We see from the text that risk arbitrage is taking advantage of the short term price discrepancy from the time the merger announcement to the closing of the merger, typically from 3 to 6 months.
Can you explain how an individual or company can participate in this price discrepancy and show an example of how a company can profit from it? Remember, in M&A arbitrage the investor in most cases will sell one of the two parties short and go long on the other.
What happens if the deal is not consummated? Please explain with two paragraghs