Tuesday, July 06, 2010

Portec Rail Arb Play

Today, I initiated a position in Portec Rail Products (Ticker: PRPX) at $11.35. This company is being acquired by L.B. Foster Company (Ticker: FSTR) for $11.71. This deal is currently delayed due to a second request by the Department of Justice. The companies agreed with the DOJ to delay the closing of the deal after July 16th and a drop dead date to terminate the deal is August 31st. The tender offer expires on July 31st so we should know by then if the deal will close. The potential net gain from this deal is ~ 3% (~ 57% annualized return with a close by August 31 and ~ 54% annualized return with a closing date of August 1st).


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