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Reuters put out a press release this morning saying that Union Bankshares Corp. was going to buy Mid-Coast Bancorp Inc. (MCBN).

Later they issued a correction. Turns out it was Union Bankshares Company (based in Maine), not Union Bankshares Corp. (based in Virginia) that was buying MCBN.

Anyway, I have a question about all this. Under the terms of the merger, MCBN shareholders will be receiving $15.875 per share. This morning, MCBN was immediately bid up to $14.75 (up from the previous close of $6), and stayed there all day.

My question is, why wasn't the share price bid up to $15.875? Couldn't I just buy a bunch of shares at $14.75, hold them until the merger is complete, then walk away with a fast and certain 7.6% profit (15.875 / 14.75 = 1.076) ?
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