Since the Embarq (EQ) deal by CenturyTel (CTL) is tied to the share price of CTL, I could make a few bucks if I think CTl’s share price will rebound before the strike date (5/15/2009).  Currently the deal is 1.37 shares of CTL for each EQ share owned.  Right now, EQ is trading at a very slight discount.  If I bought today and the price of CTL never changed up until the deal, I would have an ROI of about 3%. But… there is always a but…

I think there is a pretty good chance that the deal will go through, however, some people (see the article listed below by Zacks) think that both stocks are headed lower in the short term.  And since the deal is tied to CTL’s stock price, this would not be pretty.  Current market conditions don’t support a bull position either.

For now, this deal is on watch status only for me.

Sources:

Shareholder approval press release

Zacks article