Juicy Spread

On June 1st, 2023, I wrote up a merger arbitrage idea that had a juicy 9.0% spread to the acquisition price. The company in question was a pink sheet illiquid shitco with a market cap under $7 million. If the deal to be acquired was approved, investors were locking in a quick 9% return in short order. A crazy high return if you annualize it.

There were two things standing in the way of the merger from closing:

1. Approval from shareholders at the July 14th, 2023 meeting

2. Final approval from the Ontario Court of Justice approving the merger and authorizing the closing

The board has unanimously recommended the deal to be approved. The CEO and directors own 17.24% of the stock and an estate with another 7.78% of the stock. With 25% of the stock held by insiders and an estate that is likely wanting to cash out, the approval from shareholders on July 14th is likely to happen.

The stock has moved up from my original writeup, but there is still a pretty attractive spread that investors can lock in.

Let’s dig in…