Merger Arbitrage Mondays – August 02, 2010

  • August 1, 2010

Mergers continued to lose steam last week with only two new deals announced. However the number of deals that closed jumped up with six pending deals closing last week.

The Charles River Laboratories (CRL) and Wuxi Pharma Tech (WX) deal fell apart last week following opposition from investors like hedge fund Jana Partners and proxy advisory firms. The New York Times has a good obituary of this troubled deal including links to the letter Jana Partners wrote to Charles River. The fact that Wuxi was trading at pre-merger prices for a few weeks now and the huge spread on the deal indicated market skepticism about the deal closing and the market was right this time.

Rental car company Avis is at war with Hertz to acquire Dollar Thrifty (DTG) with an offer than values DTG at $46.50 when compared to the Hertz (HTZ) deal that values DTG under $41. Dollar Thrifty closed at $49.87 on Friday, reflecting optimism that the deal value is likely to head higher before one of these companies emerges the winner. Since DTG’s board is yet accept the offer by Avis (CAR), the merger arbitrage table still includes the details of the Hertz deal. We will update the Merger Arbitrage Tool as we get additional information.

LB Foster (FSTR) extended its tender offer for Portec Rail Products (PRPX) through August 16 as only 64.41% of outstanding PRPX shares were tendered as of the previous deadline of July 29. The stock inched closer to the $11.70 tender price and closed trading on Friday at $11.61.

The new deals announced last week include the acquisition of Health Grades (HGRD) by an affiliate of the private equity firm Vestar Capital for $8.20 per share in cash and the acquisition of American Oil & Gas (AEZ) by Hess Corp. (HES) in an all-stock deal, where Hess will issue 0.1373 shares of its stock for each outstanding share of American Oil & Gas.

The deals that closed include,

  1. The acquisition of database software company Sybase by Germany’s SAP on July 30, 2010
  2. The acquisition of Interactive Data by Silver Lake and Warburg Pincus on July 29, 2010
  3. The acquisition of National Dentex by GDC Holdings (PDF) on July 29, 2010
  4. The acquisition of Somanetics Corporation (SMTS) by Covidien (COV) on July 28, 2010
  5. The acquisition of American Italian Pasta Company by Ralcorp Holdings (RAH) on July 28, 2010
  6. The acquisition of Santander BanCorp by Banco Santander unit ABLASA on July 29, 2010.


 SymbolAnnounced
Date
Acquiring
Company
Closing
Value
Closing
Price
Last
Price
Closing
Date
ProfitAnnu.

