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Author: PhoolishPhilip Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127  
Subject: Re: Is it a good to buy stock now before the mer Date: 5/21/2001 3:19 PM
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This is called "arbitrage" or "risk arbitrage". While it seems pretty clear that there is money to be made by buying RAL at $30.70 and waiting for Nestle to buy your shares at $33.40, it is not that simple. There is a chance that the deal might not close. Perhaps the anti-trust laws in the US or EU will force Nestle to divest so much of RAL that the deal isn't worth it to them. In that case the share price will quickly retreat to the low to mid $20's. There is also a chance that the deal may get dragged out into 2002. The longer you wait for the deal to close, the less you make on an annualized basis. Here is a link to a good discussion on RAL.

http://boards.fool.com/Message.asp?mid=15007578
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