You are certainly correct. The extra 50c was announced in one of...

You are certainly correct. The extra 50c was announced in one of the presentations, so there would be some people that didn't see this extra bit of detail.
((0.1722 x 30.55) + 0.50) / 0.705 = $8.17 theoretical price.

However, as institutions would be shorting IRM to cover the other side of the arbitrage situation, it is also pertinent to take consideration of IRM dividends. Assuming only one more 48c dividend is paid by IRM then the adjusted theoretical price comes down to about $8.08.

Todays current price of $7.26 implies over 10% discount, with a potential close in about 3-4 months assuming approval. CAGR of over 30%.

Potential downside if takeover falls over: this is anyone's guess. As this takeover has been on the cards for quite a while now, the takeover premium is well and truly baked in (arguably at current prices it is not). Anywhere between $5.00-$6.50 would seem reasonable to me for a first trading open if takeover failed.

So after the upside and downside have been calculated, the next step is to calculate the probability of success. Obviously the closer you are to either company, or the regulators, or how much familiarity you have with takeover processes and risks will impact your ability to assess the probability. Personally, I think the percentage is high enough to justify the current trade thesis based on the potential upside/downside events.
The other factor to consider is that while the IRM price and AUD combo allows the theoretical offer price to trade below the $8.50 cash offer, any investors with a <5,000 parcel have a more favourable upside scenario than the institutional holders - so their own calculations will differ.

P.S dont rely on my calculations - I do these for myself only and they are likely to have errors!