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On September 14, 2009 AT&T and Centennial Communications announced that they expect the $8.50 per share acquisition of Centennial to be completed early in the fourth quarter of 2009. This statement comes after their first delay announcement on 08-Jul-09, stating then that the transaction would be completed in the third quarter of 2009 instead of the first half of 2009.

Although the new statement brings further delay to the closing of the deal, the statement shows confidence in obtaining the regulatory approvals from both the DoJ and FCC. The fact that the statement uses the word 'early 3Q09' shows that the companies now have a clearer view on when the processes should be finalized. Further confirmation of the possible regulatory clearance outcome for the deal is shown by the 09-Sep-09 communications between the companies and the FCC: the fact that AT&T seems to be moving ahead with the FCC review indicates that AT&T and Centennial have reached some level of comfort at the DoJ.

We believe that the deal is likely to be completed by end-October and hence see Centennial stock as attractive at $7.85 - investors may gain the 8.2% merger spread (annualized 65%+ return -assuming end-Oct closing).

Disclosure: Long CYCL

Source: Centennial Communication Merger Arb Opportunity