Such arbitrage activities often take place before a merger (or an acquisition) between two companies, permitting the arbitrageur to profit from the merger – due to the increase in the stock price of...

Such arbitrage activities often take place before a merger (or an acquisition) between two companies, permitting the arbitrageur to profit from the merger – due to the increase in the stock price of the acquired firm, of which he owns shares – if it goes through (we saw this strategy as pairs trading in Chapter 5).