More than two years ago, in January 2015, I participated in my first merger arbitrage deal that had a contingent value right (actually two) as part of the payment. Since then I have participated in more deals with CVRs, but since the payment is usually contingent on events pretty far in the future I haven’t got a single cent from them so far. That’s however going to change soon since Albertsons announced that the first CVR will pay 1.7 cents with a possible additional 0.03 cents coming later. It’s a very insignificant amount (adding just 0.0156% to this years return), and also a bit disappointing since the CVR was valued at $0.0488/share at the time of the merger. Nevertheless, it’s fun to finally get a little bit of money from my collection of CVRs.
The real action will be next year when the far more important CVR connected to the value of Casa Ley will expire. That one was valued at $1.0149/share at the time of the deal, and could have a more material positive impact on my portfolio :).
Author is long the two CVRs issued in connection with the SWY merger