Arbs See L-1 Takeover Return Evaporate on Safran Query: Real M&A

Merger arbitragers who bet France’s Safran SA would succeed in a takeover of L-1 Identity Solutions Inc. are facing possible losses of as much as 39 percent as a U.S. national security panel holds up the deal.

L-1, the Stamford, Connecticut-based maker of fingerprint scanners, American passports and driver’s licenses, has slid 8.1 percent in two weeks after approval for Safran’s $1.58 billion acquisition was delayed for a second time by a U.S. review of cross-border deals affecting national security. L-1 closed 10 percent below the $12-a-share cash offer at the end of last week, the widest gap since it was announced in September. If the takeover is completed in June, traders would reap an annualized return of as much as 207 percent, the most of any pending all-cash U.S. deal, according to data compiled by Bloomberg.