Cisco, Splunk, and Arbitrage Investing: Is the Upside Still There?
On Sept. 21, Cisco (NASDAQ: CSCO) announced its intentions to buy Splunk (NASDAQ: SPLK). The deal is for $157 per share in cash, but Splunk's stock only trades for $145 per share now.
That represents around an 8% upside for Splunk shareholders before the deal closes. So that prompts the question: Should investors buy Splunk stock for the 8% gain? This is known as arbitrage investing, which occurs when an investor purchases an asset for less than it's publicly worth. So, is this arbitrage opportunity worth it? Or is it time to move on from Splunk stock? Let's find out.
According to the press release, the deal is expected to close by the third quarter of 2024. However, the acquisition has some hurdles to clear before then. First, Splunk shareholders must approve the acquisition before it can move on. While rare, it's entirely possible this group could reject the deal, ending the acquisition talks or forcing one side to come back with a better offer.
Source Fool.com
Splunk Inc. Stock
With 23 Buy predictions and 1 Sell predictions Splunk Inc. is one of the favorites of our community.
With a target price of 147 € there is a slightly positive potential of 2.0% for Splunk Inc. compared to the current price of 144.12 €.
