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most suck, some are good, stick to the facts, mean reversion persists in the long run Apr 15, 2009
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Bribery Disclosure won't Derail Sun Acquisition
Spreads on the Sun Oracle acquisition have widened after reports came out on Friday that Sun has been accused of bribery in a foreign country. Oracle quickly noted that it was aware of the allegations prior to their acquisition.
This deal is still done.
You can now earn a 10-11% yield on this acquisition by going long Sun and shorting some Oct 2009 stricke 9 puts.
55 cents earned on the long position (assume buy price of Sun at 8.95) and an income of 40 cents by selling the puts totals a 95 cent return on a 8.95 net long investment.
Net yield equals 10.6%
disclosure: net long JAVA, short puts described above, and short calls at strike 10
Violent Trade: M&T Provident Transaction Offers 4%+ Return in 2 Months
Buy: PBKS
Short MTB ~170 shares for every 1000 of PBKS
Cash Transaction close by end of May
M&T Banks is one of the solid banks in America. One of its investors is Warren Buffet. M&T has a strong presence in the northeast region of America. Their headquarters is in Buffalo, with operations from there down to Baltimore.
PBKS is a Baltimore-area bank. MTB has already outline plans to integrate PBKS which include laying off employees, providing a severance package, and giving preference to laid off employees to apply for job openings at MTB.
This transaction is actually less complex than the FMCN transaction, since PBKS is a relatively small acquisition. Shareholders have already aproved the deal and all that remains is regulatory approval which should be a cinch.
The net trade should yield you an 4%+ return in about 2 months!
Take a look at my blog at www.violentcapitalist.com on how you can extend the value of this trade to 8.6%!
Disclaimer: I have an interest in PBKS