Monday, September 20, 2010

Risk Arb Play in Bowne & Co.

Well, there goes by long term buy and hold strategy with Visa (Ticker: V). I sold Visa today at $68.49 generating a 4.13% gain in a week. I still hold all of my IPO shares in Visa and I’m definitely not selling any of those anytime soon. I used some of the proceeds from this sale to initiate a risk arb position in Bowne & Co (Ticker: BNE).

Bowne & Co. entered into a merger agreement with R.R. Donnelley & Sons, Co. (Ticker: RRD) way back in February for $11.50 per share. This deal is currently hung up with the FTC and the companies expect FTC approval in the second half of this year. On 5/12/10, the FTC initiated a second request, which further delayed the closing. I picked up a few shares today at $11.09. The company should be receiving news soon regarding the decision from the FTC. It’s hard to see how the FTC can nix this small deal. It’s a $481 million deal in a boring industry. Bowne & Co. prints shareholder reports… I’ve noticed that the FTC is scrutinizing even the small deals these days. In any case, I believe there is a very good probability that this deal closes soon.


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