Merger Arbitrage Mondays – May 24, 2010

  • May 24, 2010

The slowdown in merger announcements two weeks ago appears to have only been a temporary breather. For the first time since we launched this service in mid-March, we have seen seven new mergers announced in a single week. Besides the seven new all cash deals announced last week, we had one deal that closed. The deal that closed was the acquisition of Zenith National Insurance (ZNT) by Fairfax on May 20.

The new deals include the acquisition of OSI Pharma (OSIP) by Japan’s Astellas Pharma for $57.50 per share in cash, the acquisition of The South Financial Group (TSFG) by the TD Bank Financial Group for $0.28 in cash or 0.004 shares of TD Bank for each South Financial Group common share held, the acquisition of Virtual Radiological (VRAD) by Providence Equity for $17.25 per share in cash, the acquisition of Double – Take Software (DBTK) by Vision Solutions for $10.55 per share in cash, the acquisition of EF Johnson Technologies (EFJI) by Francisco Partners for $1.05 per share in cash, the acquisition of GLG Partners (GLG) by Man Group for $4.50 per share in cash and the acquisition of Psychiatric Solutions (PSYS) by Universal Health Services for $33.75 per share in cash.

Please note that we revised the closing price of CPI International (CPII) downward to $15.59 from $16.4 last week when the merger with Comtech Telecommunications (CMTL) was announced. The reason for the downward revision was on account of the cash plus stock nature of the deal where the stock portion is determined by a ratio. As stated last week, if the merger is completed, CPI International shareholders will receive a combination of $9.00 in cash plus a fraction of Comtech common stock equal to $8.10 divided by the average closing price of Comtech common stock over a specified period of time prior to closing. The fraction shall not be greater than 0.2382 nor less than 0.2132. Using the midpoint of this range (0.2257) and multiplying by the price of Comtech as of last Friday ($29.15), the stock portion of the deal fell to $6.58 from $7.4 last week.

