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ID - merger arbitrage opportunity


rijk
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L-1 Identity Solutions (ID) is being acquired by Safran (French) for $12 share cash, current price is $10.78, i.e. 11% spread.

 

http://www.sec.gov/Archives/edgar/data/1018332/000095012310087508/y03977exv99w1.htm

 

The final pending merger condition is CFIUS approval, which looks at national safety concerns

 

ID & Safran have re-filed their CFIUS application twice to allow more time to negotiate & complete the final mitigation agreement

 

http://www.sec.gov/Archives/edgar/data/1018332/000095012311048465/y04851exv99w1.htm

 

both ID & Safran are very well connected politically (see attached), in fact Safran is being advised by Michael Shertoff, the former DHS Secretary (DHS is on of the government agencies represented in CFIUS)

 

the intelligence arm of L-1 has already been divested to BEA (UK)

 

L-1 is being sold to a French company, i.e. an allie, not a Chinese company, I wonder how Obama would explain to Sarkozy that France is not a trusted business partner but can be relied upon in times of war......

 

None of the recent press releases talks about problems with approval, the justification for another extension/re-file is that more time is required to complete the final mitigation agreement, if there was political resistance, you would have expected a different communication, unless the game is to frustrate Safran untill they withdraw the transaction, which doesn't make sense and would result in termination fee payable by Safran of $75 million (i.e. Safran had high conviction that regulatory matters were not an issue when they entered this deal).

 

Everyone is spooked by another re-file an the market doesn't like uncertainty, resulting in an 11% spread

 

what am i missing?

 

regards

rijk

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