The share swap ratio for the merger of ETC Networks and Zee Entertainment Enterprises (ZEE) has thrown up some arbitrage opportunities and the ETC scrip shot up 5% and hit the circuit breaker on Tuesday in line with punters play. As per the merger proposal, it has been proposed to allot 10 shares of ZEE for every 11 shares held by a shareholder of ETC Networks.
Even after the 5% jump in price there is still scope for more clean profits. The scrip is at Rs 210 against Rs 265 for ZEE. To balance the froth of the merger ratio, the difference between the two scrips should come down further.
Assuming ZEE stays at this level, one can potentially make a profit by buying ETC scrip till it reaches Rs 241. Although trading was halted today the scrip will continue to see action in early morning trade for the next few days.
The company also announced the allotment ratio for demerger of the education business. Each shareholder of ZEE (post merger with ETC) will get one share of Zee Learn Ltd (ZLL) for every four shares held by them in ZEE.
Also see our earlier report here.