I'm looking to take a small position in the stock as a Merger Risk Arbitrage play.
The most helpful articles I can find on the subject are as follows:
http://en.prnasia.com/story/166631-0.shtmlhttps://seekingalpha.com/article/4004170-airmedia-group-going-private-deal-hits-road-blockStock is currently trading at $2.67 and the acquirer has offered a cash bid of $6.00 for each share. If the merger goes through, I could stand to make a profit of around 125% on my investment.
However, the merger has dragged on for a very long time, and there are no guarantees that it will go through... In looking at the downside, by my calculations, although the company is making a loss, it is only trading at 2 x NCAV. My thinking is that even if the shares take 100% loss, and the company goes into liquidation, I should only lose approx. 50% of my initial investment after the assets are sold during liquidation.
Are there any major points I've missed here? Does anyone else have a position in it? It seems like a very high upside to compensate for the risk it might break.