Wednesday, February 11, 2009 0 comments ++[ CLICK TO COMMENT ]++

Sold: Puget Sound Energy (PSD)

A bit late in reporting this because one of my brokers takes a long time to post the transaction. Puget Sound Energy successfully closed the acquisition. Good luck to the new owners, all the employees, and customers. Puget Sound seems to be expanding and has new plans in alternative energy, among others, and hopefully the new owners will allow it to service everyone better.

I'm happy with this transaction since it literally saved my portfolio last year. Because of the massive loss in Ambac, along with sizeable markdown in the BCE holding, this became a large part of my portfolio. The market had doubts about the deal but I felt that the sell-off in shares was likely due to forced selling by M&A arbitrage funds due to blow-ups of others deals (this is indeed what seems to have happened.) Financing did not seem to be an issue and I suspected that the buyers had little interest in walking away. I never thought the buyers had a high likelihood of walking away because the value of Puget Energy may have declined somewhat but nothing like cyclical companies such as Rohm & Haas, which is worth far less without a buyout (most buyer cancellations are due to them buying something extremely overvalued.)

Sale price: $30
Total Return: 30% (in C$ terms, it was probably around 35%)

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