How to Play Merger Arbitrage Cliff Asness Style

How to play merger arbitrageCliff Asness and AQR Capital’s AQR Delta Master Fund just reported two moves in TMS International Corp. (NYSE:TMS) and Hi-Tech Pharmacal Co. (NASDAQ:HITK).


In a filing with the SEC, AQR reported owning 805,203 shares of TMS International, which have a total value of some $14.07 million, at the current stock price of the company. In a second filing, the fund reported a stake of 5.3% of Hi-Tech Pharmacal, owning 721,655 shares. At the current share price of Hi-Tech Pharmacal, the value of the holding amounts to $31.11 million.

Earlier in August, TMS Internatonal and The Pritzker Organizaton, LLC signed a definitive merger agreement, in terms of which, TMS should be acquired at a price of $17.50 per share with the total value of the deal reaching around $1 billion, TMS said in a statement. The transaction is expected to take place in the last quarter of the year.

Hi-Tech Pharmacal is another pre-merger company. In August the company signed a definitive agreement with Akorn, Inc, which will purchase Hi-Tech Pharmacal offering $43.50 per share for a total value of $640 million, it said in a statement.

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