takeovers/mergers

Discussion in 'Trading' started by n00b7r4d3r, Sep 18, 2007.

  1. this morning i had the chance to buy some of tlg for 2.40 this article says that its getting bought out and shareholders are getting 2.50

    when this happens is it a sure thing? if i were to buy what could cause me to lose money? is there any fine print i should be reading? will the stock price converge to 2.50 or does it get priced at a discount for some reason?


    http://www.rttnews.com/sp/Quickfactsnew.asp?date=09/17/2007&item=244
     
  2. The risk is that the deal falls apart, or the terms are renegotiated. If it's a solid deal, it will trade at a discount to the final price because of the time until the deal closes. You're tying up money for a 10 cent/share profit. How long do you have to wait and what's the risk free rate of return elsewhere? All that stuff goes into the mix.
     
  3. "The risk is that the deal falls apart, or the terms are renegotiated."

    how common is this?
     
  4. GGSAE

    GGSAE

    It depends a lot on who the potential buyer is...i agree with lescor, that just seems like a poor risk/reward setup...if you're interested in m&as, look at some other takeover companies where the deal is a target date a few weeks away...you might be able to get some good trading in there.
     
  5. You really need to do the research on each deal (SEC, Edgar), and then be sure to listen to conference calls that may take place. There are no sure things with this kind of thing, until the very last couple of days.

    Don