I followed the two of you here from the CSE board, and am looking at what I will do with the cash from that deal. I bought Case a contrarian play, and have never looked at merger abitrage situations before, but the subject has piqued my interest.
A Formula I found for valueing these opportunities requires a value for % chance of success. There were no guidelines given in the text for arriving at this value, however, and I wanted to know if you use any general guidelines, and/or any books you may recommend on the subject.
With the research I have completed to date, I am considering PLAY and SSI as possibilities for the cash from Case.
I'm not sure what use a formula would be in evaluating a merger deal, as all you'll have is subjective opinions going in with subjective opinions going out! I think you have the evaluate the following simple things with these deals:
- when will the deal happen?
- how will the deal be financed?
- are there anti-trust concerns with the deal?
- are there any other legal issues with the deal?
- what is the discount, and what conditions apply?
How you answer these is up to your own analytical ability. Be prepared for some mind-numbing volatility along the way!