Investing term

What is Deal spread?

The gap between the announced deal price and the live market price of the target's stock.

The deal spread is the gap between an announced takeover price and the target's current trading price. It exists because the deal might still fall through — regulators block it, financing collapses, shareholders reject it. The spread is the market's pricing of that risk: a wide spread signals real doubt the deal closes; a narrow one signals confidence.

For example

A company is being acquired for $50 but trades at $48 — the $2 deal spread is the return you'd earn if the deal closes, and the risk you take if it doesn't.

Deal spread is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

See the lesson →

Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
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