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P.S.I forgot to answer question #2

Yes an acquirer can reduce their price and they can even walk from the deal.

In my opinion,that is why a lot of arbs won't do tech deals (think software)where literally the value of the company can evaporate overnight and it would be highly likely the Groom would walk.

I used to Naively think that a huge cap prominent company like WHR is unlikely to walk from a deal involving another huge cap prominent company in their same industry because then it makes the Groom look bad,

Here are other risks:

1) Regulatory risk.Some regulatory body nixes the deal or demands divestitures that are so onerous that everyone walks.
2)Market Crash risk.You have a massive and quick decline ala 1987 and over night companies are teading at massive discounts to what theyt were the day before.In a stock deal you would be semi-protected because the price of the groom will decline as well as the bride.
3)Financing risk.If the groom is doing it with debt and they get turned down
4)Historicaly unreliable managements.In my opinion,the best example is when Ted Turner announced he wanted to take over CBS.A variation on this is a bandit who is imn it for the greenmail,will cut a side deal with management,and leave everyone else holding the bag.

Most deals go through. A straight stock deal with no collar offers you a little more market protection and usually have wider margins than a cash deal.
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