4. Fundamentals and earnings

Mergers and acquisitions (MA)

MA lists pending, rumored and closed takeover deals with their terms, their stage and, for listed targets, the arbitrage spread between the offer and the market price.

  • 4 min
  • 3 questions
  • Lesson 3 of 3

Why you would care

A takeover offer usually lifts the target's price by 20% to 50% overnight. After that, the price hovers a little below the offer until the deal closes or breaks. That small gap, the spread, is the market's way of saying how risky the deal is. Hedge funds trade it for a living.

The idea from scratch

In a merger or acquisition (M&A), the acquirer (buyer) takes over the target. The terms say what target shareholders get per share:

  • Cash

    "8.00 dollars per share".

  • Stock

    "0.0966 acquirer shares for each share" (the exchange ratio).

  • Cash and stock

    a mix.

  • CVR (contingent value right)

    an extra payment only if something happens later, such as a drug approval.

The road to closing

Rumored
Reported, not confirmed
Announced / pending
Agreed, not yet done
Go-shop
A period when the target may look for a better offer
Tender offer
The buyer offers to buy shares directly from shareholders
Shareholder vote
Owners approve or reject
Regulatory review
Competition authorities check it does not hurt competition (antitrust)
Awaiting close
Approved, final steps
Closed / terminated
Done / broken

The arbitrage spread

Merger arbitrage means buying the target after the announcement to collect the gap to the offer price when the deal closes.

A wide spread means the market doubts the deal (antitrust, financing, a shareholder revolt). A spread near zero means it looks certain, or a higher bid is expected.

Diagram: Announcement: terms leads to Stages: vote, regulators, financing; Stages: vote, regulators, financing leads to Close: shareholders paid (approved); Stages: vote, regulators, financing leads to Break: target price falls (blocked); Announcement: terms leads to Target trades near the offer; Target trades near the offer leads to Spread = offer vs price: the market's doubt.
Wide diagram: scroll sideways to see all of it.

See it in Gloom

Gloom screenshot: MA with Status Pending and Target Public
MA with Status Pending and Target Public: one row per deal with target, acquirer, terms, spread and stage; the newest 8 deals are locked on the free plan. Captured 2026-10-06 (historical example).

open ittype MA, or MA NVDA for one company. Filters on top: search, Status, Target (public or private), Region. Keys: / search, s status, t target, o open the source.

  1. Unlock 8 newer deals: on the free plan, deal news arrives 7 days late; Pro sees deals as announced.
  2. SSTI Transom Capital G… $8.00 cash + CVR Tender offer: a cash offer plus a contingent payment, done by tender offer.
  3. VGZ Artemis Gold 0.0966 sh: a stock deal: each VGZ share becomes 0.0966 of an Artemis Gold share.
  4. KVUE Kimberly-Clark Cash and stock Regulatory review: a large deal waiting for competition authorities.
  5. SPREAD --: no spread in this signed-out capture; the help card says spreads are live on Pro.
  6. Targets from many markets: .AX (Australia), .TO (Toronto), .L (London), .PA (Paris).

Practice and recap

Try it3 tasks
  1. Offer 30 dollars cash, target at 29. Spread? (1 / 29 = about 3.4%.)
  2. In the screenshot, find a deal in a go-shop period. (MG, H.I.G. Capital, 20.35 dollars cash.)
  3. A stock deal at 0.5 acquirer shares; the acquirer trades at 80. What is the offer worth per target share? (40 dollars, and it moves with the acquirer's price.)
Common mistakes4 mistakes
  • Assuming an announced deal will close. Some break, and the target falls hard.
  • Reading a stock deal's value as fixed. It moves with the acquirer's share price.
  • Ignoring the time to close when comparing spreads.
  • Trading on deal news on the free plan, where it is 7 days late.
Check yourself3 questions
  1. What is the difference between an acquirer and a target?
  2. What does a wide arbitrage spread suggest?
  3. What is a CVR?
Answers
  1. The acquirer buys; the target is bought.
  2. The market doubts the deal will close as agreed.
  3. A contingent value right: an extra payment if a future condition is met.
Words in this lesson9 words
M&A
Mergers and acquisitions: companies combining or buying each other.
acquirer / target
The buyer / the company being bought.
terms
What target shareholders receive per share.
exchange ratio
Acquirer shares given per target share in a stock deal.
CVR
Contingent value right: a payment only if a later condition is met.
tender offer
An offer to buy shares directly from shareholders.
go-shop
A period when the target may seek a better offer.
merger arbitrage
Buying a target to collect the gap to the offer price.
deal spread
The gap between the offer value and the target's price.

Educational material about reading market data, not investment advice.