Monday, 31 August 2009

Marvellous m&a Monday

Two good sized M&A deals were announced today, which the Raven is going to be involved in, but for slightly different reasons;

1) BHI bidding BJS, paying 0.4shares + $2.69. BHI opens down 8% and BJS opens up 8% and you'd think there isn't much to do, however the Raven has put on a trading position. Although this doesn't look like a homerun in terms of annualised spread he just doesn't think that its enough of a premium, and neither does the market, its not like there aren't other potential buyers out there. He's doing his work on valuation etc, but he's happy enough to put a small clip on speculatively on the rough work he's done so far.

2) DIS buying MVL is perhaps a subtler trade, as DIS has said that their stock will make up no less than 40% of the merger agreement, hence will have to include more shares should they below $26.845, which gives the holder of the m&a spread a put option on DIS, which then gives a nice 20% IRR given a dec deal close (which is a little to optimisitc he thinks). So more work to do.

That means he's got to make a little room on the long side of the portfolio and hence is reducing a little of the CYCL to do so.

No comments:

Post a Comment