Stay Long, Stock Cheap

We used the opportunity at the end of July to buy ALO as the mkt punuished Alstom unfairly for contributing EUR300m to help with the competition commission concerns.

Yesterdays news on reuters that GE is expected to win EU approval led to a 7% rally.

Although near our initial PT of 27.5-28 we stay long here as see the stock as cheap and see many synergies from the deal.

New PT30.(currently +6.1% on the trade)


Tuesday • 28 July 2015 • 10:42

By contributing EUR300m to GE’s remedies,  Alstom are helping to address the competition commissions concerns and thereby increasing the probability of the deal going through. It also reduces Alstom’s residual valuation by 1EUR/share

This morning the market punished Alstom (2% sell-off) without giving it any benefit of improved chances of the deal going through. It should be trading closer to 1 eur lower than it was in March/April so at the 27.5-28 level.

Given recent risk arb deals failing and the pain it has created, will partly explain the lack of interest, but that doesn’t make it right.

Trading BUY