Frank asked in Business & FinanceInvesting · 8 years ago

Will $NVE remain at around $23 until deal is complete in 2014?

Kinda got curious of how this works. So MidAmerican will purchase all of NV Energy $NVE for $23.75 in a all-cash transaction. And the deal is expected to be complete at the end of 1st quarter of 2014. I've noticed that the stock has since the announcement traded just below this offer price. Now assuming that this is 100% going to complete by 2014, will the share price stay at that level until then? Is it useless to buy it at that price as this could never go any higher? If you bought shares at the current price $23.57 and kept it until the transaction completion, will you automatically receive $23.75 per share and book that $0.18 profit?

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  • 8 years ago
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    the answer is maybe....but on that maybe you are going to tie up significant money for over 1/2 a year on the hope of making $0.18/share????

    This is not a done deal by a long shot and could fall apart.

    http://web.tmxmoney.com/article.php?news%E2%80%A6

    the above is the announcement of the buy-out

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    Under the terms of the agreement, MidAmerican will purchase all outstanding shares of NV Energy's common stock for $23.75 per share in cash. The transaction, which has been unanimously approved by both companies' boards of directors, has an enterprise value of approximately $10 billion. The acquisition is subject to customary closing conditions, including the approval of the transaction by NV Energy's shareholders and the receipt of required state and federal approvals. The transaction is currently expected to be completed in the first quarter of 2014.

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    the board of directors may have approved of the sale but the Shareholders haven't and it could be significant...consider these news items.

    http://web.tmxmoney.com/news.php?qm_symb%E2%80%A6

    No less than 7 law firms are circling and "investigating" if the announced price is a fair one and whether the Board of directors acted in the company's and shareholder's best interests

    And on the surface they probably have a point.

    http://web.tmxmoney.com/charting.php?qm_%E2%80%A6

    in the past 4.5 years the company has had a steady climb in share price from $8 to $20 (before the offer) and the shareholders are being basically offered a 15% incentive to part with their shares...I would be a little upset if I held such a stock.

    So...why are investors buying now....not for a measly $0.18/share gain when/if the deal is finalized. No, they are hoping that the shareholders disapprove of the sale and MidAmerican (Berkshire Holdings) will sweeten the pot and offer a higher settlement...I had a similar situation where a deal was supposed to be a "fait accomplait" and a hostile (to the board) bid came in to take over the company for 10% more than was "approved"...of course the shareholders wanted the better deal and the price increased after a bit of a price war by 20% more.

    SO a lot could happen in 6-9 months...but those buying are not after $0.18/share...those that are selling are taking their profits and want nothing to do with the hassles and just want to move on.

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