Q: Do you think the offer by UPS for AND will succeed? Is there an arbitrage opportunity currently as AND is trading at a price that is less than the offer price?
5i Research Answer:
The CEO/founder owns more than half the stock and more than 80% of the equity. This will limit other companies' possible interest in starting a bidding war, but it is possible. There is also a break fee of $66M. There may also be some government concern on the deal in terms of eliminating competition. But we do not think there is enough concern to stop the transaction. The current arbitrage discount is 3.42%. We would not consider it overly attractive as an arbitrage buy.