Friday, January 29, 2010

3Com Risk Arb Play

I received the proceeds from the closing of the Sun Microsystems deal today and used the cash to pick up some 3Com Corporation (Ticker: COMS), which is being acquired by Hewlett Packard (Ticker: HPQ) for $7.90 in cash. China is currently initiating a second stage investigation into this transaction, but it’s expected that they will eventually give their blessing. This is spooking the arbs a bit so this is the reason for the wide spread. Right now, the anticipated closing date is the end of April, which gives you a nice annualized return of ~ 24%. Time will tell, hopefully it will not be another drawn out saga like Oracle (Ticker: ORCL) vs the EU Competition Commission.


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