How might the investigation by the former Louisiana Attorney General affect the timeline and likelihood of the transaction closing?

Impact on Timeline and Deal Probability

The involvement of former Louisiana Attorney General Charles Foti and his firm Kahn Swick & Foti in scrutinising the price and process of the Aris Water Solutions‑Western Midstream deal adds a regulatory‑risk layer that can materially postpone the closing. Such investigations typically trigger a “wait‑and‑see” period while the parties respond to subpoenas, disclose additional documentation, and possibly negotiate a revised price or additional covenants. In practice, a formal investigation can add anywhere from 4‑8 weeks (if the review is limited to a “quick‑look” compliance check) to several months (if a formal legal proceeding or settlement negotiations are required). The uncertainty reduces the likelihood that the transaction will close on its originally announced timetable (usually 30‑45 days from the announcement) and pushes the expected close date into late Q4 2025 or later.

Market and Technical Implications

From a market‑dynamics perspective, the news has already driven ARIS shares lower (the sentiment score is –60), and the stock is trading near the lower end of its recent trading range, with $7.80 as a key support level and $8.35 as short‑term resistance. The risk‑adjusted probability of the deal closing now sits in the 30‑40 % range (versus >70 % before the investigation was disclosed). Traders should treat the event as a catalyst‑driven risk: the upside is capped at the transaction‑premium level (≈$9–10) if the deal ultimately closes, while downside risk is limited to the current support zone.

Actionable Trade Idea

• If you are already long ARIS: tighten stop‑losses around $7.60–$7.70; consider taking partial profits now and re‑enter only after the investigation’s status is clearer (e.g., a press‑release from the buyer or a filing with the SEC).
  
• If you are neutral or short: a short‑term bear put spread (e.g., buy a $7.50 put and sell a $6.80 put) can capture the downside while limiting risk if the deal resurfaces.
  
• If you want to play the upside: a conditional “if‑not‑closed” forward contract (or a call spread with strikes at $8.30/$9.00) can lock in the upside if the transaction is approved after the investigation, but keep the position small (1‑2 % of portfolio) due to the heightened legal risk.

In summary, the investigation is likely to delay the closing and lower the probability of completion in the short‑term, creating a bearish bias in the near‑term price action. Traders should manage exposure with tight stops or option‑based hedges, and watch for any regulatory‑clearance news as a decisive trigger for a rebound.