Friday, September 28, 2007 2 comments ++[ CLICK TO COMMENT ]++

Purchase/Increase: TRB

Added more Tribune (TRB) today. As mentioned before (search for TRB or click on the TRB label for prior articles), this is a merger-"arbitrage" play. The risk is definitely quite high but I feel that the deal will close. The two big threats are:

  • FCC won't approve the waiver: Tribune owns a waiver that enables it to own TV channels in the same regions, which is normally not permitted in USA. This is the biggest risk but I believe the commission will vote for the waiver given that newspapers are struggling. Even if there are some issues, Tribune can spin off their TV stations or something.
  • Bankers can't raise the money through debt: This used to be a big threat a month ago but given that the bond market has calmed down somewhat, I think financing should be fine. Sam Zell is unlikely to walk away and Tribune has already taken on massive leverage as per the first part of the takeover deal, so it is unlikely for the bankers to walk and face lawsuits and damage to their reputation.

I added to an existing small position...

Average Purchase Price: $27.27
Investment Time Horizon: Short-term

(The fact that the Canadian dollar is at parity to the US dollar means that calculating purchase prices is much easier now :) )

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2 Response to Purchase/Increase: TRB

Anonymous
February 10, 2008 at 2:42 PM

There is more information one what can keep a merger from going through on www.madmergers.com

Anonymous
February 10, 2008 at 2:44 PM

There is more information one what can keep a merger from going through on www.madmergers.com

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