Taking a bet

Will the Anheuser-Busch deal fall through or will InBev be victorious in the end? Investors have laid a wager on either possibility. That’s why the arbitrage spread on the pending deal remains wide.

Narrowing arbitrage spreads indicate that investors are more confident the mergers will close. Shares of companies that are being sold in some of the high-profile deals of the past year have gained slightly on 28 October, indicating that investors are still weary of additional deals falling through.

However, for people to really believe that things have stabilised, a few more deals will have to close. That includes the controversial Anheuser-Busch-InBev deal. Shares of Anheuser-Busch Inc., which is being acquired by Belgian-Brazilian brewer InBev SA in a USD 52 billion – or USD 70 a share – deal, recently gained 1 percent to USD 59.77 per share. This is still a 17 percent difference from the deal’s price. While the share price has tightened a bit, the spread suggests there is still some investor concern about the deal being completed.