Earn 6% in the next 5 months (merger arbitrage)

[Shoe]

This one is as close to a done deal as you can get (in my opinion of course). I agree I am not a merger expert but am very familiar with both of these companies.

[Phone Booth]

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This one is as close to a done deal as you can get (in my opinion of course). I agree I am not a merger expert but am very familiar with both of these companies.

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Answer these three questions: 1) what would the price return to (on the closing date) if the deal did not materialize, 2) given those target prices and a reasonable discount rate (say 8%), what does the probability of this deal closing have to be for this investment to break even (in other words, what does the market say about the probability of this deal closing)? 3) given this market perception, why do you think the actual probability is even higher?

[The Rain King]

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given those target prices and a reasonable discount rate (say 8%)

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I think this is the part that's really not getting enough attention. Even if you just call your discount rate something comparable to high yield savings accounts (5.5% APY?) this deal becomes a lot more questionable. You could get 2.3% risk free in that savings account in 5 months, and it goes up to 2.5% if you can find a 6% account. Given that roughly half of the total return could be achieved with 0 risk I think it's hard to justify taking a bet on this merger, especially since there's not a lot of explanation. Maybe you could give some more guidance on why you feel it's nearly a done deal?

[Evan]

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This one is as close to a done deal as you can get (in my opinion of course). I agree I am not a merger expert but am very familiar with both of these companies.

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Why is the stock prices where it is (rather than closer to the offer price)?