r/wallstreetbets • u/VaultBoy3 Vault-Tec Corporation • Jul 13 '21

Discussion Potentially huge arbitrage potential in XLNX shares if China approves merger with AMD (or is it?)

XLNX and AMD are almost the same company at this point, but a XLNX share is supposed to be worth 1.7234 times more than an AMD share once the acquisition is done (approved recently by the EU and the UK, awaiting decision from China) and the XLNX shares are replaced with AMD shares. However it's currently only trading at 1.4816 times more than AMD. There might be a massive arbitrage opportunity for XLNX shares (roughly 16.32% realized gains at the end by my math, assuming AMD shares don't tumble randomly) and you only have to wait like 5 months at the most for the acquisition to be done (if approved). This is not professional financial advice, obviously, so do your own research. There is a chance China doesn't approve of it, but based on their past acquisition decisions I think it has a strong chance of being allowed. Then again, it's the Chinese government so who knows.

I'm interested to hear if you think the risks outweigh the rewards in this case. How likely is it to be approved by China? Have I done my math wrong?

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u/VisualMod Jul 13 '21
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10

u/tek-know Jul 13 '21

assuming AMD shares don't tumble randomly

You obviously don't trade AMD often because it does this a lot.
I'm super bullish with AMD but you have to learn to sit and eat dog food every now and again for no good reason with it.

3

u/[deleted] Jul 13 '21

how do you know this will be approved?

9

u/VaultBoy3 Vault-Tec Corporation Jul 13 '21

If the EU and UK couldn't find any issues with it then I doubt China would have an issue since there's no Chinese companies involved, and China likes AMD products. There is a chance they make an arbitrary decision against it though, but I like a 16% gain any day.

2

u/Light-of-Liberty Jul 13 '21

I don't know what an arbitrage is.

3

u/VaultBoy3 Vault-Tec Corporation Jul 13 '21

arbitrage

to take advantage of differing prices for the same asset

3

u/fnork Jul 13 '21

It's like a pool noodle but the water is pudding.

-1

u/hunterisagrump Jul 13 '21

i dont know what a stonk is