MTTR - Is Matterport a Worthy Merger Arbitrage Play?
2024-05-28 06:00:00 ET
CoStar Group (NASDAQ: CSGP) , the parent company of Apartments.com and Homes.com, announced its intention to acquire Matterport (NASDAQ: MTTR) , a virtual tour software platform, for an enterprise value of $1.6 billion. CoStar management believes the deal will go through before the end of 2024, but it still needs to pass shareholder and regulatory hurdles. As a result, the proposed acquisition creates an opportunity known as merger arbitrage -- a short-term investing strategy where you buy stocks of companies trading below their acquisition prices.
So let's examine the finer print of the CoStar Group and Matterport deal and consider whether investors should capitalize on the merger arbitrage opportunity.
In late April, CoStar announced its intention to acquire Matterport, with each Matterport shareholder receiving $2.75 in cash and $2.75 in CoStar stock. The stock portion of the deal is complicated, however, because it is subject to what is known as a symmetrical collar.
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Is Matterport a Worthy Merger Arbitrage Play?