Summary of 2016’s Top 10 Deals Terms
There is a list of companies who have made deals to join businesses in the year 2016. First, Shire Plc is to merge with Baxalta in which Baxalta shareholders are to be given & 47.50 for every share. This means that each member of the company will be allocated $ 18.00 in cash in addition to 0.1482 Shire ADS for every share from Baxalta which amounts to a total price of $ 32.00 billion. Secondly, Microsoft has entered into a contract with LinkedIn in which it Microsoft is to buy all its shares at price of $ 196 in any business deal all of which will amount to $ 26.2 billion. One of the terms of the agreement is that LinkedIn will retain its distinctiveness as it is known in the market, and the Chief Executive Officer will remain in office. Thirdly, Abbot intends to purchase St. Jude Incorporation and each shareholder in St. Jude will be given a total of $ 43.93(2). The whole merger will cost Abbot Incorporation $ 25.00 billion. Fourthly, Tianjin has agreed to partner with Ingram and form a merger at the price of $ 38.90 in cash for every share held by Tianjin’s shareholders which total to $ $ 6billion. Moreover, Fortis has contracted with ITC Holdings Corporation in order to form a merger. Fortis has agreed to buy ITC Holdings at US $ 11.3 billion in which every shareholder in the corporation will be given a cash of $ 22.57. Sixthly, paints and coatings companies, Sherwin-Williams and Valspar have agreed that Sherwin-Williams will buy Valspar at one time price value of $ 11.3 billion or in the alternative, each shareholder is to be given $ 113 for every share held by them. Seventhly, ADT shareholders are to benefit from its acquisition by certain conglomerates of Apollo Global Management at a price of $ 42.00 in cash for every share acquired. Furthermore, Tyco Incorporation and Johnson Controls are merging to form a larger company dealing in building products. Tyco is to be bought at a price of $ 14.35 billion. Similarly, TransCanada Corporation is acquiring Columbia Pipeline Group Incorporation at $ 25.50 in cash for every share in addition to an 11% premium which is to be calculated on the closing stock value of TransCanada Corporation. Finally, Great Palins Energy Incorporation has agreed to buy Webster Energy Incorporation at $ 12.2 billion (M&A Insider 1).
How Hedge Fund Would Trade Each of the 10 Top deals
The aim of a hedge fund is to trade in albeit risky ways in order to realize high profit margins at the earliest time possible where mergers have taken place. Therefore, in order to trade in the merging companies, it has to buy and sell the shares of each company with a focus on the shares of the companies to be acquired through a merger arbitrage. Hedge fund will thus buy in cash the shares which are to be bought at cash and buy stock where the subject of merger is stock.
Trades to be put on by Our Hedge
The three trades with the possibility of giving high profit margin for our Hedge are Microsoft-LinkedIn deal, Baxalta-Shire deal and Sherwin-Williams-Valspar deal. This because the period in which these agreements are to be completed are short and it means that the risk of losing profits is reduced because the deals are definite and the time period left for the deals to be sealed is little. Therefore, many people are rushing to buy the shares before their price goes down in case of a merger breakdown. Secondly, the price of shares of the companies to be acquired are lucrative and the companies acquiring them have a strong market base which means that they will be sold at higher prices to the new shareholders and thus fetch high profits.
Works Cited
"M&A Insider." StreetInsider.com. N.p., n.d. Web. 1 July 2016.
