitrage. Firm chosen as an attractive takeover candidate by a potential Definition: acquirer"acquirer. The acquirer may buy up to 5% of the target's stock without public Definition: EF="/?
Merger arbitrage (Risk arbitrage) - exploit pricing inefficiencies between merging companies.
Special situations - specialized in restructuring companies or companies engaged in a corporate transaction.
Investors called risk arbitrageurs attempt to make profits from an expected rise in the price of a takeover target's shares and a drop in the price of the bidding company's shares.
Merger arbitrage also called risk arbitrage would be an example of this. Merger arbitrage generally consists of buying the stock of a company that is the target of a takeover while shorting the stock of the acquiring company.
Cross-share holdings
Often used in risk arbitrage. Corporations' or governments' equity share ownership in another corporation's shares.
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An arbitrageur might participate in risk-free arbitrage (true arbitrage) or an arbitrageur might be involved in risk arbitrage (statistical arbitrage).
and Robert Vishny (1997) and others noted that, while market efficiency requires traders to act quickly on their information out of fear of losing their advantage, mispricing can persist because it offers few opportunities for low-risk arbitrage ...
A list of stocks that are ineligible for trade by an investment bank's risk arbitrage division. The gray list is composed of firms working with the investment bank, often in matters of mergers and acquisitions.
You can now use your marketing know-how, IT acumen and financial savvy to determine whether AOL TW's fundamentals justify it being worth twice as much as News Corporation. Risk arbitrageurs can then play one security off the other, ...
(4) Risk arbitrage applies the principles of risk offset to mergers and other major corporate developments.
risk arbitrage The use of an arbitrage, usually associated with risk. risk capital The funds made available for startup firms and small businesses with exceptional...
'Arbitrage' or 'risk arbitrage' often used loosely to describe the taking of positions in related securities, e.g., at the time of the takeover bid.
 See also: Expense, Banks, Values, Funding, Systematic risk
  
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