Purchase: TRB

After thinking about the previously mentioned merger-"arbitrage" situations, I decided to go with the Tribune (TRB) deal. This is the one that really interested me in the first place (the returns on the others weren't as attractive to me). The upside is around 25%.

The downside is uncertain and can be very large. If the deal does not complete, Tribune will end up being a heavily leveraged business in a declining newspaper industry. I can see the stock price dropping quite a bit (more than 30%). In such a case, I will likely sell with a loss. However, one should consider whether new bidders may emerge if the Zell deal fails. There were a few bidders before so Tribune may still be of interest to some (although, with a large debt load the interest may be less than before).

If the stock drops more and if I can save a few thousand more over the next month, I'll consider adding to this position. Right now the position is too small for my liking (it's around 5% of my portfolio).


Purchase Price: US$27.52
Investment Time Horizon: Short-term

Comments

  1. AnonymousFebruary 10, 2008 at 2:55 PM

    You can find all the information about TRB, which is now a closed merger, at www.madmergers.com.

    ReplyDelete

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