Specifically, MNA provide investors with a diversified approach to a group of takeover targets. The fund capture the spread or difference between a stock’s trading price before a deal is announced and its eventual takeover price. Currently, BHI is trading at about an 8% discount to the $67 takeover price that Halliburton offered as of Tuesday’s close. The deal has been extended to close by December 1.
“It’s a wide spread, which people might want to take advantage of,” Roy Behren, portfolio manager at Westchester Capital Management, said in the Reuters article.
Nevertheless, merger experts warn that the widening spread between BHI’s current price and takeover target only reflects the growing pessimism that a deal will be completed this year.
The M&A space has been hit with some high profile deals that failed to take off due to anti-trust concerns. More recently, Comcast (NasdaqGS: CMCSA) abandoned a $45 billion offer for Time Warner Cable (NYSE: TWC). TWC is 5.8% of MNA, and ProShares Merger Arbitrage ETF (NYSEArca: MRGR) also includes a position in TWC.
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Max Chen contributed to this article.