Profit

+EMMS05/25/2010JS Acquisition and Alden Global Capital (N/A)$3 billion$2.40$1.9609/30/2010 22.45% 138.88%
+TLCR06/07/2010Grifols (GRF.MC)$3.4 billion$26.17$22.0312/31/2010 18.79% 45.41%
+SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$19.5 million$7.25$6.4708/16/2010 12.06% 314.31%
+AYE02/11/2010FirstEnergy (FE)$8.5 billion$25.15$22.8003/31/2011 10.29% 15.58%
+BGH06/11/2010Buckeye Partners LP (BPL)$1.14 billion$44.75$41.9612/31/2010 6.64% 16.05%
+ATBC05/10/2010Jacksonville Bancorp (JAXB)N/A$2.45$2.3109/30/2010 6.06% 37.49%
+PINN02/24/2010Investor Group lead by Scotia Waterous (USA) (N/A)$11 million$0.34$0.321508/21/2010 5.75% 110.54%
+Q04/22/2010Century Link (CTL)$10.6 billion$5.93$5.6604/21/2011 4.72% 6.58%
+ATAC07/19/2010Genco Distribution System Inc. (N/A)$513 million$25.00$23.9812/31/2010 4.25% 10.28%
+TTIL06/09/2010Teoco Corp. (N/A)$58 million$3.00$2.8909/30/2010 3.81% 23.55%
+ALOY06/24/2010ZelnickMedia (N/A)$126.5 million$9.80$9.4912/31/2010 3.27% 7.90%
+PMACA06/10/2010Old Republic International (ORI)$228 million$6.88$6.7109/30/2010 2.54% 15.72%
+DIVX06/02/2010Sonic Solutions (SNIC)$323 million$7.80$7.6109/30/2010 2.43% 15.05%
+OMNI06/04/2010Wellspring Capital Management (N/A)$122 million$2.75$2.6911/15/2010 2.23% 7.75%
+MIR04/12/2010RRI Energy In. (RRI)$1.6 billion$11.20$10.9712/31/2010 2.08% 5.03%
+WMZ05/24/2010Williams Partners L.P. (WPZ)$35.14$34.4309/30/2010 2.07% 12.83%
+NTY07/15/2010The Carlyle Group (N/A)$3.8 billion$55.00$53.8912/31/2010 2.06% 4.98%
+GLG05/17/2010Man Group (N/A)$1.6 billion$4.50$4.4109/30/2010 2.04% 12.63%
+PSYS05/17/2010Universal Health (N/A)$3.1 billion$33.75$33.1412/31/2010 1.84% 4.45%
+BNE02/24/2010RR Donnelley (RRD)$481 million$11.50$11.3109/30/2010 1.68% 10.39%
+ACF07/22/2010General Motors Co. (N/A)$3.5 billion$24.50$24.1112/31/2010 1.62% 3.91%
+ECLP06/09/2010Allscripts-Misys Healthcare (MDRX)$1.3 billion$20.03$19.7111/15/2010 1.61% 5.61%
+WAIN06/29/2010Eastern Bank (N/A)$163 million$19.00$18.720112/31/2010 1.50% 3.61%
+VETS06/02/2010VCA Antech Inc (WOOF)$41.25 million$0.34$0.33509/30/2010 1.49% 9.23%
+SWWC03/03/2010Institutional Investors (N/A)$275 million$11.00$10.8503/31/2011 1.38% 2.09%
+ACAP07/08/2010The Doctors Company (N/A)$386 million$41.50$40.9512/31/2010 1.34% 3.25%
+STBK03/18/2010Roma Financial Corp (ROMA)$14.7 million$2.52$2.4908/16/2010 1.20% 31.41%
+PFWD04/16/2010Oracle Corp. (ORCL)$685 million$17.00$16.8006/30/2010 1.19% 0.00%
+LSBX07/15/2010People's United Financial Inc. (PBCT)$96 million$21.00$20.7912/31/2010 1.01% 2.44%
+NYM07/15/2010ProSight (N/A)$230 million$25.75$25.5012/31/2010 0.98% 2.37%
+HEW07/12/2010Aon Corp (AON)$4.9 billion$49.58$49.1011/15/2010 0.97% 3.37%
+MAM03/12/2010Emera Inc (N/A)$75.7 million$45.00$44.6012/31/2010 0.90% 2.17%
+ODSY05/24/2010Gentiva Health Services (GTIV)$1.0 billion$27.00$26.7609/30/2010 0.90% 5.55%
