Puget Energy (PSD) - Macquarie Infrastructure Partners

The anticipated political/public opposition has surfaced in the form of a rejection recommendation for the Washington State AG's office. This is, of course, a fairly common occurrence in recent utility mergers and should in no way be considered a surprising development in this case. This deal is, to say the least, a very high-profile event in Washington state and the AG's office would be remiss if it did not take advantage of the growing negativity to the deal, regardless of motives. The AG's Public Counsel testimony is available by following this link.

Perhaps of greater importance, the Washington UTC staff is also recommending rejection of the merger to the voting Commissioners. This is a severe blow to the companies' hopes of obtaining the critical UTC consent as an extremely high percentage of deals failing to obtain staff approval also fail to obtain the respective state Commission approval.

Given the direction this transaction has now taken, it is difficult to anticipate the current procedural schedule continuing on a September 2 decision course. If the companies are able to successfully navigate through the enormous opposition, the negotiations process could easily push the deal well into the fall or winter of this year. It is just as likely that the companies will decide to terminate the transaction within the next two to three months if the July (again, these may be pushed back) settlement conferences and evidentiary hearings fail to yield positive results.

*Take-Two Interactive Software (TTWO) - Electronic Arts (ERTS)

TTWO has disclosed the following regarding the previously announced FTC subpoena and civil investigative demand:

"On June 18, 2008, the Company reached an agreement with the Federal Trade Commission (“FTC”) which will continue to allow the FTC access to the information it seeks in connection with its review of EA’s Offer. The agreement will allow the Company to appropriately limit the scope of its production of information and witnesses, and alleviate the need for a hearing in the U.S. District Court for the District of Columbia on June 24, 2008."

Again, this situation offered TTWO two options to further frustrate ERTS' efforts. TTWO could have resisted the FTC actions as an indirect means of disrupting the offer, although this would naturally have had negative consequences with the regulator. Instead, TTWO has evidently decided to cooperate with the FTC, which should allow the company to selectively provide information against the potential combination if it so chooses.

In essence, TTWO can now directly influence the timing and outcome of the FTC review, to some extent. By reaching this agreement with the FTC so rapidly, ERTS will essentially be forced to increase its offer sooner rather than later if it has any hopes of drawing TTWO into serious negotiations. If ERTS continues to maintain its current, insufficient offer, TTWO can simply provide the FTC with ample evidence to ensure a very difficult HSR process should ERTS attempt to continue its pursuit.

ERTS is therefore anticipated to increase its offer closer to the $30 level within the next few weeks.

Safeco Corporation (SAF) - Liberty Mutual Group

SCPIE Holdings Inc. (SKP) - The Doctors Company

We have confirmed that the California DOI Form A review remains in progress as of today. Unfortunately, the DOI is refusing to provided any substantial updates for this case, which is highly unusual for the DOI. In the majority of Form A reviews conducted by the DOI, officials are more than accommodating in provided at least general information on any given case. Inexplicably, this is not the situation for this deal's Form A review.

Although it is difficult to read anything negative, or positive, into this, it must be pointed out that the California DOI is perhaps the most volatile insurance regulator in the U.S. and has been for some time. The DOI -- like all other insurance regulators -- does not actually reject Form A's, but is has shown on numerous occasions a penchant to delaying consents for various reasons. Most commonly this involves some sort of public/political factor.

At this point, there is no evidence of politics playing a role in this case, so the decision delay is a complete mystery. Attempts will continue to obtain a status report from the DOI and any results will be posted immediately as they become available. For the time being, it is assumed that the DOI Form A review will conclude with an approval within the next few weeks.

Electronic Data Systems (EDS) - Hewlett-Packard (HPQ)

EDS has scheduled its special shareholder meeting associated with this transaction for July 31, 2008. The record date is June 24, 2008.

As of this entry, the European Commission has not posted this case to its pending review list. With the delay in this filing, and presumably some of the various other non-U.S. regulatory filings, the timing for this transaction is very likely to be dictated by the EC or Israeli review processes.

Until contradictory information is obtained, it is assumed that the required notifications are in the process of being filed, or have been filed, as of this update. However, there is now a very solid chance that the transaction will not close by the July 31 due to the approvals required, and more likely the companies will see slippage into roughly mid-August 2008.

Huntsman Corporation (HUN) - Hexion Specialty Chemicals

Hexion announced late yesterday (6/18) that it has filed a lawsuit in the Delaware Chancery Court to end this transaction on the basis of Huntsman no longer being "viable" under the capital structure of the merger agreement. A Hexion press release states the following:

"The suit alleges that in light of this conclusion, Hexion does not believe that the banks will provide the debt financing for the merger contemplated by their commitment letters.