MIL Takeover after "Leak" - Surprise Bidder

Discussion in 'Trading' started by livevol_ophir, Mar 1, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    Details, charts, skews, trades, news history, prices here:

    ** UPDATE #2

    You can read the original post <a href=""><b>BY CLICKING HERE</b></a>.
    You can read the first update post <a href=""><b>BY CLICKING HERE</b></a>.

    MIL is trading 104.72 up almost $10.31 with vol down 80%.

    The news is a takeover bid for $107.

    The surprise is not the takeover or the price - but the bidder. The news as broken by Bloomberg last week that TMO was going to make a bid. MIL went from $72 to $102 and finally settled to $87. When there was no denial or confirmation but the company hired Goldman as its financial advisor, the stock crept up to $94 but the vol remained high. Today the news is that MRK is the bidder for the same expected price. There may be a possibility for a counter bid but the price is not reflecting that possibility.

    Usually if a bidding war ensues (or is expected to ensue) the underlying will trade higher than the bid price. In this case we don't see that yet.

    The snapshot of the first two months Options Tab is included (in the article). I have highlighted the Mar and Apr 105 and 110 calls. You can see the Mar 110s are no bid and the Apr 110s are only 0.10 bid. The market (the stock, the options prices and the vols) are pointing to no second bid. We'll see...

    Details, charts, skews, trades, news history, prices here: