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Tierone - oops

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February 19, 2008 – Comments (0) | RELATED TICKERS: CSE.DL2 , TONE

Sometimes, if things are too good to be true, they are.

Today, Capitalsource's board announced that it's given the CEO authority to either terminate the merger with Tierone, or to seek new terms.

My guess is that Capitalsource is seeking new terms. the spread of about 25% was too generous. Tierone shareholders knew they were getting a good deal, which is why they approved the merger. Capitalsource, of course, wants the best deal it can get for itself.

I think Capitalsource still wants to go through with this. Tierone would give them access to low cost funding, which they would then loan out. I think they're just trying to get leverage over Tierone. it seems that either party is allowed, under the deal, to terminate the transaction. Tierone probably has no grounds to sue Capitalsource to complete the deal.

at this point, I think Capitalsource is a good buy. however, I would not buy Tierone. I'll hold on to my shares until after I hear what Josh Peters at Morningstar is doing. he's usually quick to email. 

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