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| Deal | Offer | Current | Spread | Ann. Return | Risk | Close | Conviction |
|---|---|---|---|---|---|---|---|
Hologic HOLX · $18.3B | $76.00 | $74.91 | 1.45% | 11.6% | Low | April 2026 | |
Electronic Arts EA · $55.0B | $210.00 | $205.50 | 2.19% | 8.8% | Medium | June 2026 | |
Kenvue KVUE · $48.7B | $20.76* | $17.49 | 18.70% | 37.4% | Medium | September 2026 |
$76.00/share cash + CVR up to $3.00/share tied to Breast Health revenue targets in FY2026-2027
All major jurisdictions approved — U.S., EU, China (Feb 9, 2026). Only customary closing conditions remain.
$12.25B in committed debt financing from JPMorgan. Equity backstop of $6.05B from Blackstone, TPG, ADIA, and GIC.
Hologic shareholders overwhelmingly approved the transaction. No competing bids emerged.
This is as close to a free lunch as merger arb gets. Every material hurdle — regulatory, financing, shareholder — is cleared. The $1.09 spread to the $76 cash price is compensation for ~30 days of waiting. The real upside is the CVR: if Hologic's Breast Health segment (their crown jewel) hits revenue targets over the next two fiscal years, you pocket an additional $1.50-$3.00/share on top of the deal price. At current levels, you're buying a near-certain $76 close with a free option on $79. We'd be buyers here for any portfolio seeking low-risk, short-duration returns.
$210.00/share all-cash. PIF rolling 9.9% existing stake. $36B equity + $20B JPMorgan debt financing.
The FTC is conducting a detailed review of the transaction. PIF's 93.4% post-close ownership and Saudi sovereign wealth fund involvement add scrutiny layers beyond standard antitrust.
Saudi sovereign fund taking control of a major U.S. entertainment company may trigger national security review. EA holds significant user data and operates live-service platforms with global reach.
$20B committed from JPMorgan. Largest LBO debt package since the Dell take-private. Leveraged ~4.5x EBITDA — manageable for EA's cash-flow profile.
Proxy expected to be filed in April 2026. At a 25% premium to pre-leak price, approval is highly likely.
The largest LBO in history naturally carries headline risk, but the fundamentals here are sound. EA generates ~$7.5B in annual revenue with strong recurring revenue from live services (FC, Madden, Apex). The $210 price represents a reasonable 25% premium. The real question is the FTC — and we think the risk is overstated. This isn't a horizontal merger that reduces competition; it's a financial sponsor acquisition. The CFIUS angle around PIF is the wilder card, but precedent (PIF's existing 9.9% stake was approved, plus their investments in Lucid, Riot Games' parent, and other U.S. assets) suggests clearance is likely. The 2.19% spread over ~3 months is fair compensation for the remaining uncertainty. We'd scale into this position, buying more aggressively if EA dips below $203.
$3.50/share cash + 0.14625 KMB shares per KVUE share. *Implied value based on KMB at ~$118. Total consideration fluctuates with KMB stock price.
U.S. antitrust cleared. EU, UK CMA, and several international jurisdictions still reviewing. Overlapping consumer health categories (skin care, OTC medications) may require divestitures.
Both shareholder bases voted overwhelmingly in favor — 96% of KMB shares and 99% of KVUE shares voted to approve.
Kenvue already announced 3.5% workforce reduction and $250M restructuring charge. Achieving $2.1B in synergies is ambitious and will take years. Post-close execution risk is real.
Only $3.50 is fixed cash. The remaining ~$17.26 fluctuates with KMB's stock price. If KMB drops 10%, the deal value drops to ~$19.03.
This is the most interesting — and most complex — opportunity in the current merger arb universe. The raw spread of 18.7% looks enormous, but it's misleading. This is primarily a stock-for-stock deal, which means the 'spread' reflects both deal risk AND the basis risk of Kimberly-Clark's stock price. The correct arbitrage here is to buy KVUE and short 0.14625 shares of KMB for every KVUE share, isolating the pure deal spread. On that hedged basis, the true spread is closer to 3.2% over ~6 months (~6.4% annualized). That's still attractive for a deal with shareholder approval in hand. The key risk is international antitrust — the combined entity would dominate several consumer health categories globally. We expect conditional approval with divestitures, not a block. This is a position for experienced arb investors comfortable with stock-for-stock mechanics. If you're not hedging the KMB exposure, you're making a bet on KMB's stock price, not running an arbitrage.
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