Inside Pentwater’s 2025 Merger-Arb Machine: Every Live Deal, Explained

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Inside Pentwater’s 2025 Merger-Arb Machine: Every Live Deal, Explained

Who Pentwater Capital Really Is

Pentwater Capital Management is one of the world’s largest event-driven hedge funds, managing billions with a singular focus on merger arbitrage and special situations. Founded in 2007 and based in Naples, Florida, the firm is known for building hedged, catalyst-driven portfolios that profit from the predictable math of mergers rather than market mood swings.

Its second-quarter 2025 13F filing reads like a case study in professional merger-arb execution:

Precise long and hedged pair trades across active M&A.
Multi-layered option overlays to manage regulatory and timing risk.
A massive SPY put hedge protecting the entire book against systemic drawdowns.

In other words, Pentwater’s portfolio wasn’t betting on markets — it was pricing the law, not the economy.

1. Hess (HES) → Chevron (CVX)

Deal Type: All-Stock | Terms: 1.025 CVX shares per HES | Closed: July 2025

Chevron’s $60 billion acquisition of Hess was the definitive energy-sector arbitrage of the decade. The spread revolved around one make-or-break question: Would Exxon and CNOOC’s “right of first refusal” claim on Hess’s Guyana stake derail the merger?

Pentwater’s book showed long HES with CVX options and shorts as a ratio hedge. That allowed exposure to the event outcome while neutralizing oil and market beta. When the arbitration panel ultimately rejected Exxon’s claim, the deal closed swiftly and the spread collapsed.

Key Risk: Arbitration outcome and Chevron’s share volatility.
Arb Design: Ratio-locked, option-cushioned long HES versus CVX.

2. Juniper Networks (JNPR) → Hewlett Packard Enterprise (HPE)

Deal Type: All-Cash ($40 per share) | Closed: July 2025

HPE’s $14 billion all-cash buyout of Juniper was straightforward but profitable. Regulators scrutinized router and networking overlaps, then approved after modest divestitures. The spread tightened from roughly 4% in early 2025 to under 1% by June.

Pentwater’s position was clean: long JNPR, minimal hedging, and standard cash-settlement logistics. This was the definition of a low-drama yield generator in a volatile market.

Key Risk: Remedy complexity and antitrust clearance timing.
Arb Design: Pure convergence — target long, no stock leg.

3. ANSYS (ANSS) → Synopsys (SNPS)

Deal Type: Cash + Stock ($197 cash + 0.345 SNPS) | Closed: July 17, 2025

The Synopsys–ANSYS merger created a global leader in semiconductor design software. The hybrid consideration made this a classic ratio arb, with regulatory hurdles across the U.S., EU, and China.

Pentwater’s execution was textbook:

Long ANSS to own the spread.
Short SNPS / own SNPS calls to hedge the 0.345 exchange ratio.
ANSS puts to guard against last-minute regulatory delays.

When final approvals arrived in July, the spread collapsed, SNPS rallied, and both sides of the structure paid.

Key Risk: Foreign antitrust clearance; SNPS price movement.
Arb Design: Delta-hedged cash/stock merger with protective options.

4. Amedisys (AMED) → Optum / UnitedHealth Group (UNH)

Deal Type: All-Cash ($101 per share) | Closed: August 14, 2025

UnitedHealth’s Optum subsidiary fought through a year of antitrust litigation before sealing this $3.3 billion deal. The Department of Justice ultimately approved after divestitures of 164 home-health sites across 19 states.

Pentwater ran long AMED while maintaining UNH long exposure paired with UNH puts to offset any policy or reimbursement headlines that could harm the buyer. When the DOJ settlement was finalized, the spread disappeared overnight.

Key Risk: DOJ litigation and remedy scope.
Arb Design: Paired trade — long target, policy-hedged buyer.

5. Spirit AeroSystems (SPR) → Boeing (BA)

Deal Type: Stock-for-Stock ($37.25 in BA stock via collar) | Status: EU Cleared (Oct 2025), U.S. pending

Boeing’s acquisition of Spirit AeroSystems is one of the most strategically important industrial deals of the decade — and one of the most complex. It required divesting Spirit’s Airbus-facing assets while managing multiple regulators across continents.

Pentwater’s filings show long SPR, short BA, and BA puts — an elegant hedge against the very volatility that defined Boeing’s year. This construction neutralized the collar’s lower bound and insured against any production or regulatory headline.

Key Risk: Airbus carve-out execution; U.S. approval delays.
Arb Design: Collar-adjusted ratio hedge with tail protection.

6. Paramount Global → Skydance (Paramount Skydance, PSKY)

Deal Type: Multi-Step Control + Merger | Closed: August 7, 2025

The long-running Paramount–Skydance saga reshaped Hollywood’s corporate map. The deal created a new entity, Paramount Skydance (PSKY), after months of boardroom tension, litigation threats, and FCC review.

