IQ Merger Arbitrage ETF

The M&A (mergers and acquisition) (MNA) (MRGR) trend showed a rally since 1Q09. This rally continued until 4Q15. In 4Q15, the M&A deal was $11,150 billion.

Office Depot is a global supplier of office products and services to businesses and consumers. The company has 64,000 employees.

Once the proxy comes out, check the transaction background and see if they ran an auction. If not, a private equity buyer may step in after the deal breaks.

Staples stock was up on the announcement, and the analyst community understands the pressure this segment is under. At any rate, no Staples vote is needed.

Regarding the Office Depot and Staples deal, the MAC clause lays out the circumstances under which Staples can back out of its deal with Office Depot.

If another bidder tops the Staples bid, and Office Depot is unable to get shareholder approval, it will owe Staples a breakup fee of $185 million.

A war that affects the economy as a whole is not a material adverse change, but a hurricane that takes out Hospira’s manufacturing facilities is.

The material adverse change clause lays out the circumstances under which Pfizer can back out of its deal with Hospira.

Typically, what the first step merger arbs will do to get a handle on the antitrust is to look at the 10-Ks of each company.

The ETP–RGP deal and the MAC clause The MAC (material adverse change) clause is one of the first things that arbs look at. For the deal between Energy Transfer Partners (ETP) and Regency Energy Partners (RGP), the MAC clause lays out the circumstances under which ETP can back out of its deal with RGP. Let’s take […]

Energy Transfer Partners owns natural gas transportation pipelines that receive natural gas from other mainline pipelines and gathering systems.

This article covers what you should know about the RGP and ETP merger.

In merger arbitrage, the acquiring company generally buys the acquired company’s stocks and short sells them.

Liquid alts provide a way to generate income while preserving capital in the face of an anticipated rise in interest rates.

News reports in August noted that Renaissance Technologies LLC, Jana Partners, David Einhorn’s Greenlight Capital, Dan Loeb’s Third Point LLC, and Paulson & Co. posted losses in July.

Risk arbitrage as a strategy is basically the act of picking up nickels in front of a steamroller. When a deal successfully closes, you get a nickel. When a deal breaks, you lose a buck.

Antitrust is usually the biggest risk for a deal to break. All mergers over a certain dollar threshold must pass muster from the antitrust authorities in the U.S. and if they do business overseas, the antitrust authorities there.

If there’s a vote for the deal, the next step will be the release of the preliminary proxy statement. The proxy statement contains all the data in the merger agreement as well as some other important pieces of data.

Typically, approaches end up with a deal. Why? The target board of directors has a fiduciary duty to shareholders to get the best price for the company.

Not all deals are cash deals, however. Often companies will issue stock in lieu of giving cash for a deal. This adds a layer of complication to the process and also some risk factors we need to consider.

What are the components of a risk arbitrage spread? There are a number of factors that figure into a trade. Let’s look at a typical cash deal first.

Merger arbitrage, otherwise known as “risk arbitrage,” is an investment strategy that primarily focuses on mergers and capturing the spreads on announced deals.