Thursday, October 30, 2008

Mueller Water Products

Earlier this month and in my quarterly letter I talked about the opportunity that opened up in Mueller Water Products. You can read about it in my original post here:

Well today big news hit to address the issue as the company plans on issuing an A share for every B share and dissolving the B shares. The spread collapsed today. The amazing thing is there is still a spread. of $.43 at the close (tightened $1.04 today). Not only is the B shares really worth more from intrinsic perspective but this has almost 100% chance of passing. Company is proposing it. There are more B shares than A shares and each B shares has 10 times the voting power. The spread still has one more chance of widening with the rebalancing tomorrow. The A shares are part of an index and there could be huge potential buying pressure in the A shares tomorrow with the close at the end of the month. It should be on your ticker screen.

I thought when I originally entered the trade it was a great deal. I didn't even consider this a possibility. This is just the cherry on top of the sundae.

Mueller Water Products Proposes Submission of Plan for Conversion of Class B Shares and Announces Date of 2009 Annual Meeting of Stockholders and Quarterly Dividend
Conversion of Series B Common Stock to be Submitted to Stockholders for Approval in January

No comments: