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The implied chance of Microsoft Corp.'s takeover of Activision Blizzard Inc. going through jumped to around 80% from roughly 40% a day earlier after a US judge gave the deal a green light.
The odds are calculated assuming the stock's standalone value without a deal is in the $75 to $80 range, according to Aaron Glick, a merger arbitrage specialist at TD Cowen.
"With the companies and the UK antitrust regulator seeking to work on a resolution, closing by the July 18 deal deadline is much more likely now," said Glick. Most arbs were previously skeptical that Microsoft would be able to resolve the UK challenge, he noted.
The US clearance, and more importantly the news from the UK Competition and Markets Authority, has changed perceptions dramatically, said Cabot Henderson, who focuses on arbitrage and special situations at JonesTrading.
"Before the market saw the deal as a tossup," he said. "It would now be a surprise were it not to close."
Microsoft-Activision (MSFT, ATVI) Deal Odds Almost Double After Court Nod - Bloomberg
