Why Arcosa Inc. (ACA) Offers a Merger Arbitrage Opportunity

Gabelli Investment Management Firm recently released its "Dividend Growth Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here . The Fund faced a second quarter in which a dramatic stock-market rebound was led by semiconductor and industrial shares, while the Fund's more defensive positioning and limited exposure to the strongest AI hardware names constrained its relative performance. Class I shares gained 5.35% in Q2, compared with a 9.99% return for the Lipper Large Cap Value Fund Average, while the Fund's one-year return stood at 18.68% versus 22.52% for the benchmark. The Fund benefited from selected exposure to major technology and financial companies, but its lack of exposure to the biggest AI hardware and semiconductor winners was a significant drag as exceptionally strong pricing and supply shortages drove those areas sharply higher; the Fund also maintained a modestly defensive position amid concerns over the Iran conflict, higher oil prices, a weaker consumer, a stronger U.S. dollar, and a flattening yield curve. Looking ahead, management expects earnings growth to remain an important market driver, with 2026 S&P 500 earnings growth expectations rising to 25% from 15% at the start of the year and AI infrastructure investment continuing to support technology and industrial demand, while inflation, interest rates, geopolitical risks, and the sustainability of elevated AI spending remain key uncertainties. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, Gabelli Dividend Growth Fund highlighted stocks like Arcosa Inc. (NYSE: ACA ). Arcosa Inc. (NYSE:ACA) provides infrastructure-related products and solutions across its construction products and engineered structures businesses. The one-month return of Arcosa Inc. (NYSE:ACA) was 0.44% while its shares traded between $89.03 and $146.92 over the last 52 weeks. On September 29, 2026, Arcosa Inc. (NYSE:ACA) stock closed at approximately $146.00 per share, with a market capitalization of about $7.18 billion.

Gabelli Dividend Growth Fund stated the following regarding Arcosa Inc. (NYSE:ACA) in its Q2 2026 investor letter:

" Arcosa Inc. (NYSE:ACA)(2.1% of net assets as of June 30, 2026) (ACA – $145.29 – NYSE) provides infrastructure-related products and solutions across its construction products and engineered structures segments. The Construction Products segment offers natural and recycled aggregates; specialty materials; and construction site support equipment, namely trench-shoring products. The Engineered Structures segment offers utility structures for electricity transmission and distribution, wind towers, lighting structures, and telecommunication structures. On June 22nd, CRH plc, the world's largest building materials company by revenue, announced an agreement to acquire Arcosa for $150 per share cash. While CRH's offer reflected a modest 10% premium to Arcosa's pre-deal share price, it came on the heels of Arcosa's strong year-to-date stock performance, reflecting data center driven demand for transmission structures and favorable pricing and infrastructure demand for aggregates. Arcosa now offers a good merger arbitrage return (i.e. uncorrelated cash-like return) into the deal close, expected in early 2027."