With a spread still around 2% and only a few weeks to go until the transaction closes, the profile of the transaction has improved, hence warranting an investment
The first time I looked at the Microsoft/LinkedIn transaction (here) 2 months ago, I concluded that it was not worth my time because the return on investment was too low.
Today, the spread is still around 2%, but with the shareholder vote happening only in 10 days (August 19, 2016), there is not much time left before the deal closes.
The combination still needs to receive regulatory approvals, but I don’t see see any material risk in that area, given that LinkedIn and Microsoft, although both tech companies, have little overlap. There is no reverse termination fee in the merger agreement so LinkedIn probably felt the same way during negotiations.
Oh, and don’t you worry about the shareholder vote. Reid Hoffman, LinkedIn’s co-founder and executive chairman, has you covered since he has 53% voting power thanks to his Class B shares.
I am now long LinkedIn and hoping for a close any time between Sept. 1 – Sept. 30 2016.
Disclosure: Long LinkedIn.
This article expresses an opinion and the author does not receive compensation for it and has no business relationship with any company whose stock is mentioned in this article; do your own due diligence before making investment decisions.