Energy East Risk Reward

The arb game is all about risk and reward. On 8/21 I picked up some Energy East (Ticker: EAS) @ $26.69. Energy East is in the process of being acquired by Iberdrola SA, a Spanish utility company, for $28.50. The final regulatory hurdle to approve this merger is a vote by the New York regulators. The vote was originally scheduled for Wednesday 8/27, but was cancelled due to scheduling conflicts with two of the commissioners. The vote has been rescheduled for Wednesday 9/3. Basically, a majority vote is needed to move this merger forward. There were a total of 5 commissioners scheduled to vote on the deal, but one just dropped out. Now with 4 left, you need a 3-1 majority to approve and a 2-2 tie will be viewed as a no go. From what I’ve seen, there’s already 1 no vote so you need the remaining 3 to vote in favor. The risk is too high in this deal falling apart. Is a quick 6.7% worth the risk? I vote no. I’ll settle for a small 1.9% return (sold today @ $27.20) and move on…