M&A deal to watch: Centennial Communications (CYCL) buyout by AT&T

AT&T (T) announced last friday that it is buying Centennial Communications (CYCL). Haven't looked deeply at this deal but this probably has low financing and regulatory risk. I suspect that regulators will not have any issues given that Centennial is a small company. The majority shareholder, owning around 20% of the company has agreed to the deal. AT&T is paying a 100%+ premium so it is unlikely to be rejected (although I will note that this is an opportunistic offer given that the share price collapsed more than 50% within the last two months.

There is high risk if the deal collapses. On top of the share price dropping 50%, this company has negative book value so I'm not sure of its condition.

You can get the press release announcing the deal here.

Buyout price: $8.50 cash
Expected closing date: 2Q 2009

As for me, I'll do more research and wait. The deal is expected to close in 2Q2009 so no rush. You are looking at around 12% return, which is good but not spectacular given that it closes two quarters away (at best). This deal also poses curreny risk for Canadians (I wouldn't be surprised if the US$ drops 10% by then.)

Comments

  1. AnonymousJanuary 3, 2009 at 3:45 PM

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    for free

    ReplyDelete

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