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Merger Arbitrage Mondays – December 11, 2017

  • December 11, 2017

Merger activity decreased last week with three new deals announced and two pending deals closing. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

There was one new deal announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2017207
Total Number of Deals Not Completed in 201711
Total Number of Pending Deals
Cash Deals41
Stock Deals18
Stock & Cash Deals8
Collars1
Special Conditions8
Total Number of Pending Deals75
Total Deal Size$1049.79 billion

New Deals:

  1. The acquisition of Regal Entertainment Group (RGC) by Cineworld Group for $5.9 billion or $23.00 per share in cash. We added this “potential” deal to our Deals in the Works tool on November 29, 2017.
  2. The acquisition of Entellus Medical (ENTL) by Stryker Corporation (SYK) for $662 million or $24.00 per share in cash.
  3. The acquisition of Sigma Designs (SIGM) by Silicon Labs (SLAB) for $185.98 million or $7.05 per share in cash. We added this “potential” deal to our Deals in the Works tool on July 26, 2017.

Deal Updates:

  1. On December 4, 2017, First Financial Bancorp (FFBC) and MainSource Financial Group (MSFG)  announced that each company has received the requisite shareholder approval for the merger of MainSource with and into First Financial.
  2. On December 4, 2017, Exactech (EXAC) announced that it has entered into an amendment to its merger agreement with TPG Capital. Pursuant to the amended merger agreement, the Company’s common stock outstanding immediately prior to the effective time of the merger (other than certain shares held by the Company’s founders and certain management shareholders) will be converted into the right to receive $49.25 per share in cash. This represents an increase of approximately 17.3% over the $42.00 of per share merger consideration previously agreed to by Exactech and TPG Capital. TPG Capital has also increased its equity financing commitment to $737 million for purposes of consummating the merger.
  3. On December 5, 2017, Itron (ITRI) and Silver Spring Networks (SSNI) announced that the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) with respect to Itron’s acquisition of Silver Spring Networks has expired. The expiration of the HSR Act waiting period satisfies one of the conditions to the closing of the pending acquisition, which remains subject to other customary closing conditions, including the approval of Silver Spring’s stockholders. Both companies expect to close the transaction in early 2018.
  4. On December 5, 2017, Post Holdings (POST) and Bob Evans Farms (BOBE) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to Post’s previously announced proposed acquisition of Bob Evans has expired. The expiration of the waiting period satisfies one of the closing conditions of the transaction. The transaction is now expected to be completed in January 2018, subject to customary closing conditions and approval of Bob Evans’s stockholders.
  5. December 5, 2017: According to Reuters, the U.S. government on Tuesday urged a federal judge to reject the February court date sought by AT&T (T) and Time Warner (TWX) in a dispute over the firms’ proposed merger, arguing the companies are rushing to meet an April 22 closing deadline for their $85.4 billion deal.
  6. On December 5, 2017, TerraForm Global (GLBL) announced that it has exercised its right to extend the termination date under the Agreement and Plan of Merger with certain affiliates of Brookfield Asset Management from December 6, 2017 to March 6, 2018. However, the closing of the merger is currently anticipated to occur no later than December 29, 2017 on the terms previously approved by the Company’s stockholders at the special meeting held on November 13, 2017.
  7. On December 5, 2017, Advanced Accelerator Applications (AAAP) announced that its Board of Directors, following the completion of the information and consultation of the Company’s works council, has approved and adopted the transactions contemplated by the Memorandum of Understanding and determined to recommend that the Company’s stockholders support the offer, accept the offer and tender their shares in the offer.
  8. On December 7, 2017, Orbital ATK (OA) announced that, as expected, it has received a request for additional information (“second request”) from the Federal Trade Commission (FTC). This second request is part of the regulatory process in connection with the FTC’s review of Northrop Grumman’s (NOC) proposed acquisition of Orbital ATK. The company continues to expect the acquisition to close in the first half of 2018, after receiving regulatory approvals.
  9. On December 8, 2017, The judge who will oversee the U.S. Justice Department’s bid to stop wireless and pay TV company AT&T Corp (T) from buying media company Time Warner (TWXset March 19 as the trial date.
  10. December 8, 2017: According to Bloomberg, Bayer AG is set to get a so-called statement of objections cataloging potential reasons for the European Union’s antitrust regulator to block its proposed $66 billion takeover of Monsanto (MON) as soon as next week.
  11. On December 8, 2017, the Hawai’i Department of Commerce and Consumer Affairs’ (DCCA) Cable Television Division (CATV) announced the conditional approval of the transfer of control of Hawaiian Telcom’s cable franchise to Cincinnati Bell (CBB). This development is an important step in the process of satisfying the closing conditions of Cincinnati Bell’s combination with Hawaiian Telcom Holdco (HCOM).
  12. On December 8, 2017, CVS Health (CVS) announced that it expects the U.S. Justice Department to do the antitrust review of its planned acquisition of health insurer Aetna (AET).

Closed Deals:

  1. The acquisition of PharMerica Corporation (PMC) by KKR & Co. L.P. (KKR) on December 7, 2017. It took 126 days for this deal to be completed.
  2. The acquisition of Numerex (NMRX) by Sierra Wireless (SWIR) on December 7, 2017. It took 127 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$3.3604/01/201861.61%202.58%
MGI01/26/2017Ant Financial Services Group (N/A)$18.00$13.1012/31/201737.40%682.63%
BCEI11/15/2017SandRidge Energy (SD)$36.00$26.8403/31/201834.13%113.24%
SXE11/01/2017American Midstream Partners, LP (AMID)$2.06$1.6406/30/201825.85%46.95%
TWX10/22/2016AT&T, Inc. (T)$106.53$90.7104/22/201817.44%48.23%
NXTM08/07/2017Fresenius Medical Care (N/A)$30.00$26.1206/30/201814.85%26.97%
AET12/03/2017CVS Health (CVS)$206.23$182.7312/31/201812.86%12.19%
SNI07/31/2017Discovery Communications, Inc. (DISCK)$90.00$81.8503/31/20189.96%33.04%
MON09/14/2016Bayer AG (BAYRY)$128.00$117.3003/31/20189.12%30.27%
NEWS10/17/2017First Eagle Investment Management (N/A)$12.44$11.8212/31/20175.25%95.73%

List of all pending deals:

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

Disclaimer: I hold positions in Fortress Investment Group (FIG), Southcross Energy Partners (SXE) and NewStar Financial (NEWS). 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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