Merger Arbitrage


Also found in: Dictionary, Thesaurus, Legal.

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 ?
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.
Gabelli Funds believes there is a compelling opportunity for investment in merger arbitrage; merger arbitrage returns, while non-market correlated, have historically been less volatile than the returns of the stock market as a whole.
The second sub-fund within the firm's Luxembourg based SICAV, GAMCO Merger Arbitrage will be offered outside of the US to institutional and retail investors and will initially register retail shares in Switzerland, Germany, and Italy.
Merger arbitrage strategies contributed 15 basis points to the index performance in September, while long-biased corporate credit strategies continued to benefit from the recovery in the high yield credit markets, added another 16 points.
a hedge fund based in New York, where he focused on investing in international distressed debt, merger arbitrage and special situations, including several investments in the TMT space.
Needham & Company, LLC has added key research, sales and sales trading professionals in Health Care Services Research; Boston Equity Sales; Corporate Access Origination & Client Strategy; Event-Driven, Special Situations & Merger Arbitrage Sales; and Sales Trading, the company said.
Special situations, credit and merger arbitrage funds in the liquid alternative event-driven sub-index gained 0.
Mattison noted, Gabelli Securities has a terrific record in the hedge fund business, historically in Merger Arbitrage and is extending it to other core competencies.
The LAB Merger Arbitrage Index remains the best performing sector with year-to-date gains of 5.
ArbJournal, LLC, the leading source for real-time merger arbitrage research and analysis, is pleased to announce the expansion of its product offerings into Europe.
The special situations sub-index gained 2%, and merger arbitrage was up 0.