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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Sir Auric Goldfinger who wrote (4493)	10/29/1998 1:39:00 PM
From: Smilodon	Respond to of 18998

Arbitrage opportunity for small investors. LGTO agrees to buy FTSW at a price equal to .143 times LGTO price. LGTO is at 37 3/4 and FTSW at 4 7/16, giving a 20% arbitrage premium. Deal is expected to close in December or early January. We owned FTSW before the deal and have hedged our position with LGTO shorts. FTSW CFO says the deal is very tight and difficult for either side to back away from. The agreement contains no mechanism to get out. Don't know the amount, but heard the breakup fee was very large. LGTO CEO is on the board of FTSW and is very good friends with FTSW CEO. VRTS is largest competitor of LGTO and FTSW, who have no product overlap. I think this deal had been planned for a long time and FTSW was, in effect, functioning as a subsidiary of LGTO. Deal risk seems low, and the spread is a good percentage for the time involved. FTSW is thin, so will probably be difficult to get a position of size. Obviously, no guarantees, but it looks like a good opportunity. Just my opinion. Archer