Initiated Position in Cubist Pharmaceuticals

I started scaling out of my Multimedia Games (Ticker: MGAM) position by selling the common and closing out some of the short Puts in order to allocate the funds to Cubist Pharmaceuticals (Ticker: CBST). I initiated a short Put position on Cubist yesterday, which was obviously a day too early! I initiated a long common position in Cubist today at an average price of $97.78. I see this as a very good risk reward play as Cubist sold off a bit on worries that Merck (Ticker: MRK) may pull out of the deal due to the adverse court ruling on Cubist’s lead product Cubicin. I can’t see how Merck if it even wanted to can pull out of this deal. No material adverse event (MAE) was triggered with this court decision and to pull out of a deal due to a MAE is a huge hurdle. The courts take a very dim view on those who try to back out of a deal using MAE as an excuse. In any case, I can see this deal closing in ~ 60 days via tender offer with a potential net gain of 4.31% or ~ 25% annualized.