What is the annualized spread?

A spread shows the gain if the deal closes at the offer. It doesn't say how long the wait is.

Take two deals, each with a 4.2% spread. One closes in four months, the other in a year.

The first offers the same gain with a much shorter wait. The annualized spread turns each gain into a yearly rate, so the two can be compared.

The rate holds only if the deal closes at the offer on the date used.

Litware trades at $48.00 against an offer of $50.00. The deal is expected to close in 120 days.

The gain is $2.00 a share, or 4.2%. Multiply by 365 and divide by the days: 2.00 ÷ 48.00 × 365 ÷ 120 = 12.7% a year.

This is the simple form. It doesn't assume the gain is put to work again.

A compounded rate assumes each gain is put into a deal like it, again and again.

The same deal then gives (50.00 ÷ 48.00) raised to 365 ÷ 120, minus 1 = 13.2%.

For waits under a year, the shorter the wait, the further apart the two forms are. Over 30 days, the same 4.2% is 50.7% a year simple and 64.3% compounded.

With a fixed offer and no other payments, a late close doesn't change the gain in dollars. But it takes longer to earn, so the yearly rate falls:

On time

$2.00 on a $48.00 share over 120 days: 12.7% a year.

120 days late

The same $2.00 over 240 days: 2.00 ÷ 48.00 × 365 ÷ 240 = 6.3% a year.

Close to closing

The same $2.00 over 30 days: 50.7% a year. With a short wait, a few days' change moves the rate a lot.

The date in the sum is a guess. The companies' expected close is guidance, not a promise.

The outside date is the date after which the agreement usually lets the parties end it.

Take 447 acquisitions of at least half a company, completed from 2020 to 2024, in which both sides were US public companies. Subsidiaries were left out. The median time from announcement to completion was 136 days.

Dividends paid while the deal is pending add to the cash received. Holders on each record date get them.

Many agreements allow only regular dividends, and some allow none. Some lower the offer for certain payouts. See dividends while pending.

A CVR may pay more later under its own terms. Its payment and timing are uncertain, so a yearly rate may leave it out.

The annualized spread isn't a forecast. It's earned only if the deal closes at the offer on that date.

It says nothing about the loss if the deal fails. That loss is often much larger than the spread.

The gap to what Treasury bills pay over the same time is the extra return if the deal closes as assumed. It leaves out the loss if it fails.

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.