Identifying Hedge Fund Strategies: Merger Arbitrage

XYZ Capital is a hedge fund that predominantly engages in event-driven strategies. Recently, they invested in a company that is the target of an acquisition by a larger firm, which is in the process of completing due diligence. XYZ Capital believes that the acquisition will result in a substantial increase in the target company’s stock price based on historical takeover premiums. In analyzing this situation, XYZ Capital is deciding whether to adopt a merger arbitrage strategy, a distressed securities strategy, or an activism strategy.

Which of the following strategies is most aligned with XYZ Capital's current investment focus given the acquisition scenario?