Market's Too Risky for Arbs

The Wall St. Journal's "Heard on the Street" column reports that even the merger arbitragers are losing their appetite for risk and selling some of their holdings, in many cases because of fears that private equity deals will not close because of the increased costs of debt financings.  For example, while Sallie Mae shareholders approved the LBO this week, the buyers have stated that they may walk away.  See WSJ, Flight of the Merger 'Arbs':Risk-Takers Fear Dead Deals.