Merger Arbitrage

This one day course provides the foundation for any fund manager looking to explore merger arbitrage. Delegates will gain insight into the benefits of adding merger arbitrage to an investment portfolio, the mechanics behind merger arbitrage, and the practical considerations and potential pitfalls of the strategy.

The course focuses on merger arbitrage in the UK and US and includes examples and regulations from other countries such as Australia and Canada.

November 23, 2017
Duration: One day (9.00am to 5.00pm)
Location: The Tower Hotel – London E1, UK
Trainer: Thomas Kirchner
Course fee: £1195 + VAT – Register online

Course Outline

Part 1: Introduction
Benefits of Merger Arbitrage for a Diversified Portfolio

+ Volatility of stocks going through a merger
+ Return and correlation characteristics of merger arbitrage
+ Risk and return of merger arbitrage funds
+ Benefits of merger arbitrage in a diversified portfolio

Part 2: Mechanics of Merger Arbitrage

Incorporating Risk into the Arbitrage Decision 
+ Probability of closing
+ Severity of losses
+ Expected return of the arbitrage

Sources of Risk and Return 

+ Deal spread
+ Liquidity
+ Timing and speed of closing
+ Dividends
+ Short sales as a hedge and an element of return
+ Leverage boosts returns
+ Covered call writing
+ Commissions and portfolio turnover
+ Bidding wars and hostile bids

Deal Structures: Mergers and Tender Offers 

+ Mergers: Cash Mergers and Stock-for-Stock Mergers
+ Tender Offers
+ Comparison of mergers and tender offers
+ Case Study (Canadian deal structures)

Part 3: Pitfalls of Merger Arbitrage 

+ Financing of mergers versus tender offers
+ Uncertain merger consideration
+ Investment banks and fairness opinions
+ Systemic risk

Legal Aspects

+ Merger process
+ Takeover defenses
+ US Case Studies
+ The UK's Takeover Panel

Special Considerations

+ Management compensation and continuing management interest in buyouts
+ Related party transactions
+ Private equity buyouts
+ Minority squeeze-outs

Government Involvement (with US and UK Case Studies)

+ Antitrust
+ State Government
+ Federal Government
+ Trade Unions

Ways to Fight Abuse of Shareholders in Mergers

+ Case for activist merger arbitrage
+ Legal tactics
+ Public opposition

Part 4 Investing in Merger Arbitrage 
Practical considerations

+ Trading versus investing
+ Leverage and options
+ Shorting stocks
+ Transaction costs
+ Managing the cash position
+ Risk management
+ Standard & Poor's Merger Arbitrage Index
+ Separate accounts
+ Hedge funds and mutual funds