Recently Amgen announced to buy Onyx (ONXX) for $120 per share, which Onyx refused. Days ago Amgen raised its price to $130, which was reportedly agreed upon by Onyx for a deal. But yesterday, Onyx shares plunged almost 10% due to a report that the deal may be delayed since Onyx refused to provide immediately to Amgen the data of an ongoing phase 3 study, because it is still blinded. Well, the deal may be delayed, but I think it will finally go through since the price is very attractive for Onyx and Amgen is very eager to get new drugs to replenish its scanty portfolio. It is just a matter of time.
This has created a so-called arbitrage trade: the current price is much less than the final price if you are confident that a deal will go through. Depending on what price you can get in, potentially you may make $10-15 per share if you take the opportunity and buy ONXX now. If you know how to play options, then the risk benefit will be even more attractive. You may risk $2000 or so to bet for a profit of over $5000.
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