The deal is $103.40 cash and .5152 ANTM shares for each 1 CI share.

Right now ANTM is $151. So CI's formula = 103.4 + .5152*(151) = ~$181

Right now CI is trading around $145. The difference between the implied value of the deal for CI and the market price for CI is called the arbitrage spread (arb spread / deal spread / few other names). The way I'd look at this is take the arb spread as a percentage of the CI price. = 36/145 = 25%. For non professionals out there, this is a massive massive deal spread.

Why is the spread so big? 1) Regulatory risk. A lot of people think this deal might be blocked by the FTC/DOJ (not sure which one covers health insurance cos). If the deal falls through due to regulatory risk, then CI isn't worth $181...it's worth whatever it's worth as a standalone company. 2) Even if the regulators approve, it will probably take a long time to get approved. Deals with little to no regulatory risk can close in even a few months but usually it takes closer to 6 months. I am not a healthcare analyst or anti trust specialist, but from my previous experience looking at merger situations, I think this deal will take 1.5 years or more, which is an extraordinarily long time. The longer it takes you to get your 25% return, the lower your IRR...

These are two huge and well covered companies. Usually when that's true, there's rarely a free lunch.

I played this game in 2008. I made money buying BUD which was being taken over by Inbev. I made 10% in about a month or so. Then I took that money and bought ROH (Rohm and Haas) which had a deal to be taken over by DOW. That deal almost fell apart and my stock got crushed. (But later on DOW did eventually take over ROH).