Insider trading is illegal because it is theft from the company, not because it is unfair. Hedge funds spend a fortune gaining an advantage that is material and

Insider trading is illegal because it is theft from the company, not because it is unfair. Hedge funds spend a fortune gaining an advantage that is material and non-public. The key is that they didn't steal it from the company. So if the buying company forced an employee to give them options without the selling companies consent, that would be insider trading. But if the deal is company to company, then there shouldn't be an issue. To quote Matt Levine: This is definitely not legal advice.