A leak first published in the Globe and Mail revealed last week that Laurentian Bank was looking for a buyer. This immediately aroused a great deal of interest among the arbitrageurs of these mergers and acquisitions transactions (M
The Laurentian stock, which closed Wednesday’s session at $33.50, ended the week at $42.41, having even touched $48 on Thursday. Marc Amirault, president of Gestion Cristallin and manager of the Amethyst Arbitrage Fund, one of whose strategies is precisely the arbitrage of these mergers and acquisitions transactions, sees an interesting case for arbitrageurs of all sizes in the sale of the Bank Laurentian.
There will likely be buyers for the bank’s assets, and governments will have little reason to oppose the transaction, as the bank has long been positioning itself for this eventuality, meaning it will not result in few job losses, believes the manager. The offer or offers that Laurentian Bank will attract should be known within about three months for a transaction that could close in approximately a year, given the usual slowness of regulators. This therefore leaves time for arbitrageurs to establish a position that they can increase or decrease over time depending on developments. The initial position must however remain modest, because in M
Note that the book value of the bank is around $60 per share. Whether the buyers who show up will be willing to pay that price remains to be seen.
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