The spread is currently very negative. So if arbs are holding the positions, they're betting on a sweeter deal (Chinese arb). If they do have a traditional arb position on (which I cannot imagine), they'll lose money on the consummation of the deal as structured from this price.
A typical arb (arbitrage) on a merger is going long the target and short the acquiror. This is done because generally the target trades at a discount to the actual deal price for two main reasons: 1) The time value of money (say company X is being acquired for $50, but the deal doesn't close until October, so today it trades at $49 just as a reflection of interest rates) 2) The risk that the deal does not happen. So, if company X was trading at $40 before the announced takover, it may only trade to $46 because the arbs think the odds of the deal closing aren't great.
A Chinese arb is the opposite of the situation I described (go short the target and long the acquiror). This is what arbs do when they think the deal won't consumate.
In MTOH's case, I meant a Chinese arb just in the sense that it's a wierd deal where you'd be long the target and short the acquiror but for the opposite reason of normal (normally it's because you think the deal will consumate, but this time it's because you think the deal won't consumate or will be done at a better price).