Sina and Focus Media
I don't know if you heard, but Sina (SINA) bought about three fourths of Focus Media (FMCN) a few months ago in an all-stock deal. If I remember correctly (and I'm starting to doubt that I do), Focus got 0.35 shares of Sina per FMCN share. Focus announced that they would distribute those shares to their own shareholders once the deal was finalized.
Well, I like Sina, and Focus doesn't sound so bad, so when FMCN started trading for less than 1/3 the price of SINA, I decided to load up on the former. And the share price fell. So I loaded up some more. I kept buying and buying, and today, SINA is up above where it was when I first heard about the deal, in the $22 range. FMCN is trading just above $5.
So if you add 0.35 shares of SINA at today's price to the $3 in cash that FMCN is trading for, you have a company that has more than $10 in cash and stock trading for less than half of that. That doesn't even count Focus' remaining business endeavours.
That said, can anybody explain to me why the big fish haven't arbitraged the heck out of that spread? Why is SINA up more than 10% today and FMCN down more than 20%? Am I stupid?