The Study Of The Theoretical Analysis And Cases Of Merger Arbitrage

With the constant improvement of China’s capital markets, mergers and acquisitions and investment of arbitrage become hot issues, which investors are increasingly concerned about. As a typical event-driven investment strategy in the foreign capital market, merger arbitrage investment strategy is a more mature investment strategy than in the domestic market, and subject to the institutional obstacles (such as lacking of short-selling mechanism), it does not become a normalized investment strategy, but with the constant improvement of the system construction、increased domestic industry consolidation and numbers of merger cases, as well as investors professionalism is enhanced, the development momentum of merger arbitrage investment strategy will certainly be better. This paper constitutes divided into two parts, the first part mainly elaborates some theory and concepts; the second part mainly analysis domestic and international M&A cases, the main content is as follows:The first chapter is an introduction, in this chapter we introduce the research background and the whole frame structure and the significance of the research; chapter two is a theoretical analysis, Mainly to explain the relationship between theory and merger arbitrage(mainly on the acquisition premium); the concept and types of merger arbitrage; and factors which can impact the result of merger arbitrage; then we elaborate the historical performance of the global market and so on. Chapter three narratives some abroad cases, mainly on Pfizer’s acquisition of Wyeth and the merger of Johnson&Johnson and Synthes, the combined cases illustrate the M&A operational processes, as well as the relationship between acquisitions premium and merger arbitrage. Chapter four analysis domestic cases, in addition to the same methods like abroad cases, this chapter has some unique features, such as we especially reveals the risks of merger arbitrage.From the whole frame of this paper, we concluded that:although there are still some differences between developed capital markets abroad and our domestic market, but domestic M&A transactions still exist many arbitrage opportunities. so through proper analysis and operation we can get some ideal arbitrage gains. Merger arbitrage will become a normal means of investment in the capital market with the constant improvement of China’s capital market system. And fund managers, institutional investors, and market participants can widely use this strategy.