Pentwater’s trade: hold legacy Paramount equity through closing while owning PSKY puts for insurance against control battles or last-minute regulatory shocks. The FCC cleared it in late July, the merger closed in early August, and the re-rating delivered a quick gain.

Key Risk: FCC approval and governance disputes.
Arb Design: Control-arb with volatility hedging.

7. Informatica (INFA) → Salesforce (CRM)

Deal Type: All-Cash ($25 per share) | Guided Close: Early FY 2027

Salesforce’s $8 billion acquisition of Informatica was a long-dated regulatory carry — safe, slow, and predictable. With no financing risk and limited antitrust overlap, the only variable was time.

Pentwater’s approach was patience-oriented: long INFA, light macro hedge, and disciplined sizing to manage capital cost. In merger-arb terms, this was a carry trade masquerading as a deal.

Key Risk: Extended timeline and data-governance remedies.
Arb Design: Long-duration cash arb — time as the cost of yield.

8. Verve Therapeutics (VERV) → Eli Lilly (LLY)

Deal Type: Tender Offer + Milestone Payments | Expected Close: Q3 2025

Eli Lilly’s acquisition of Verve was a high-premium gene-editing takeover with both cash and milestone components. Regulatory hurdles were light, but biotech headline risk was not.

Pentwater positioned long VERV, modestly sized, and time-bound to the tender period. No acquirer hedge was needed — just a clear exit plan once tender thresholds were met.

Key Risk: Tender participation rate; biotech news volatility.
Arb Design: Short-window tender arb with disciplined sizing.

9. Mr. Cooper (COOP) → Rocket Companies (RKT)

Deal Type: All-Stock Exchange | Closed: October 1, 2025

Rocket’s purchase of mortgage servicer Mr. Cooper was a stock-for-stock efficiency merger that started near $9 billion in equity value and closed closer to $14 billion as valuations rose. It was all about mechanics: borrow availability, ratio discipline, and operational timing.

Pentwater’s setup was pure: long COOP, short RKT to lock the exchange. Once regulatory sign-offs landed, this basis compressed neatly into close.

Key Risk: Market drift in acquirer stock; regulatory timeline.
Arb Design: Straight ratio lock; operational execution focus.

10. Event-Driven, Not Yet Signed (as of Q2 2025)

A few holdings, like Surgery Partners (SGRY) and Frontier (FYBR), appeared on Pentwater’s radar as potential event catalysts — but lacked definitive agreements. These positions represent optionality, not current arbitrage.

Portfolio-Level Architecture: How the Trades Fit Together

Deal Type	Position Structure	Profit Driver	Primary Risk
Cash Deals (JNPR, AMED, INFA)	Long target + light macro hedge	Regulatory milestone compression	Timing, remedies
Cash/Stock (ANSS)	Long target + hedge acquirer leg	Ratio convergence	Acquirer volatility
All-Stock (HES, COOP)	Long target + short acquirer	Locked exchange ratio	Market beta
Control/Complex (SPR, PSKY)	Long target + puts	Close-day re-rating	Regulatory delay
Short-Window (VERV)	Tight sizing	Tender execution	Biotech headlines

Overlaying all of it: a $3.7 billion SPY put hedge (24% of portfolio exposure) that functions as macro insurance. In the event of a market drawdown, those puts would surge in value — providing liquidity when merger spreads widen and capital becomes scarce. That’s portfolio engineering at institutional scale.

Why Pentwater’s 2025 Playbook Worked

Precision over prediction: Every position was built around legal probabilities, not market opinions.
Risk budgeting through options: Puts and calls were treated as structural insurance, not leverage.
Macro hedge discipline: The SPY put acted as a safety net across all idiosyncratic bets.
Patience and duration control: Deals like Informatica carried low IRR but near-zero volatility — essential ballast for an arb portfolio.
Concentration as conviction: A handful of large spreads (Hess, ANSYS, Boeing, Paramount) did most of the heavy lifting — exactly how professional arbitrage is supposed to work.

My Takeaway

While retail investors chase trends, funds like Pentwater profit from certainty mispriced as doubt. They don’t bet on stocks going up; they bet on contracts closing. Their 2025 portfolio is a model of how to extract alpha from legal inevitability while hedging the world’s chaos.

In a year of geopolitical shocks, inflation hangovers, and election-year volatility, Pentwater didn’t guess — it calculated. Every trade was an equation with defined boundaries and measurable payoff.

That’s not luck. That’s arbitrage in its purest form.

DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.

MACROHINT

MACROHINT

Inside Pentwater’s 2025 Merger-Arb Machine: Every Live Deal, Explained