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Arbitrage Opportunity

Occasional Contributor
DMR as listed on the JSE and BRC (listed on Toronto Stock Exch) announced a formal merger. 24.5 DMR shares for 1 BRC share. According to the formal merger announcement, DMR should be trading at approximately R2 (before costs). However is only trading at about R1.35. Massive discount, although merger is going to go through. Moneyweb Powerhour had a show on this last week. And it is not often that arbitrage opportunities like this present themselves. Here is the transcript from Moneyweb Powerhour: "Yes, if you look at the merger ratio, it was one BRC share for 24.5 Diamond Core shares. So on the current exchange rate, you're looking at an equivalent offer of around R2 a share. So for the current share price of R1.30, you are sitting at a fairly hefty discount. The only way that I can explain that discount away is a function of the fact that we haven't seen the arbitrageurs come in as a function of illiquidity. But, more importantly, I think that the international guys who would typically snap up an opportunity like this aren't prepared to come into this market until they know that the deal is a done deal. And that is imminent, and we should be releasing all the circulars next week" Here is the link to the full story:
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Valued Contributor
this deal is as yet not a done deal. Still got to get share holder vote in January 2008.
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