Columbia pipeline group buyout

[Value Buy]

It is being bought out with an all cash offer of $25.50 a share by Trans Canada.
It has been trading above that level for the last three days, but by only a little over five to ten cents a share. Should close by end of the year.
I cannot find anything explaining why it is trading higher than the buy out offer.
No white knight, etc.
There is a law firm that says they might enter the fray, because it was sold below it's value (probably was. It traded over $30 a share after being spun off by Nisource) and upper mgmt might be getting a "sweetheart payoff)
Anyone have any ideas?

[Aman A.K.A. Ahamburger]

The initial bid was made at a 11% premium back in March, VB. That snapback in oil prices we talked about a few months back.

TransCanada to Acquire Columbia Pipeline Group for US$13 Billion

[Virgil Showlion]

What was the price of the shares before the price of crude tanked?

Stock prices swing with the forecasted price of a barrel of oil, and oil prices seem to pop or drop daily with announcements of production freezes, production restarts, rumoured producer agreements (Doha, Doha 2).

My guess would be that there's a growing cohort bullish on future oil prices.

[Value Buy]

CPGX traded above $30 a share on a when issued basis.

When it was spun off it initially traded in the $27 a share range. CPGX does not transport crude oil. They are a natural gas pipeline transportation company.
Yes, they were hurt by lower ng prices, but they were in the business of moving it for producers and buyers downstream. The problem was there was fear some producers might file bankruptcy, negating the longterm contracts of transporting the ng at a favorable return rate for CPGX.

[Aman A.K.A. Ahamburger]

All resource based companies were hammered with the price of oil. The rising tide of oil prices has lifted all boats; tck.b is a great example of that. If the offer for CPGX was made back in Feb the 25 offer would have been at a $7-10 premium. From the link I posted above:

Under the terms of the all-cash deal, unanimously approved by the Boards of Directors of both companies, Columbia shareholders will receive US$25.50 per common share, an 11 per cent premium based on Columbia's closing stock price on the NYSE of US$23.00 as of March 16, 2016 and a 32 per cent premium to the volume weighted average price over the last 30 days.

[Value Buy]

Apr 26, 2016 10:34:53 GMT -5 Aman A.K.A. Ahamburger said:

All resource based companies were hammered with the price of oil. The rising tide of oil prices has lifted all boats; tck.b is a great example of that. If the offer for CPGX was made back in Feb the 25 offer would have been at a $7-10 premium. From the link I posted above:

Under the terms of the all-cash deal, unanimously approved by the Boards of Directors of both companies, Columbia shareholders will receive US$25.50 per common share, an 11 per cent premium based on Columbia's closing stock price on the NYSE of US$23.00 as of March 16, 2016 and a 32 per cent premium to the volume weighted average price over the last 30 days.

Right now it is trading at $25.66 a share. Even if investors were trying to pick up the dividend payment, they are now buying a stock that will not cover the dividend payment versus the stock selling price.
$25.66
-.14
= $25.52
Why buy a stock guarenteeing a loss for you?

[clarkrl2]

I have an idea they are expecting a higher bid. Many times a condition of a buyout is there will be a period where the acquired company can look for better offers.

[Aman A.K.A. Ahamburger]

Apr 26, 2016 11:05:50 GMT -5 Value Buy said:

Apr 26, 2016 10:34:53 GMT -5 Aman A.K.A. Ahamburger said:

All resource based companies were hammered with the price of oil. The rising tide of oil prices has lifted all boats; tck.b is a great example of that. If the offer for CPGX was made back in Feb the 25 offer would have been at a $7-10 premium. From the link I posted above:

Right now it is trading at $25.66 a share. Even if investors were trying to pick up the dividend payment, they are now buying a stock that will not cover the dividend payment versus the stock selling price.
$25.66
-.14
= $25.52
Why buy a stock guarenteeing a loss for you?

Agreed, it's not a good buy right now, and like Clark is saying, there could still be an increase in the offer. Sorry, I was talking strictly towards the question in the OP; why the price is currently over the buyout amount?

Further, you could use this as an example of why buying shares right now isn't very enticing.

The Bright And Soft Spots: The S&P 500 Earnings Announcements This Week

The Energy sector is reporting the largest year-over-year decline in earnings (-110.3%) of all ten sectors. The year over-year decline is larger than -100% because the sector is now expected to report an aggregate loss (-$1.3 billion) for Q1 2016, compared to year-ago aggregate earnings $12.9 billion

Exxon was just downgraded. Corporate buy backs are at/exceeding their 2007 high. Corporate debt is at it's higest since 2007/2008(buy backs being funded by debt). NYSE margin debt levels hit their highs last year and have continued their downward trend since then, unless the DOW and S&P rally towards 20,000 at this point and break the 35 year trend.... As of last Friday blended earnings had declined 8.9%...

Sorry for the rant, but it kinda seems like lots of companies aren't making enough money, or IE, have P/E that kinda scream loss ATM. Guess we'll see how things go after the GDP report and FED meeting later this week.

[Value Buy]

The buy out was approved by stock holders yesterday.
Stock is actually trading a little below the buy out price this week.

I imagine it will take a month or so, to get the check, but now I have to consider what to do with the proceeds. We should receive  apkg on how we are to relinquish the holdings o Trans Canada the first week in July, after the takeover July 1st.
Looks like I will get the equivalent of three years of needed cash for Taxes, general living expenses, two nice vacations a year, and mortgage payment.
I am thinking of re-investing about one third right away, and letting the rest sit for expenses so I do not have to sell anything the next two years, creating a larger tax bill for us.
I dislike selling at a specific time to pay estimated income taxes as well as property taxes. Hard to time the selling to maximize profits and minimize losses........
Say what you want about timed with drawls from IRA'S but it seems like the unit price is always lower at the time of redemption than other times.........

[Value Buy]

Here we are 10 days into the month, and I have not received any paperwork from Transcanada yet.
Sent them an e-mail last Thursday, no response from them yet.
Checked CPGX website and it said mailing would go out three days after the consummation of deal on July 1st, so it should be in the mail somewhere.
Since it is coming from Canada, I wonder if it takes a day or two longer to arrive........
I have what I consider a large amount of money tied up here, I am getting antsy.
Anyone here have experience with all cash take overs on what is a fair amount of time for transaction material to arrive?

[Value Buy]

Pleasant surprise yesterday afternoon.
Received the check in the mail from CPGX for all the shares.
No explanation, nothing. Just a general description of shares owned, shares cashed in at $25.50 a share, just as you would get a quarterly distribution, drip statement.
I would have thought the company buying them out would issue the check, but it was not them.

Now we are torn between adding to present stocks in the portfolio, or go in a new direction, say, mining, tech, or pharma.
Decisions, decisions.
I think we are too old to chance it in "new tech" companies, as now retired, we have to look at preservation of capital at this point.

Could always go in a good tax exempt bond fund, but I keep thinking they might be topping out for a generation.

[Value Buy]

We have all this money sitting right now from CPGX and have no clue where to go right now.
Hate sitting out for awhile, but I am thinking we see a sell off from the recent new highs.

Last month my wife moved the last 401-k from a previous employer, and for some stupid reason they refused an automatic roll over and said the check had to come to her.
Lost four working days, and six total, including the weekend, before rolling it over. Naturally the fund price was higher than if it had just been automatically accepted by them, thus reducing share toal received.