Merger Arbitrage Mondays - March 22, 2010

Merger Arbitrage Mondays

Merger Arbitrage Mondays – March 22, 2010

March 21, 2010

Last week was very active with new mergers and acquisitions announced, rumors of deals for some very well know names like Harley-Davidson (HOG) and Polycom (PLCM) and the successful completion of two acquisitions. Polycom, widely recognized for its Klingon starship shaped conference phones, had an interesting ride last week with the stock jumping more than 10% from Tuesday’s close of $30.44 to an intraday high of $34.14 on Wednesday on nearly 10 times average daily volume on speculation that investment firm Apax Partners has been in negotiations with the company since November to take it private at $37 per share. A couple of valuation related downgrades later, oddly enough the stock closed the week at $31.34, just a little higher from where it had started the week.

InsideArbitrage pick Teva Pharmaceutical (TEVA) and Pfizer (PFE) also duked it out for German generic drug manufacturer Ratiopharm and it looks like Teva won this $5 billion round, much to the delight of Teva investors who bid the stock up 3% last week. Since we don’t include international deals or rumors in the Merger Arbitrage Mondays list, you will not see these deals in the table below. You will however find the newly announced acquisitions of Orchard Enterprises (ORCD), Chordiant Software (CHRD), Sport Supply Group (RBI) and Sterling Banks (STBK). The acquisitions of Bare Escentuals (BARE) and Home Diagnostics (HDIX) completed last week and hence they have been removed from the Merger Arbitrage list below.

