Watch Alert: Puget Energy Arbitrage

I have to admit, lately the content of the blog has been evolving to special situations. I’m not sure whether the readers are ok with this, but if not, please let me know. But I digress…

In the meantime, a merger that I have had my eyes on since announcement is Puget Energy. Puget Energy is a holding company but performs all of its operations through Puget Sound Energy which is based here in Seattle, right in my backyard.

As with most utility companies in a merger or privatization deal, the deal is nearing its 1 year announcement of October 26, which is something I look for because news from 1 year ago on Wall Street is history. As with the merger of Aquila, there are many approvals to be acquired but so far things have been progressing nicely.

I bring this up today because along with the panic that set in today with the financial markets melting down, PSD was also included in the sell off.

If the deal is finalized, PSD is to be converted to $30 in cash. It was trading in the $24’s at one point this morning and closed at $27.60 on Friday. The 8% drop just goes to show that the market is full of emotion. Who said markets were efficient? 🙂

I won’t be going over the details here as I want to get back to looking at the deal again and other potential bargains due to todays drop.

In the meantime, here is an interesting interview by Steve Reynolds, chairman, president and CEO of PSD to add to your research.


I own shares of PSD

[tags]arbitrage, merger, psd, special situation[/tags]

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6 responses to “Watch Alert: Puget Energy Arbitrage”

  1. Jae Jun says:

    I bought PSD before I left at around 23 ish but when I noticed the market crash I sold out for a tiny profit and bought into another position which I feel is a better opportunity.

    I wanted to re-buy at 21 but didn’t have the cash and now that they have EVERYTHING approved. The last thing is for reply briefs to be submitted by Oct 23 and the deal is complete. $30 cash per share, so there is still a good spread here.

    With very little in the way of upsetting the deal, I’m looking to buy again if I can money into my 401k account quickly.

  2. Jae Jun says:

    BELLEVUE, Wash. – Puget Sound Energy, utility subsidiary of Puget Energy (NYSE:PSD), and Puget Holdings LLC, a consortium of long-term infrastructure investors, today noted that on Oct. 8, 2008 the Washington Utilities and Transportation Commission provided notice to all parties to the merger case that reply briefs, if submitted, must be filed by Oct. 23, 2008. The filing of reply briefs by the parties is expected to be the last step before a final order is issued from the UTC relating to the merger case.
    All federal regulatory and shareholder approvals required for the merger have been obtained. Puget Holdings has committed equity and debt financing in place to complete the merger and to provide significant capital for PSE’s future needs.
    If the merger is approved by the UTC and customary conditions are met, completion of the merger is expected this year.

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