TAHO
Tahoe Resources Inc
stock NYSE

***Question***
Trying to do some basic analysis of a merger situation. Steps are:
* (1) *Run through the evaluation criteria*.
* I am not asking questions on this part for now, just included for completeness.d
* (2) *Estimate the return*.
* My question is whether my analysis is the right way to think about / structure a potential arbitrage trade.
* I lack experience in this realm and writing it out helps me make sense of it.
***Facts***
**Pan American Silver Corp.** (NASDAQ: PAAS) (TSX: PAAS) ("Pan American") or the "Company") and Tahoe Resources Inc. (NYSE:TAHO) (TSX:THO) ("Tahoe") today announced that they have entered into a definitive agreement for Pan American to acquire all of the outstanding shares of Tahoe pursuant to a plan of arrangement (the "Transaction"), creating the world's premier silver mining company. Shareholders of Tahoe will be entitled to elect to receive common shares of Pan American and/or cash in exchange for their shares of Tahoe. Additional consideration will be in the form of the right to a contingent payment in common shares of Pan American tied to the restart of the Escobal mine in Guatemala.
...
Pursuant to the Arrangement, Tahoe shareholders may elect to receive US$3.40 in cash or 0.2403 Pan American shares for each Tahoe share, subject in each case to pro-ration based on a maximum cash consideration of US$275 million and a maximum number of Pan American shares issued of 56.0 million, totaling US$1,067 million (the "Base Purchase Price"). The Base Purchase Price represents a premium of 34.9% to Tahoe's volume weighted average price ("VWAP") for the 20-day period ending on November 13, 2018.
In addition, Tahoe shareholders will receive contingent consideration in the form of contingent value rights ("CVRs"), that will be exchanged for 0.0497 Pan American shares for each Tahoe share, currently valued at US$221 million, and payable upon first commercial shipment of concentrate following restart of operations at the Escobal mine (the "Contingent Purchase Price"). The CVRs will be transferable and have a term of 10 years. The total consideration, including the Base Purchase Price and the Contingent Purchase Price, is US$4.10 per share representing a premium of 62.8% to Tahoe's VWAP for the 20-day period ending on November 13, 2018.
[https://www.panamericansilver.com/investors/news-releases/detail/65/2018-11-14-pan-american-silver-and-tahoe-resources-create-the-worlds-premier-silver-mining-company](https://www.panamericansilver.com/investors/news-releases/detail/65/2018-11-14-pan-american-silver-and-tahoe-resources-create-the-worlds-premier-silver-mining-company)
​
***(1)*** ***Evaluation Criteria \[not asking on these criteria but included for completeness\]***
*To evaluate arbitrage situations you must answer four questions:*
1. How likely is it that the promised event will indeed occur?
2. How long will your money be tied up?
3. What chance is there that something still better will transpire - a competing takeover bid, for example?
4. What will happen if the event does not take place because of anti-trust action, financing glitches, etc.?
*Additional merger checklist items:*
* How is the transaction financed?
* Is there a risk financing falls apart?
* Are there termination clauses (both sides)?
* What are the contingencies?
* Are there special provisions?
* Have shareholders approved?
* Are there majority shareholders?
* Which agencies need to approve?
* Have the relevant agencies approved?
* What happened in similar transactions?
***(2) Estimated Return***
*Acquirer: Pan American Silver Corp. (NASDQ:PAAS / TSX: PAAS)*
* Price: $13.84
* Shares outstanding: \~204 million
*Acquiree: Tahoe Resources Inc. (NYSE:TAHO / TSX: THO)*
* Price: $3.57
* Shares outstanding: \~312 million
​
*Assuming maximum cash consideration and satisfaction of CVR:*
**Cash:** $0.88 \[$275 million / 312 million\]
**Stock:** $2.54 \[($1,067 million - $275 million) / 312 million\]
**CVR:** $0.69 \[$13.84 x 0.0497\]
**Total proceeds:** $4.11
​
*Simple arbitrage model (ignoring trading fees):*
**Long:** TAHO
* Buy 10,000 shares @ $3.57 \[current trading price\]
* Total cost = $35,700
**Short:** PAAS
* Sell 1,944 shares short @ $13.84 \[$26,900 total proceeds / current trading price\]
* Total proceeds = $26,900 \[$35,700 total cost - (10,000 shares x $0.88 per share that will be in cash)\]
tl; dr: Is this the right way to think about / structure a potential arbitrage trade?