+TSFG05/17/2010TD Bank Financial Group (N/A)$61 million$0.28$0.277609/30/2010 0.86% 5.35%
+PRPX02/17/2010L.B. Foster Co. (FSTR)$112 million$11.71$11.6108/31/2010 0.86% 10.84%
+ME04/15/2010Apache (APA)$2.7 billion$24.09$23.8909/30/2010 0.84% 5.17%
+BSMD05/13/2010Merit Medical Systems (MMSI)$96 million$4.38$4.3509/30/2010 0.69% 4.27%
+EFJI05/17/2010Francisco Partners (N/A)N/A$1.50$1.4909/30/2010 0.67% 4.15%
+WEL04/09/2010Halliburton Company (HAL)$240 million$3.00$2.9809/30/2010 0.67% 4.15%
+HGRD07/28/2010an affiliate of the private equity firm Vestar Capital (N/A)$294 million$8.20$8.1509/30/2010 0.61% 3.80%
+MEND07/12/2010Johnson & Johnson (JNJ)$480 million$23.40$23.2609/30/2010 0.60% 3.72%
+AEZ07/28/2010Hess Corp (HES)$450 million$7.36$7.3212/31/2010 0.52% 1.25%
+MDNU06/11/2010Danone (N/A)$62.3 million$4.00$3.9809/30/2010 0.50% 3.11%
+QUOT06/11/2010LQ Acquisition (N/A)$19 million$4.00$3.9809/30/2010 0.50% 3.11%
+ORCD03/16/2010eMusic (N/A)$12.77 million$2.05$2.0408/16/2010 0.49% 12.78%
+CRN04/19/2010GeoGroup (GEO)$685 million$28.05$27.9309/30/2010 0.44% 2.75%
+VIRL06/10/2010Synopsys (SNPS)$315 million$12.00$11.9512/31/2010 0.42% 1.01%
+RCNI03/05/2010ABRY Partners (N/A)$536 million$15.00$14.9409/30/2010 0.40% 2.48%
+SXE05/07/2010CGI Group (N/A)$904 million$37.50$37.3509/30/2010 0.40% 2.48%
+VRAD05/17/2010Providence Equity (N/A)$294 million$17.25$17.2009/30/2010 0.29% 1.80%
+GNA06/02/2010Gerdau (GGB)$1.7 billion$11.00$10.9708/31/2010 0.27% 3.44%
+VTIV05/06/2010Thomas H. Lee Partners (N/A)$1.1 billion$26.00$25.9409/30/2010 0.23% 1.43%
+SII02/19/2010Schlumberger (SLB)$7.5 billion$41.56$41.4809/30/2010 0.19% 1.18%
+ADCT07/13/2010Tyco Electronics (TEL)$1.24 billion$12.75$12.7312/31/2010 0.16% 0.38%
+STST06/30/2010Boeing (BA)$775 million$34.50$34.4709/30/2010 0.09% 0.54%
+RBI03/15/2010affiliate of Oncap Management Partners L.P. (N/A)$13.55$13.5408/16/2010 0.07% 1.93%
+ATSI04/29/2010Medtronic (MDT)$350 million$4.00$4.0009/30/2010 0.00% 0.00%
+CAL05/03/2010United (UAUA)$1.2 billion$24.93$25.0212/31/2010 -0.37% -0.90%
+SMTB07/15/2010People's United Financial Inc. (PBCT)$60 million$3.98$4.0012/31/2010 -0.52% -1.26%
+VRX06/21/2010Biovail Corporation (BVF)$3.3 billion$55.75$56.3212/31/2010 -1.01% -2.43%
+CPII05/10/2010Comtech (CMTL)$472.3 million$13.87$14.0709/30/2010 -1.43% -8.87%
+NGA04/01/2010AZZ Inc. (AZZ)$125.6 million$7.50$7.6308/31/2010 -1.70% -21.44%
+ABII06/30/2010Celgene (CELG)$2.9 billion$72.43$75.2912/31/2010 -3.79% -9.17%
+BXC07/22/2010Cerberus Capital Management (N/A)$111.1 million$3.40$3.7112/31/2010 -8.36% -20.20%
+MCCC06/01/2010Chief Executive Rocco Commisso (N/A)$590 million$6.00$7.34N/A -18.26% 0.00%
+DTG04/26/2010Hertz (HTZ)$1.3 billion$40.27$49.8712/31/2010 -19.24% -46.51%
+CCE02/25/2010The Coca-Cola Company (KO)$12.3 billionN/A$28.7010/01/2010 N/A N/A

Voluntary Disclosure: I am long Coca-Cola Enterprises (CCE) and Portec Rail Products (PRPX).