Big Tata Steel's merger

so many companies involved and getting merged to Tata steel.

Whch companies benefit the most from this merger? n vl v gt any chnce to buy or is it too late?

Metal is cyclical business. There should be future chances to buy

TATA steel consolidated as one company is a great news for the company.

A question to the experts here.

Currently Tata Steel market price is 105.15. Assuming, I have done all the due deligence and vetted the company and assuming I wish to buy this stock.

Instead of buying Tata Steel, if I buy Tinplate Company of India which is getting merged with Tata Steel and its current price is 318. For every 10 shares of tin plate, the swap is 33 shares of tata steel.

So if I buy 10 shares at 318 = 3180. This will translate to 33 shares of tata steel in future
With 3180, I can only buy 30 shares of tata steel at 105 per share

Is it not better to buy Tinplate company now instead of Tata Steel. I will get extra 3 shares.

Is my thought process right or am I missing out on something.


One thing I can think of.

What if Tata steel gives dividend and tinplate doesn’t before the merger actually takes place.

I am a strong believer of no arbitration gain for retailers. If you have thought about it, don’t you think others also have thought about it? When it’s an open secret then you can’t make any riskless profit.

I had decided on buying Tata Steel. Now, this news comes in today. Hence instead of buying Tata Steel directly today I bought tinplate based on the above calculation. All things remaining the same.

All I wanted to know is if this equation is ok as of date or is there any hidden elements.

Dividends is something which happens in future - what if tinplates declare dividends instead of tata steel, all this are moving parts.

All other points are irrelevant of what I thought and others thought, risk less profit etc. I am an investor and buy to hold and my average cost is what it matters.

Looks right to me.

Yes, your thought process is right. Such arbitrage opportunities keep on popping up when mergers are announced. But will vanish in couple of days as prices of both stocks align with merger ratios.

As such recently there was similar opportunity in HDFC and HDFC bank merger which was exploited by PPFAS flexicap fund and explained in their monthly letter

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