Reader Saku Kiviharju tipped me on an interesting merger arbitrage opportunity, which has a large spread for arbitrageurs. In essence, AT&T (NYSE: ) is acquiring Centennial Communications (Nasdaq: ) for $8.50/share, which was announced back in November 2008. The acquisition has been approved by Centennial's stockholders in February 2009 and remains subject to approval by the Department of Justice and Federal Communications Commission and other customary closing conditions. Once the transaction is complete AT&T would sell some assets in Louisiana and Mississippi to Verizon (NYSE: ) for $240 million. If the merger between CYCL and AT&T occurs as planned, the sale of the assets to Verizon would close by 4Q 2009. The deal was expected to enhance AT&T's ( ) coverage in Puerto Rico, the US Virgin Islands in addition to the rural Midwest.

Centennial Communications Corp. (Centennial) is a regional wireless and broadband telecommunications service provider serving over 1.1 million wireless customers and approximately 582,200 access line equivalents in markets covering approximately 13 million Net Pops in the United States and Puerto Rico. In the United States, it is a regional wireless service provider in small cities and rural areas in two geographic clusters covering parts of six states in the Midwest and Southeast.

Up until July 13, in 2009 Centennial Communication ( ) traded at a small discount of 1% to 5% to the $8.50 offer price. In Feb., John Paulson showed a 5,000,000-share position in Centennial (CYCL) in his funds 13-F filing with the SEC.

Back on July 8, AT&T announced that it expects to close the deal by the third quarter, because of added regulatory scrutiny. On July 14 however, the stock dropped 9.50% on above average volumes.