Tesaro Arb Play

I really like the Tesaro arb play at this current price (~$73 and change). GlaxoSmithKline (Ticker: GSK) announced a definitive agreement to acquire Tesaro (Ticker: TSRO) for $75.00 in cash on December 3rd. The company initiated the tender offer today with the tender expiring on January 14^th. The company has stated that it plans to file for antitrust clearance on December 17^th, which would equate to a HSR decision by January 4^th. I don’t see any antitrust issues. The company does not have any scheduled clinical read outs prior to the closing of the tender offer. Of course there can be a curve ball such as adverse clinical events resulting in a clinical hold or Zejula (PARP inhibitor for ovarian cancer) being pulled from the market, which will result in a material adverse event. These are risks you face with any pharma / biotech buyouts. At the current price, you are looking at a mid-teens annualized return, which I find attractive. I am playing this deal via short puts and long common.

Edit: Company filed for antitrust clearance on December 14^th with the HSR 15 day waiting period expiring on December 31^st.