Merger-Arbs Cleaning Up in Inhibitex Buyout (INHX, BMY)

It is not that often that investors get to clean up in a merger arbitrage spread any longer.  The buyout of Inhibitex, Inc. (NASDAQ: INHX) by Bristol-Myers Squibb Company (NYSE: BMY) appears to be an exception as the tender offer of $26.00 is now commencing.

BMS is acquiring all of the outstanding shares of Inhibitex and the stockholders will receive $26.00 per share in cash for each share validly tendered and not validly withdrawn in the offer. 

This is one of those deals that perhaps the merger arbitrage spread is wide because the downside would be huge if BMS were to decide to walk away.  The 52-week trading range of Inhibitex is $2.15 to $24.58 just to show how much it has moved.  With a $24.57, this leaves a merger arbitrage spread of 5.8%. 

In today’s climate, a spread of almost 6% might be in a cash and stock deal or it might be in a relatively certain deal that is expected to close out a couple of quarters.  While ‘investigations from law firms’ are taking place, it is important to understand that this merger came with a super=premium and this was an all-time high for the stock.  If this wasn’t a fair buyout price for shareholders, then very few buyouts are fair.

JON C. OGG