On June 13, 2016, Microsoft announced its acquisition of LinkedIn with a stock exchange offer, swapping 4.2123 its share for each share of LinkedIn share. Upon the announcement of this $26.2 billion deal, Microsofts share trades at $46.53 per share and LinkedIn share jumped from the $131.08 pre-announcement price to $192.21. You work for a hedge fund specialize in event driven investing.

a. Do you see any opportunity for merger arbitrage upon the deal announcement?

b. If so, please describe your merger arbitrage strategies and calculate the expected arbitrage profits based on your strategy (assume no transaction costs, no trading on derivatives, and no partial share trading).