Alinta (AAN) is currently subject to a takeover by a Babcock & Brown consortium which has a high probability of success and will be finalised shortly. There is an arbitrage available currently lending to Alinta shares trading below the gross value of the basket of shares comprising the takeover consideration, $15.43 of value versus $14.88 last price, representing a gross arbitrage profit of 3.70% ignoring tax and transaction cost implications.
The spreadsheet below shows a worked example of the arbitrage, both in raw form and employing a leveraged position on 1,000* shares which can potentially yield 43.30% by utilising Alinta’s very low margin requirement (it is possible to buy the stock and borrow 95% of the purchase price through Macquarie Prime).
Note that there are still risks, being:
- The takeover not proceeding and the Alinta share price falling
- Volatility in the prices of the constituents to the offer consideration (BBI/BBP/BBW/APA)
More information can be obtained in recent company announcements from Alinta on the ASX website.
*A shareholder with 1,000 shares or less can elect to vend all the shares they received from the takeover into a ‘sale facility,’ thereby eliminating all brokerage on realising cash.
