Merger arbitrage is an attempt to generate nearly riskless profits. It's a beautiful thing, when it works.

One example would be Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) bid for Constellation Energy (NYSE:CEG) via subsidiary MidAmerican Energy. Despite the near-certainty that this deal will be consummated, Constellation shares have bounced all over the place in recent months. Alert Fools could have purchased shares at around $23 as recently as last week. As long as shareholders get cashed out within the next year, that's better than a 15% annualized return.

Of course, deals fall apart. Just this week, BHP Billiton (NYSE:BHP) cut bait in its pursuit of Rio Tinto (NYSE:RTP). In such situations, arbitrageurs will typically bail out of the target en masse, sometimes leaving a low-priced opportunity for those with a longer-term investing mindset. Here's one idea I have.

Like Motley Fool Income Investor pick ONEOK, Buckeye GP Holdings (NYSE:BGH) is (or in this case, owns) the general partner of a publicly traded midstream energy limited partnership. As the limited partner -- in this case, Buckeye Partners (NYSE:BPL) -- increases its distributions (read: dividends), Buckeye GP gets an increasing cut of the pie thanks to what are known as incentive distribution rights. There's no shortage of growth projects for midstream companies to pursue, and the model is a proven profit machine when executed properly.

During the market meltdown, these partnerships sold off severely, despite their dependable distributions and recession-resistant characteristics. A private equity-backed group called BGH GP Holdings saw the opportunity to pick up the remaining 38% of Buckeye GP that it didn't already own, and made a $17 tender offer. On Nov. 17, BGH kicked up the offer by two shiny quarters, but the general partner still recommended that unitholders reject the "inadequate" offer. BGH dropped its bid last Friday as a result.

Buckeye GP now changes hands for less than $14 per unit, which values the company at an extremely low multiple of operating cash flow. Buckeye Partners has paid 87 consecutive quarterly distributions, so those cash flows do not appear fleeting. From the Marcellus shale to ethanol pipelines, Buckeye appears to have lots of interesting growth opportunities, and the general partner's debt load, reasonable at 52% of total capitalization, shouldn't stand in the way.

Interested Fools will need to dig much deeper, but this busted pipeline deal could pump up your portfolio.

Berkshire Hathaway is both an Inside Value and a Stock Advisor selection. Try any of our newsletters free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Fool owns shares of Berkshire Hathaway. The Motley Fool has a disclosure policy.