Case | HBS Case Collection | October 1998

Farallon Capital Management: Risk Arbitrage (C)

by Andre F. Perold and Robert Howard

Abstract

Farallon Capital Management, an investment firm that specializes in risk arbitrage, has taken significant long and short positions in MCI Communications and British Telecommunications, respectively, in the belief that the proposed merger of these firms will be successfully completed. Raises the issues facing Farallon as positive and negative events relating to the merger unfold. Provides a rich institutional setting for understanding merger arbitrage and its function in capital markets.

Keywords: Capital Markets; Equity; Mergers and Acquisitions; Financial Institutions; Risk Management; Investment Funds; Financial Services Industry;

Citation:

Perold, Andre F., and Robert Howard. "Farallon Capital Management: Risk Arbitrage (C)." Harvard Business School Case 299-022, October 1998.