Wednesday, 3 October 2012

BAE (BA/) ... merger gamble

Friday last I bought some Dec calls in BAE Systems (BA/, mkt cap £10.9bn). The strike is at 360p/shr and compares to today’s price at 334p/shr. BAE is in merger talks with EADS (EAD, mkt cap €21.2bn). I have no idea whether the merger will go through or on what terms. As the politicos are involved it is likely to be a tortuous process. However, there is a slim chance that Lockheed (LMT, mkt cap $30.2bn) or A N Other may pounce. In that event, BAE goes to 400p/shr in the blink of an eye. And the calls reap a 40p+ gain. Seeing as the price on the calls came to 3.8p, the risk seemed worth taking. I bought a few. They now trade at 5.3p and rising.

Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog.

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