What is the annualized spread?
A plain guide to the number on every deal: what it is, how to read it, and the maths.
Tracking Alpha
What it is
The spread turned into a yearly rate, so deals that close at different times can be set side by side.
How to read it
Days are calendar days from today, New York time, to the expected close. When the companies gave a period such as Q4 2026, the maths uses its last day, December 31, 2026.
Dividends we have on record with an ex-dividend date after today and on or before the expected close are added; the deal page then says Dividends included. A CVR isn't counted.
It is simple, not compounded, and assumes the deal closes at the offer on that date. If it closes later, the same spread earns less per year. There is no figure without an expected close, or once that day has come.
How it is worked out
(offer + dividends before the close − delayed close) ÷ delayed close × 365 ÷ days to the expected close
A worked example
Example, with made-up numbers
Offer $50.00, delayed close $48.00, expected close 120 days from today, no dividends.
- (50.00 − 48.00) ÷ 48.00 × 365 ÷ 120 = 12.7%
- With a $0.50 dividend before the close:(50.50 − 48.00) ÷ 48.00 × 365 ÷ 120 = 15.8%
- The same spread with 365 days to go:4.2%
Related terms
- SpreadThe gap between the offer and the share price, as a share of the price: how much the price would rise if the deal closed at the offer.
- Expected closeWhen the companies say they expect the deal to close.
- Dividends while pendingWhether the target may keep paying its regular dividends before the deal closes.
