Merger Arbitrage Mondays – January 30, 2017

  • January 30, 2017

Merger Activity increased last week with eight new deals announced and two deals closing. You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

We have received requests from several readers about new features and tweaks that they would like to see to the site or the Merger Arbitrage Tool and we try as best as possible to accommodate these requests. When we launched this new site, one of the requests we incorporated was with the ability to filter deals by the type of deal (all cash, all stock, etc.). Today we are launching a new page called Merger Arbitrage Academic Research that lists several academic and industry studies related to this investment strategy. We are also tweaking the Merger Arbitrage Tool to provide links to the original releases when a deal is announced so that you can review those articles or filings directly from the tool instead of having to hunt down the specific Merger Arbitrage Mondays post that referenced the deal. To access this link simply click the + symbol to the left of the deal you are interested in. We have other exciting features in the works that we hope to roll out in the coming weeks.

Deal Statistics:

Total Number of Deals Closed in 201712
Total Number of Pending Deals
Cash Deals53
Stock Deals22
Stock & Cash Deals11
Special Conditions8
Total Number of Pending Deals94
Total Deal Size$676.68 billion

New Deals:

  1. The acquisition of BNC Bancorp (BNCN) by Pinnacle Financial Partners (PNFP) in an all stock deal. Under the terms of the merger agreement, BNC shareholders will receive 0.5235 shares of Pinnacle common stock for every BNC share.
  2. The acquisition of Multi Packaging Solutions International Limited (MPSX) by WestRock Company (WRK) for $2.28 billion or $18.00 per share in cash.
  3. The acquisition of GenVec (GNVC) by Intrexon Corporation (XON) in an all stock deal. Under the terms of the agreement, GenVec stockholders will receive 0.297 of a share of Intrexon Common Stock in exchange for each share of GenVec common stock. GenVec stockholders will also receive a right to contingent consideration equal to 50% of any milestone or royalty payments received within 36 months after the closing of the transaction under GenVec’s Research Collaboration and License Agreement with Novartis.
  4. The acquisition of Arctic Cat (ACAT) by Textron (TXT) for $311.71 million or $18.50 per share in cash.
  5. The acquisition of WGL Holdings (WGL) by AltaGas for $6.4 billion or $88.25 per share in cash.
  6. The acquisition of Midcoast Energy Partners (MEP) by Enbridge (ENB) for $170.2 million or $8.00 per share in cash.
  7. The acquisition of Centrue Financial Corporation (CFCB) by Midland States Bancorp (MSBI) for $175.1 million. Under the terms of the definitive agreement, holders of Centrue common stock will have the right to receive a fixed exchange ratio of 0.7604 shares of Midland common stock, a fixed consideration of $26.75 in cash, or a combination of cash and stock for each share of Centrue common stock they own, paid 65% in Midland common stock and 35% in cash, and subject to potential adjustment based on Centrue’s adjusted stockholders’ equity at closing.
  8. The acquisition of Stonegate Mortgage Corporation (SGM) by Home Point Financial Corporation for $211 million or $8.00 per share in cash.

Deal Updates:

  1. On January 23, 2017, A U.S. judge blocked health insurer Aetna’s (AET) proposed $34 billion acquisition of smaller peer Humana (HUM), raising the stakes for rival Anthem (ANTM) as it battles to close a $54 billion deal to buy Cigna (CI).
  2. On January 24, 2017, Ariad Pharmaceuticals (ARIA) and Takeda Pharmaceuticals filed a Notification and Report Form with the Antitrust Division and the FTC. As a result, the required waiting period is due to expire on February 8, 2017, unless earlier terminated by the FTC and the Antitrust Division, Ariad and Takeda elect to withdraw and resubmit their Notification and Report Forms, or the FTC or the Antitrust Division issues a request for additional information and documentary material prior to that time.
  3. On January 25, 2017, shareholders of Eldorado Resorts (ERI) and Isle of Capri Casinos (ISLE) voted to approve Eldorado’s acquisition of Creve Coeur-based Isle of Capri.
  4. On January 26, 2017, Sherwin-Williams (SHW) said it now expects to sell part of its business to complete its acquisition of rival Valspar (VAL) but does not expect this divesture to exceed $650 million of revenue. If divestures exceed $650 million, then the transaction price would be adjusted to $105 in cash per Valspar share.
  5. On January 26, 2017, Brocade Communications (BRCD) confirmed that its shareholders voted in favor of the company’s buyout by Broadcom (AVGO).
  6. On January 27, 2017, NXP Semiconductors (NXPI) announced that, during an extraordinary general meeting of shareholders, NXP obtained shareholder approval for all items proposed relating to the previously disclosed tender offer by Qualcomm Incorporated (QCOM), to acquire all of the outstanding shares of NXP.
  7. On January 25, 2017, Alere (ALR) announced that the European Commission has granted clearance for Abbott Laboratories (ABT) to acquire Alere.
  8. On January 26, 2017, The chief executive of Walgreens Boots Alliance (WBA) said that the biggest U.S. drug store chain was pressing on with its purchase of smaller Rite Aid (RAD), which was announced in October 2015 and has not closed. However as of Friday, January 27th, the deal deadline had not been extended. The stock closed up a little but the spread on the deal remains large after the big drop in Rite Aid stock the week prior.

Closed Deals:

  1. The acquisition of Federal-Mogul Holdings Corporation (FDML) by Icahn Enterprises (IEP) on January 23, 2017. It took 139 days for this deal to be completed.
  2. The acquisition of Applied Micro Circuits Corporation (AMCC) by MACOM Technology Solutions Holdings (MTSI) on January 27, 2017. It took 67 days for this deal to be completed.

Top 10 deals with largest spreads:

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
GNW10/23/2016China Oceanwide Holdings Group Co., Ltd. (N/A)$5.43$3.4306/30/201758.31%140.95%
ALR02/01/2016Abbott Laboratories (ABT)$56.00$38.1003/31/201746.98%285.80%
RAD10/27/2015Walgreens Boots Alliance, Inc. (WBA)$9.00$6.9301/31/201729.87%10902.60%
CI07/23/2015Anthem, Inc. (ANTM)$182.41$146.8104/30/201724.25%98.33%
MON09/14/2016Bayer AG (BAYRY)$128.00$109.4012/31/201717.00%18.52%
TSL08/01/2016Investor consortium comprising Mr. Gao and other entities. (N/A)$11.60$10.0303/31/201715.63%95.08%
CAB10/03/2016Bass Pro Shops (N/A)$65.50$57.2106/30/201714.49%35.03%
LSCC11/03/2016Canyon Bridge Capital Partners, Inc. (N/A)$8.30$7.2803/31/201714.01%85.23%
SYT02/03/2016ChemChina (N/A)$96.01$84.6604/15/201713.41%65.25%
NXPI10/27/2016QUALCOMM Incorporated (QCOM)$110.00$97.8812/31/201712.38%13.49%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium and Plus members.

Disclaimer: I hold long positions in WhiteWave Foods (WWAV), Apollo Education (APOL), Syngenta (SYT), InterOil Corporation (IOC), Valspar (VAL) and Trina Solar (TSL). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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