Monday, 11 May 2009


Interesting to watch the JAVA m&a spread trade. Friday JAVA opened down big time on because they'd 'may have broken a law prohibiting US companies from bribing foreign officials', Oracle came out and said that they knew this before they agreed to the merger, so Friday the stock opened as low as 8.77 (annualized spread of ~35%), then traded all the way back up to close at 9.14 ~15% a.s. Its interesting to the Raven as the price action looks a little weak this morning in early trading. Its at 9.06ish now, which is at the return threshold for the Raven, given that JAVA picked ORCL because of their ability to move quickly, get the deal done because they knew the firm, this would indicate that its not really new news as such and perhaps the price action and rumour knocked out a few weak hands that stuffed the rest of the market with a chunk of paper? it'd be nice to have a look at the merger agreement in more detail and see whether this is explicitly excluded from the MAC clause, particularly if one thinks that the market could well have a sell off from here and that a spiv might want to renegociate the price down (the Raven doesn't think that's really Larry Ellison's form though).

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