bloggingbuyouts

Tribune Co. (NYSE: TRB) closed at $28.12. Sam Zell announced on April 2, 2007 that his group would pay TRB shareholders $34 per share. The closing has been expected to occur in the fourth quarter of 2007. Alex Brown said on October 2, "We continue to believe the transaction will close successfully, and reiterate our Buy rating and $34 price target." TRB November option implied volatility of 44 is above its 26-week average of 25 according to Track Data, suggesting larger price risks.

Cablevision Systems Corp. (NYSE: CVC), a leading entertainment and communications company controlled by the Dolan family, closed at $34.79. The Dolan family's proposal of taking CVC private at $36.26 a share will be voted on at special meeting of CVC shareholders on October 24. CVC has secured board and special committee approval. CVC December call option implied volatility is at 19; puts are at 23, near its 26-week average of 23 according to Track Data, suggesting non-directional price risks.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Just last week, I addressed some of the pending mergers that are being deemed at risk as far as "WILL THEY CLOSE?" and there are still some pretty large spreads between today's stock prices and the implied merger prices. That merger risk-arb is an area that has made fortunes for many funds, and it has led to many a demise. Here are some of the pending deals covered today so you can see where there is risk and where there is opportunity.

Tribune (NYSE:TRB) is perhaps one of the most frequently referred to deals. This is one that we have speculated will have a price cut. After all, would you loan Sam Zell and this company this much money when the media fundamentals are as bad as they are (and they only get worse)? Shareholders have approved the deal, but that was a given. Tribune's $34.00 buyout price has an implied return of over 20% to today's prices of $28.15, but I think a safe bet is for a lower-than-voted-on price.

First Data Corp. (NYSE:FDC) is the one of the biggest mergers pending that is still at risk. First Data is set to receive $34.00, and shares are currently at $32.51. The good news is that this KKR-led deal is MUCH better in risk-arb terms than it was two weeks ago when shares dipped to under $32.00.

Sallie Mae, or SLM Corp. (NYSE:SLM), is really perceived as being at risk. It isn't just the financing being at risk. The regulatory agencies may want this blocked as it is a quasi-agency status. If you don't think a $60.00 buyout price is a risk when the shares are at $49.05 today, then what can be said? J.C. Flowers & Co., Bank of America Corp.(NYSE:BAC) and JPMorgan Chase & Co.(NYSE:JPM), have said that legislation could kill the deal.

Cablevision Systems Corp. (NYSE:CVC) is one that is in Dolan-Hell. The buyout is at $36.26 and shares sit today at $32.30.

TXU Corp. (NYSE:TXU) is the real biggie, and still up in the air. You have to wonder why Warren Buffett wouldn't have stepped in for his WHALE OF A DEAL, particularly since he has telegraphed that he'd like to own utilities. ISS has recommended that shareholders vote in favor of the buyout.

Jon Ogg is a partner in 24/7 Wall St., LLC; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

Comcast Corporation (NASDAQ: CMCSA), the massive cable, telephone and Internet service provider, was mentioned as one heck of a bargain in Barron's Magazine (subscription required), with one article participant labeling it as one of the cheapest 15 stocks in the S&P 500. The combination of strong revenue growth of 18% and strong cash generation could finance a $20 billion buyback, driving the $40 per share, one analyst believed.

However, despite being the number one player in this space, Brian Roberts, Comcast CEO, could be frustrated seeing his other cable brethren potentially making billions, particularly Cox Communications, who went private a few years ago, and Cablevision, who is in the process of going private. While Roberts & Family owns 100% of the voting stock, it only owns around 3 to 4% of the economic shares. The cumulative value of these shares approaches $1b, meaning Roberts could walk away with tens of billions in a successful private equity deal. While shut down for now, the private equity market will not be shutdown forever.

The numbers at Comcast are impressive, now serving 24 million homes versus number two Time Warner who serves 13 million. Comcast also has a presence in 20 of the 25 largest cities in the US.

Will Roberts ever take the private-equity leap, adding more debt on to the $33 billion already on its balance sheet? Most likely not. What has made Comcast the number one player in this space is the Roberts family's wise use of debt. Expect huge share buybacks to be the means for the industry pioneers to increase their ownership in the cable giant. The Roberts family is too risk averse to leverage this gem of a company to the hilt.comcast