Merger Arbitrage IBM / RHT

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A classic example of Merger Arbitrage this morning with IBM announcing they are paying a premium for Red Hat.

RHT jumped almost 45% at one stage (notice the huge gap) with IBM moving in the opposite direction.

Financial theory states that "a merger arbitrageur typically buys shares of the target company's stock, in this case RHT, while shorting shares of the acquiring company's stock (IBM)."

Aviso legal

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