Monday, December 30, 2013

Some RDA Microelectronics, Inc.

I initiated a position in RDA Microelectronics, Inc. (Ticker: RDA) today by selling the June 2014 $17.50 Puts for $0.30. Tsinghua Unigroup is acquiring the company for $18.45 ($18.50 - $0.05 ADR fee = $18.45) in cash. RDA Microelectronics shareholders approved the merger on 12/27 and all that remains are the PRC regulatory approvals. I anticipate this deal closing in Q2, 2014. Tsinghua Unigroup just closed its acquisition of Spreadtrum Communications so they are good with the cash.


At December 30, 2013, Anonymous Anonymous said...

Hi MT,
It seems like roughly a 2% return in 6 months. Is it worth it? Isn't there always a chance that the deal does not go through?

At December 30, 2013, Blogger Money Turtle said...

You're right, the spread is too narrow to play this deal using the common stock. I'm playing this by selling the out of the money puts and pocketing the premium now. Tsinghua Unigroup already has the financing in place. If you look at the track record of the PRC (MOFCOM), they have approved almost all mergers with the exception of a few foreign ones. I see a high probability that this will close although it may take some time.


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