Merger Arbitrage


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Merger Arbitrage

In the context of hedge funds, a style of management that involves the simultaneous purchase of stock in a company being acquired and the sale of stock in its acquirer.

Merger Arbitrage

A strategy in which a hedge fund buys shares in two companies that are in the process of merging and sells the shares after the merger is complete. Merger arbitrage can be profitable because stock prices often decline in the process of a merger because of the possibility that the merger negotiations will fail. They then go to a higher price after the merger is complete. Because this phenomenon is so consistent, the hedge fund using merger arbitrage effectively makes a riskless profit.
References in periodicals archive ?
The firm has been running merger arbitrage portfolios since 1985.
mergers-graphicSeveral large US funds such as Citadel, Moore, DE Shawand Perry Capital scaled back their European merger arbitrage operations during the economic crisis as deal activity dried up and their ability to borrow was curbed.
Since the key drivers of merger arbitrage returns are different from the key drivers of equity market returns, the performance of a merger arbitrage strategy is not expected to be correlated to equity markets over time.
These three new indices, in addition to our existing S&P Merger Arbitrage Index, provide investors sophisticated and transparent benchmarks that reflect how these significant events impact a company's performance.
Schefrin spent 15 years at Bear Stearns where he was a Senior Managing Director and Global Head of Merger Arbitrage.
At the same time, our risk-controlled approach is paying off, as the fund consistently has been a top performer in the merger arbitrage category.
NEW YORK -- IndexIQ, a leading developer of index-based alternative investment solutions, will ring The Opening Bell(SM) at the New York Stock Exchange this morning in a ceremony that will mark the November 17,2009 launch of the firm's IQ ARB Merger Arbitrage Exchange-Traded Fund (ETF), the first merger arbitrage ETF (NYSE Arca: MNA).
IndexIQ, a leading developer of index-based alternative investment solutions, has introduced the first merger arbitrage Exchange-Traded Fund (ETF) designed to give investors exposure to global corporate merger & acquisition activity, which is rapidly increasing, it was announced today.
Exchange Traded Notes due October 6, 2020 Linked to the Credit Suisse Merger Arbitrage Liquid Index (Net) ("ETNs")
With a focus on credit and merger arbitrage strategies, Mereor needed a risk and portfolio management system that would provide extremely flexible stress testing capabilities, a high degree of user-defined customization capabilities, and reporting transparency sufficient for the demands of today's investors.
The HFRX Global Hedge Fund Index is comprised of all eligible hedge fund strategies; including but not limited to convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage.
NEW YORK -- Wall Street Access, a New York-based independent securities firm that provides clients with institutional brokerage, securities research and wealth management services, today announced that it has launched a new, web-based merger arbitrage information service that significantly expands the firm's current online offerings on mergers, acquisitions and special situations opportunities.