Scott Siegel, manager of an M&A hedge fund, watched the tape go across his Bloomberg screen at
Question:
Scott Siegel, manager of an M&A hedge fund, watched the tape go across his Bloomberg screen at 4:00 p.m. on June 13, 2001. Celera Genomics, a Rockville company known for mapping the human genome, announced it would acquire AXYS Pharmaceuticals Inc., an integrated small molecule drug discovery and development company. The deal was structured as a stock swap in which AXYS shareholders would receive 0.1016 Celera share for each AXYS share.
Celera share was at $41.75, and AXYS at $3.45 after the announcement.
As an M&A arb, Siegel would try to immediately take a position in AXYS and in Celera on the bet that the seller's share price would rise while the buyer's share price would remain same. What should be the seller's share price before Seigel could execute his trade so that there is no arbitrage opportunity for him . Give your answer up to two places of decimal and without the $ sign.
Understanding Business Ethics
ISBN: 9781506303239
3rd Edition
Authors: Peter A. Stanwick, Sarah D. Stanwick