Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

Merger Arbitrage Mondays – June 21, 2010

  • June 20, 2010

There was very little activity on the Merger Arbitrage front last week with just one new deal announced and one deal closing. The new deal announced was the acquisition of Somanetics (SMTS) by Covidien (COV) for $25 per share in cash for a total deal value of $250 million and the deal that closed was the acquisition of BWAY Holdings by Madison Dearborn partners on June 16, 2010. The interesting part about this new acquisition is that Covidien announced the $2.6 billion acquisition of ev3 (EVVV) less than three weeks ago and that deal is expected to close in July.

The Charles River – Wuxi Pharma drama intensified last week with another fund Relational Investors joining Jana Partners in opposing the merger. This comes just days after the James Foster, the CEO of Charles River (CRL) defended the merger in a letter to Jana Partners. In light of these events, WuXi PharmaTech’s (WX) stock dropped even more last week and is now trading below the point where the acquisition was announced. The spread on the deal is 31.41% as you can see below.

The pending deals I like the most at this point are,

  1. The acquisition of media software company DivX (DIVX) by Sonic Solutions (SNIC), which has a 5.36% spread  and the potential of 19.17% annualized profits if the deal closes by 9/30/2010.

  2. The acquisition of Portec Rail Products (PRPX) by L. B. Foster, which has a 2.81% spread and the potential of 102.55% annualized profits if the deal closes by 6/30/2010.

  3. The acquisition of bottling company Coca-Cola Enterprises (CCE) by The Coca-Cola Company (KO), which does not have a clearly defined per share acquisition price but is a very lucrative deal as discussed in detail in the blog entry Special Report Update: Coca-Cola Enterprises.

Only plus or premium subscribers can access this post. Subscribe today.