An acquirer has made an unsolicited (hostile) offer for a target, of $75 per share of the

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Question:

An acquirer has made an unsolicited (hostile) offer for a target, of $75 per share of the target, in cash. The stock market reacted to the announcement of the tender offer by increasing the target stock price to $77 a share. Which of the following options would you disagree with?

CHOOSE ONE

A. There is a high probability that the target will eventually be sold.

B. The market may be expecting that another acquirer makes a higher offer for this target.

C. The arbitrage spread in this case is positive.

D. The market expects the deal price to increase above $75.