Tata Steel – Would be merger be of any value?

Possibilities of merger arbitrage exist. If the share price of one of the smaller cos goes too low, and if you are willing to short 1 lot of Tata Steel and buy the equivalent (post merger) amount of the smaller co, then ideally it should work out. As with other risk arbitrage plays, the real risk is if the merger doesn’t go through. The reverse trade doesn’t work because you can’t trade FnO in any of the smaller cos, so there’s no way to short those.