Lorillard (LO) / Reynolds acquisition news was announced today. Reynolds will buy LO for 68.88 per share. However, the stock dropped today to ~ $60.17. The out of the money call options also reflect the same story.
Even though the deal will not be closed until middle of next year, the LO stock will be purchased at the said price. Thats ~ 14.5% return in a year. Isn't this too good to be true?
Why is the market behaving this way? Is it that M&A firms are just closing the transactions which is putting downward pressure on the stock?