arbitrage, information theft and insider trading

Michael Jensen

from Palgrave Macmillan

Abstract: Risk arbitrage involves the purchase of a target firm's shares on the announcement of a merger or tender offer. These transactions provide a risky profit opportunity when the price of the target is below the risk-adjusted expected value of the final takeover price. This article explores the role of arbitragers in the merger and acquisition of firms, and how their role is important to the process and is not to be confused with insider-trading.

Keywords: takeovers; mergers and acquisitions; Securities and Exchange Commission; arbitragers (search for similar items in EconPapers)
JEL-codes: G3 G32 G34 (search for similar items in EconPapers)
Date: 2012
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