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This paper explores the cross sectional variation in risk arbitrage spreads. Factors that are relevant to the probability of deal success (i.e. target termination fees, target resistance, target price run-up, relative target size and arbitrageurs ’ activity), bid revision (i.e. target’s growth opportunity), potential loss when a deal fails (i.e. bid premium, bidder’s systematic risk) and transaction costs for risk arbitrageurs (i.e. bidder’s return volatility, low priced shares) are found significant in developing a prediction model for risk arbitrage spreads. We find that portfolios of deals that our model predicts spreads less than their actual values tend to outperform portfolios whose actual spreads are less than their predicted values. We believe that our model may be able to help risk arbitrageurs identify attractive risk arbitrage opportunities