Question on TSL going private

[crimsonghost747]

Ok, so there is obviously something that I'm not seeing here. So I'd be very greatful if someone could tell me what I'm missing.

As per their press release (http://ir.trinasolar.com/phoenix.zhtml?c...ID=2191453) they have entered into a definitive agreement to go private. Of course there will still be a vote but the way I see it, this deal is very likely to happen. The thing I don't get is... if they have offered $11.60 per ADS then why is Trina currently trading at around $10.40? I can see the price not jumping to exactly $11.60 because it will take some time for the merger to finish and for the owners to get their cash, however that can't explain for such a large difference.

I can buy now for $10.40 and early next year I'll receive $11.60. That would be a more than 10% gain over a roughly 6 month period of time... and with very little risk. So what is it that I'm missing?

[benjamen]

This isn't a done deal. It requires a 2/3 vote by the shareholders to pass. A similar deal was attempted unsuccessfully in the past.

Relevant article:
http://seekingalpha.com/article/3994482-...es-private

[ChadR]

Same thing is happening to one of my holdings, Westar Energy (WR). Currently selling for $55.33 and it has a buyout price of $60 next year. In this situation, I believe that the reason is that there are some class action lawsuits saying that the $60 price is too low.

[crimsonghost747]

Well, the vote went through and Trina Closed at $9.62.
So now we are looking at.. over 20% profit on a deal that, once again, looks to be as close to certain as possible.

I'll repeat the question: is there something I'm missing? I get that this transaction has been advancing slowly, but even if it would take a whole year to close that would still be a 20% profit in a year with close to zero risk. Even if it would take two years to close that would still be an excellent risk/reward ratio. Now, I'm skeptical because this really sounds too good to be true...

I can use margin with a 2% interest rate... seriously considering grabbing a big pile of TSL with margin. Your thoughts?

[crimsonghost747]

Well, turns out I wasn't missing anything. I had some shares (bought at $10.xx a long time ago) and I grabbed more in december at $9.42 since I just couldn't pass up on the apparent 20% profit.

The price jumped up yesterday after hours and I sold my shares today at $11.50.

If it sounds too good to be true... apparently it sometimes is true. :p

[ChadR]

Nice arbitrage play. I thought about grabbing some in December when you made your previous post. For some reason that I can't remember now I didn't. My loss.