It was announced this morning that Cisco will aquire NDS for about $5bn and what you are seeing in the market today is a great example of merger arbitrage:
CSCO is selling off (down about 1.66% right now) and is weak relative to the S&P, Nasdaq, and Dow's gains this morning. It puts the stock in an interesting position as it has retreated to its 50 DMA after failing to break through its previous highs for the year:
This may lead to more technical weakness as investors decide whether CSCO is overpaying for NDS but for the time being, CSCO may have some trouble with the $20 level.
Thu, March 15, 2012
by David Boland