Apex Pal / Thai Village - Emerging Value OR Arbitrage Opportunity OR Both!?

APEX-Pal International Ltd - owner of the Sakae Sushi chain - is making a bid to buy over Thai Village Holdings, a restaurant group best known for its signature braised shark's fin soup. Disclosing the proposed offer yesterday, Thai Village said Apex-Pal has informed the company its intention to make a voluntary conditional offer for the remaining shares it does not already own. The controlling shareholders of Thai Village - Lee Tong Soon, Lee Tong Kuon and Kok Nyong Patt - as well as major shareholder Tee Yih Jia Food Manufacturing Pte Ltd, will be offered 0.6 new Apex-Pal share for each Thai Village share they own. The three controlling shareholders, who collectively hold 68.6 million shares or approximately 33.01 per cent of the company, have already agreed to accept the proposed offer, Thai Village said.

APEX PAL will offer to all shareholders for each Thai Village share held either of the following consideration: (i) 0.6 Apex-Pal share;
(ii) $0.201 cash;
or (iii) 0.2 Apex-Pal share plus $0.134 cash.

Rationalizing the offer with current price of Thai Village @ $0.19 & Apex Pal @ $0.365, there appears to be some opportunity for arbitrage, 2 ways to go about it:

Option 1 - Almost guaranteed free $$: Buy Thai Village shares at $0.19,and wait for the offer to endand exercise to complete to earn the additional $0.011 per share (prob need to hold at least 3-6 months). This is likely to go through as the major shareholders have expressed agreement to Apex Pal's proposal. Low Risk option

Option 2 - Go for the Apex Pal shares: With the conversion from TV shares to AP shares, it is easy to calculate that you are paying effectively only $0.317 per Apex Pal share. Given the current price of $0.365, you are netting $0.05 per share. Of course, you still need to wait for 3-6 months for the deal to go through, during this time, there may be market fluctuations that gobbles away your arbritage profits. Riskier option

My View :)
Its your choice!, I like option 1, almost risk free anyway.
For investors who like Apex Pal , Option 2 should be fine also , it gives you Apex Pal shares at only 8 times historical 2006 PE, a value not found in today's white hot market. Either way, this looks like an great opportunity. Only one caveat to watch out, if the deal does not go through, then you have to contend with the TV shares in your pocket.