What Is a Package Deal?

A package deal is an order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets.

Key Takeaways

  • A package deal is an order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to maturity for multiple assets.
  • Because it is a package deal, if all specifications of the trade are not executed, then the deal never happens. So, if you are a trader looking at a special situation and want to put a trade on only as a package, this can make sure the trade is 100% executed to your expectations.
  • Having conditions in a multi-leg trade can make a lot of sense for patient traders using limit orders. This allows the trade (prices) to come to them, rather than chasing.

How a Package Deal Works

A package deal may be the best choice for traders in properly executing an investment strategy. For example, let's say an investor wants to enter into a long-short strategy, where he or she purchases one stock and short-sells another. Making this order a package deal will protect the investor in case either stock is not immediately available for purchase or sale. The investor may not want the exposure of being only long or short for the period of time required to complete the second transaction.

Because it is a package deal, if all specifications of the trade are not executed, then the deal never happens. So, if you are a trader looking at a special situation and want to put a trade on only as a package, this can make sure the trade is 100% executed to your expectations. Having conditions in a multi-leg trade can make a lot of sense for patient traders using limit orders. This allows the trade (prices) to come to them, rather than chasing.

Example of Package Deal

A package deal contract can also be used to attract potential investors in large-scale construction projects that would benefit a local economy. For instance, the Investment Development Authority of Lebanon (IDAL) offers a package deal contract with investor incentives. They offer investment incentives based on an investment project's potential capital investment, the number of jobs created, and the project’s sector type.

In IDAL's package deal contract, an investor is promised incentives including

  • Full exemption from: corporate income tax for a period that can run up to 10 years, project dividends taxes for a period that can run up to 10 years, and land registration fees
  • Up to 50 percent reduction on work- and residence- permit fees as well as construction-permit fees
  • Getting work permits with no delay

Another example of a package deal is a recent agreement in the tech industry. In 2017, TechCrunch reported that Uber agreed to move forward with a SoftBank Group investment, stating that they "entered into an agreement with a consortium led by Softbank and Dragoneer on a potential investment.”

This is an example of a package deal, but SoftBank’s $1 billion investment relies on the tender offer going through final rounds of greenlighting. TechCrunch further reported that the “potential deal includes a $1 billion investment in the company at the last private valuation of nearly $70 billion,” with a source suggesting the deal is an extension of its last Series G round. TechCrunch says that observers expect the group to buy “up to $9 billion in Uber shares from employees and other shareholders,” which would bring its “total ownership to at least 14 percent of the company.”