	Symbol	Announced Date	Acquiring Company	Closing Value	Closing Price	Last Price	Closing Date	Profit	Annualized Profit
+	AYE	2/11/2010	FirstEnergy	$8.5 billion	26.53	23.44	3/31/2011	13.2%	13.05%
Details of Allegheny Energy Inc.: Expected to close by March 31, 2011 for a closing value $8.5bn. It is a stock based transaction @ 0.667 share of FE
+	SSE	2/23/2010	Naugatuck Valley Financial Corp	$19.5 million	7.25	6.52	8/16/2010	11.20%	28.38%
Details of Southern Connecticut Bancorp Inc.: Expected to close by the third calendar quarter of 2010, for a closing value of $19.5mn @ $7.25/share. The Cash/stock election is subject to proration
+	STBK	3/18/2010	Roma Financial Corp	$14.7 million	2.52	2.3	8/16/2010	9.57%	24.25%
Details of Sterling Banks, Inc.: Expected to close in the third quarter of 2010 for a closing value of $14.7 million. The cash deal is @ $2.52 per share
+	PINN	2/24/2010	Investor Group lead by Scotia Waterous (USA)	$11 million	0.34	0.3201	5/17/2010	6.22%	41.26%
Details of Pinnacle Gas Resources, Inc. : Expected to close by the second quarter of 2010 for a closing value of $11mn. It is a cash deal @ $0.34 per share
+	SII	2/19/2010	Schlumberger	$7.5 billion	45.84	43.31	9/30/2010	5.84%	11.34%
Details of Smith International Inc.: Expected to close by the second half of 2010. It is a stock-for-stock merger @ 0.6966 shares of SLB / $45.84 per SII share
+	SWWC	3/3/2010	Institutional Investors	$275 million	11	10.5	5/17/2010	4.76%	31.60%
Details of Southwest Water Co.: Expected to close by the second quarter of 2010 for a closing value of $275bn. It is a cash deal @ $11.00 per share
+	ORCD	3/16/2010	eMusic	$12.77 million	2.05	2	8/16/2010	2.50%	6.34%
Details of The Orchard Enterprises Inc.: Expected to close by the third quarter of 2010 for $12.7 million @ $2.05 per share.
+	BNE	2/24/2010	RR Donnelley	$481 million	11.5	11.23	9/30/2010	2.40%	4.67%
Details of Bowne & Co. Inc.: Expected to close by the second half of 2010 for a closing value of $481mn. It is a cash deal @ $11.50 per share
+	MIL	3/1/2010	Merck	$6 billion	107	105.25	9/30/2010	1.66%	3.23%
Details of Millipore Corp.: Expected to close by the second half of 2010 for a closing value of $6bn. It is a cash deal @ $107 per share
+	TRA	3/12/2010	CF Industries Holdings, Inc.	$4.7 billion	46.37	45.7	4/12/2010	1.47%	26.76%
Details of Terra Industries Inc.: Expected to close in 30 days from the time of announcement on March 12, 2010 for a value of $4.7 billion. It is a cash and stock deal with $37.15 in cash and 0.0953 shares of CF Industries stock for each Terra share
+	SKIL	2/12/2010	consortium of private equity funds	$1.1 billion	10.8	10.65	5/31/2010	1.41%	7.45%
Details of SkillSoft plc: The merger agreement has a “go-shop” period, ending on March 6, 2010. It has a closing value of $1.1bn. The closing price for the cash deal is $10.80 per share
+	MAM	3/12/2010	Emera Inc.	$75.7 million	45	44.5	12/31/2010	1.12%	1.47%
Details of Maine & Maritimes Corporation: Expected to close by the end of 2010 for a closing value of $75.7 million. The cash deal is @ $45 per share
+	ZRBA	1/11/2010	Woodstream Corp	$23 million	9	8.91	3/31/2010	1.01%	40.97%
Details of Zareba Systems Inc. : Expected to close in the first half of the year 2010, for a closing value of $23mn. The closing price for the cash deal is $9.00 per share
+	IUSA	3/8/2010	CCMP	$460 million	8	7.93	6/30/2010	0.88%	3.29%
Details of infoGROUP, Inc. : Expected to close by this Summer for a value of $460 million @ $8.00 per share
+	CITP	2/2/2010	Manpower	$375.8 million	17.65	17.5	4/2/2010	0.86%	31.29%
Details of COMSYS IT Partners, Inc.: Expected to close by April 2, 2010, but could be extended, for a closing value of $431mn. The closing price for the cash deal is $17.65 per share
+	CFL	1/18/2010	Tyco International	$2.9 billion	42.5	42.16	6/26/2010	0.81%	3.13%
Details of Broadview Security: Expected to close in the second half of Tyco’s fiscal year, which began on September 26, 2009, for a closing value of $2.9bn. The closing price for the cash deal is $42.50 per share
+	RISK	3/1/2010	MSCI	$1.55 billion	22.4	22.26	7/16/2010	0.63%	2.01%
Details of RiskMetrics Group, Inc.: Expected to close by the third fiscal quarter of 2010 for a closing value of $1.55bn. It is cash plus stocks deal @$16.35/share + 0.1802 MSCI shares
+	ADG	1/19/2010	Chemring Group Plc	$59 million	7.25	7.22	4/19/2010	0.42%
Details of Allied Defense Group Inc.: Expected to close by April 19, 2010 for a closing value of $59mn. The closing price for the cash deal is $7.25 per share
+	PRPX	2/17/2010	L.B. Foster Co.	$112 million	11.71	11.67	6/30/2010	0.34%	1.28%
Details of Portec Rail Products Inc.: Expected to close by the end of June 2010 for a closing value of $112mn. The cash deal is @ $11.71 per share
+	KTII	1/11/2010	Hillenbrand Inc Common Stock	$435 million	150	149.89	3/31/2010	0.07%	2.98%
Details of K-Tron International, Inc. : Expected to close by the end of March 2010, for a closing value of $435mn. The closing price for the cash deal is $150 per share
+	FACT	3/9/2010	Abbot	$450 million	27	27.01	5/17/2010	-0.04%	-0.25%
Details of Facet Biotech Corporation: Expected to close by the second quarter of 2010 for a value of $450 million. The closing price for the cash deal is $27
+	RBI	3/15/2010	affiliate of Oncap Management Partners L.P.		13.55	13.56	8/16/2010	-0.07%	-0.19%
Details of Sport Supply Group, Inc: Expected to close in the second or third quarter of 2010. ONCAP has the unilateral option to terminate the merger agreement by paying to Sport Supply Group a termination fee of either $6,000,000 or $10,000,000, depending on whether financing is available to ONCAP. It is a cash deal @ $13.55
+	RCNI	3/5/2010	Abry	$1.2 billion	15	15.08	9/30/2010	-0.53%	-1.03%
Details of RCN Corp.: Expected to close by the Second half 2010 for a closing value of $1.2bn. It is a cash deal @ $15.00 per share
+	ZNT	2/18/2010	Fairfax Financial Holdings	$I.4 billion	38	38.34	5/17/2010	-0.89%	-5.89%
Details of Zenith National Insurance Corp.: Expected to close by the second quarter of 2010 for a closing value of $1.4bn. It is a cash deal @ $38 per share
+	CHRD	3/15/2010	Pegasystems	$161.5 million	5	5.07	5/17/2010	-1.38%	-9.16%
Details of Chordiant Software, Inc.: Expected to close by the second quarter of 2010 for a closing value of $161.5 million. The cash deal is @ $5 per share
+	LGN	1/22/2010	Lone Star Funds	$270 million	2.5	2.54	5/17/2010	-1.57%	-10.45%
Details of Lodgian Inc.: Expected to close by the second quarter of 2010 for a closing value of $270mn. The closing price for the cash deal is $2.50 per share
+	CKR	3/1/2010	Thomas H. Lee	$928 million	11.05	11.41	5/17/2010	-3.16%	-20.94%
Details of CKE Restaurants Inc.: Expected to close by the second quarter of 2010 for a closing value of $928bn. It is a cash deal @ $11.05 per share
+	PIII	2/18/2010	Lineage	$16.7 million	5.26	5.81	5/17/2010	-9.47%	-62.82%
Details of PECO II Inc.: Expected to close by the second calendar quarter of 2010 for a closing value of $16.7mn @ $5.86/share. The offer price represents a 51 percent premium over the closing price of Peco II shares at the close of business Wednesday.
+	JSDA	3/9/2010	Reeds Inc.	$9.7 million	0.4	0.54		-25.93%	0.24%
Details of Jones Soda Co.: Expected to close for a value of $9.7mn. It is a cash plus stock deal @ $0.10 per share in cash plus 0.17 of a share of Reed’s common stock for each share in Jones Soda
+	CCE	2/25/2010	The Coca-Cola Company	$12.3 billion		26.96	10/1/2010
Details of Coca-Cola Enterprises Inc.: Expected to close by October 1, 2010 for a closing value of $1.23bn. The deal includes $10 per share + a share in a new bottling company

Merger Arbitrage Mondays – March 22, 2010

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