Definition: The simultaneous purchase of stock in an acquired company and the sale of stock in a purchasing company.
TeenAnalyst Advice: Usually when a company purchases another company, they see their stock decline slightly. The company being acquired is purchased at a premium, so their stock usually appreciates. Risk arbitrageurs are people who try to profit from this transaction.
This usually isn't something to be done by a regular investor because the stocks move right when these acquisitions are announced, so you'd miss the boat.