 SymbolAnno.
Date
Acquiring
Company
Closing
Value
Closing
Price
Last
Price
Closing
Date
ProfitAnnu.
Profit
+ADG1/19/2010Chemring Group Plc$59 million7.253.645/31/201099.18%5171.31%
+AYE2/11/2010FirstEnergy$8.5 billion23.2619.93/31/201116.88%20.07%
+SSE2/23/2010Naugatuck Valley Financial Corp$19.5 million7.256.418/16/201013.10%58.33%
+Q4/22/2010Century Link$10.6 billion5.535.014/21/201110.38%11.59%
+PINN2/24/2010Investor Group lead by Scotia Waterous (USA)$11 million0.340.316/30/20109.68%98.12%
+STBK3/18/2010Roma Financial Corp$14.7 million2.522.38/16/20109.57%42.58%
+SWWC3/3/2010Institutional Investors$275 million1110.333/31/20116.49%7.71%
+GLG5/17/2010Man Group$1.6 billion4.54.249/30/20106.13%17.76%
+ME4/15/2010Apache$2.7 billion23.0721.769/30/20106.02%17.44%
+VTIV5/6/2010Thomas H. Lee Partners$1.1 billion2624.719/30/20105.22%15.12%
+PSYS5/17/2010Universal Health$3.1 billion33.7532.1412/31/20105.01%8.43%
+IDC5/4/2010Silver Lake & Warburg Pincus$3.4 billion33.8632.349/30/20104.70%13.62%
+RCNI3/5/2010Emera Inc.$1.2 billion1514.369/30/20104.46%12.91%
+SII2/19/2010Schlumberger$7.5 billion42.1440.369/30/20104.41%12.78%
+BNE2/24/2010RR Donnelley$481 million11.511.079/30/20103.88%11.25%
+DCP4/12/2010Cerberus Capital Management$1.5 billion17.5516.9611/15/20103.48%7.43%
+MAM3/12/2010 $75.7 million4543.4912/31/20103.47%5.84%
+EFJI5/17/2010Francisco Partners 1.051.029/30/20102.94%8.52%
+DBTK5/17/2010Vision Solutions$242 million10.5510.279/30/20102.73%7.90%
+PRPX2/17/2010L.B. Foster Co.$112 million11.7111.46/30/20102.72%27.57%
+CKR3/1/2010Apollo Management VII$694 million12.5512.226/30/20102.70%27.38%
+ORCD3/16/2010eMusic$12.77 million2.0528/16/20102.50%11.13%
+ARD4/4/2010SandRidge Energy Inc.$1.6 billion30.9730.299/30/20102.24%6.50%
+CPII5/10/2010Comtech$472.3 million15.5915.269/30/20102.16%6.26%
+BSMD5/13/2010Merit Medical Systems$96 million4.384.299/30/20102.10%6.08%
+ATSI4/29/2010Medtronic$350 million43.929/30/20102.04%5.91%
+SXE5/7/2010CGI Group$904 million37.536.759/30/20102.04%5.91%
+BELM3/29/2010Avnet$252 million76.876/30/20101.89%19.19%
+VRAD5/17/2010Providence Equity$294 million17.2516.959/30/20101.77%5.13%
+RBI3/15/2010affiliate of Oncap Management Partners L.P. 13.5513.328/16/101.73%7.69%
+WEL4/9/2010Halliburton Company$240 million32.959/30/20101.69%4.91%
+CRN4/19/2010GeoGroup$685 million26.6126.179/30/20101.68%4.87%
+SY5/12/2010SAP$5.8 billion6564.049/30/20101.50%4.34%
+CYBS4/21/2010Visa Inc.$2.0 billion2625.629/30/20101.48%4.30%
+SENO5/5/2010Bard$200 million1110.859/30/20101.38%4.00%
+PFWD4/16/2010Oracle Corp.$685 million1716.786/30/20101.31%13.29%
+HTRN5/5/2010Endo Pharmaceuticals$223 million4.854.797/31/20101.25%6.82%
+BWY3/29/2010Madison Dearborn Partners, LLC ("MDP")$915 million2019.88/16/20101.01%4.50%
+TWPG4/26/2010Stifel Financial$300 million7.197.126/30/20100.98%9.97%
+DCAI4/14/2010U.S. Renal Care$112 million11.2511.155/31/20100.90%46.76%
+TUTR3/26/2010Thoma Brava$141 million5.65.567/31/20100.72%3.92%
+NGA4/1/2010AZZ Inc.$125.6 million7.57.458/31/20100.67%2.53%
+MIL3/1/2010Merck$6 billion107106.39/30/20100.66%1.91%
+SKIL2/12/2010consortium of private equity funds$1.2 billion11.2511.185/31/20100.63%32.65%
+IUSA3/8/2010CCMP$460 million87.966/30/20100.50%5.09%
+PONE4/26/2010GTCR$828 million15.515.436/30/20100.45%4.60%
+NADX4/5/2010GDC Holdings Inc.$100 million1716.936/30/20100.41%4.19%
+RISK3/1/2010MSCI$1.55 billion21.7921.717/16/20100.37%2.59%
+PALM4/28/2010Hewlett – Packard$1.2 billion5.75.687/31/20100.35%1.92%
+MIR4/12/2010RRI Energy In.$1.6 billion11.7111.6712/31/20100.34%0.58%
+CXG3/22/2010Consol Energy Inc.$363 million38.2538.166/30/20100.24%2.39%
+OSIP5/17/2010Astellas Pharma$3.5 billion57.557.386/30/20100.21%2.12%
+TSFG5/17/2010TD Bank Financial Group$61 million0.280.27989/30/20100.07%0.21%
+CAL5/3/2010United$1.2 billion19.4619.4512/31/20100.05%0.09%
+SMMX4/5/2010Accelrys Inc.$186 million5.445.966/30/2010-8.72%-88.46%
+DTG4/26/2010Hertz$1.2 billion4145.6112/31/2010-10.11%-17.00%
+ATBC5/10/2010Jacksonville Bancorp  2.42.69999/30/2010-11.11%-32.18%
+CCE2/25/2010The Coca-Cola Company$12.3 billion 26.5710/1/2010#VALUE!#VALUE!