Could this be the perfect trade?

CVS bought CMX today. CVS will give CMX 1.67 shares of CVS in an all stock transaction today.

CVS is at 28.73 and CMX is at 47.3. Simple calculation would suggest that CMX buy out would be at 28.73 * 1.67 = 47.98. We therefore see a CMX cheaper by 68 cents at current prices.

Is this normal? Yes - You usually see a 30 to 40 cent discrepancy before the buyout actually takes place and the gap gets lesser as the buyout date comes closer. There is a huge difference here though.

1. CMX is at a 52 week low although earnings have been great (Walmart competition is the biggest reason).
2. CVS is also quite low but they have had good earnings as well.
3. "Could this be the perfect trade": Forget points 2 and 3 and think about this trade. Short CVS and buy CMX. This way if CVS goes down you make money on the short and lose money on the long on CMX. If CVS moves up then you have the opposite reaction. Either way you still stand to make your 68 cents.

If you were to chose to go in any one direction, choose CMX buy. Reasons: Deal might not go thorugh as some analysts think the offer is quite low. This might require CVS make a higher offer. The important thing to note here is that as per points 1 and 2, if the deal is canceled some how both stocks will still go up over the long run considering the levels they are at from a 52 week chart and earnings perspective.

Point 3 is the safe trade. Buying only CMX is the riskier one but could give greater yields. Let me know what you guys think.