“Bumptrage” (bump + arbitrage) occurs when a deal is arrange (for example, a deal to buy a company). Activists then threaten the deal unless demands are met (for example, a “bumped” or higher deal price).
“‘Bumpitrage’—oppose transaction and get a sweetener” was cited in 2009 in a paper by Chris Young, Director of M&A and Proxy Fight Research for the RiskMetrics Group.
The M&A and Hedge Fund Activism Landscape
Chris Young—Director of M&A and Proxy Fight Research
Pre-crunch: M&A activism as a “no lose” proposition
...“bumpitrage”—oppose transaction and get a sweetener
DEALS-Activism, economy weighed on M&A in 2013, issues could linger
BY MICHAEL ERMAN AND SOYOUNG KIM
NEW YORK Thu Dec 19, 2013 7:00pm EST
“There has been a practice among activists that is frequently described as ‘bumpitrage,’” said Morgan Stanley’s Eatroff.
“After companies announce an intensely negotiated transaction, activists pour into one of the stocks and threaten to vote against the deal unless their demands to amend the terms of the transaction are met,” he said. “If you consider the enormous complexity required to announce any M&A transaction, the risk that activists will seek a second bite of the apple post-announcement can be an important consideration.”
CtW Investment Group
Beware of “Bumpitrage” - Activism, economy weighed on M&A in 2013, issues could linger http://reut.rs/1cDRzxB via @reuters #corpgov
2:21 PM - 23 Dec 2013
February 9, 2014 6:59 pm
Activist investors force higher price takeovers
By Ed Hammond in New York
Corporate America’s battle with activist investors is increasingly being fought across the deal table rather than the boardroom, according to new research.
Agitating for higher deal prices, or so-called “bumpitrage”, combines the activist predilection for audacity with the traditional practice of arbitrage by investors, who buy into a target company in the hope of the shares being acquired at a premium.
Activist investors force higher price takeovers http://buff.ly/NBpkL6
“Bumpitrage” is now my word of the day
3:05 PM - 12 Feb 2014
The Wall Street Journal—MoneyBeat
12:05 pm ET Mar 19, 2015
Tulane Dispatch: High Stock Prices, Confidence Fuel Optimism Deal Surge Will Continue
By DANA MATTIOLI
The annual Tulane M&A confab is underway, and so far the tone, at least from one prominent deal maker, is one of confidence that the recent surge in takeover activity has some legs.
Greg Weinberger, the recently minted co-head of global M&A at Credit Suisse CS -0.71%, focused his remarks in a session entitled “Global M&A Deal-making – Will All the Activity Continue?” on two engines of the current uplift in takeover activity: boardroom confidence and high stock prices.
Mr. Weinberger may also have coined a new term: “Bumpitrage” — a money-making play in which shareholders, typically hedge funds, pile into a stock after the company is question has agreed to be bought, and push for a higher price. The strategy is on the rise, he said, but “paradoxically … may actually hurt shareholder returns” by encouraging some acquirers to leave a little money in their pockets when agreeing on deals, in case they need to boost the price – as Valeant Pharmaceuticals International Inc.VRX -0.65% was forced to do this week to hold on to Salix Pharmaceuticals Ltd.SLXP -0.12% Valeant faced a rival bid for Salix from Endo International Ltd., which incidentally was backed by banks including Mr. Weinberger’s.
MT @Dealpolitik: New M&A jargon: “Bumpitrage.” Activists buying block & threatening to vote no on signed deal if bid isn’t increased.
9:33 AM - 19 Mar 2015
New York City • Banking/Finance/Insurance • Thursday, March 19, 2015 • Permalink