I am always looking for discounts and arbitrage situations.
An example, EAS is an electric utility in the northeast. There is a
buyout in place for $28.50 per share, yet it trades at around $25.
The sale must be approved by a judge because the NY regulators
oppose it. The market is saying the deal won't be approved, yet the
likely result is unknown. I buy here because the arbitrage spread is
13% and the worst that can happen is that I will own a mediocre
utility that yields a 4.9% dividend if the deal is not approved.
Evidentiary hearings on the acquisition started March 17.
Energy East Corp. (EAS), Iberdrola SA
Premium offered: $3.25 or 12.87%
Offer per share: $28.50 cash
Value of outstanding common equity: $4,503,000,000
Target share price: $25.25
Expected closing: First half of 2008