Merger Arbitrage Mondays – August 09, 2010

  • August 8, 2010

Merger activity continues to dwindle with just one new deal announced last week and four deals closing.

The new deal announced last week was the acquisition of ExpressJet Holdings (XJT) by SkyWest (SKYW) for $6.75 per share in cash. The current spread on the deal is 2.9% or 7.34% annualized if the deal closes by the end of this year. I have generally been happy flying with SkyWest (through their partnership with United) and it is good to see them expand with this acquisition. Despite the fact that I do not invest in airline stocks, SkyWest has been on my watch list for a number of years. The company is currently trading close to its 52 week low, has managed to remain profitable despite a big drop in 2009 revenue and has a EV/EBITDA  of 4.54.

Dollar Thrifty (DTG) rejected Avis’s offer in favor of Hertz saying that it was unsure that Avis could close the deal. The company would consider any changes that Avis might make to its offer.

The spread on the Qwest (Q) – CenturyLink (CTL) deal has widened to 6.42% or 9.19% annualized if the deal closes on 4/21/2011 after staying below 6% for over 5 weeks. The difference in dividend yields between the two companies would shave about 1% off returns if one were to short CenturyLink while starting a long position in Qwest.

On Friday, August 06, 2010, Phase Forward Inc. (PFWD) said that a waiting period had passed for the U.S. Department of Justice to object to its $685 million acquisition by Oracle Corp. on antitrust grounds. Completion of the proposed merger remains subject to the satisfaction or waiver of the other closing conditions specified in the merger agreement.

The deals that closed include,

  1. The acquisition of North American Galvanizing & Coatings (NGA) by AZZ Inc. on August 03, 2010
  2. The acquisition of inVentiv Health (VTIV) by Thomas H. Lee Partners on August 04, 2010
  3. The acquisition of Argon ST (STST) by The Boeing Company (BA) on August 05, 2010
  4. The acquisition of Sports Supply Group (RBI) by ONCAP on August 05, 2010

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

Profit

+TLCR06/07/2010Grifols (GRF.MC)$3.4 billion$26.73$22.2812/31/2010 19.99% 50.67%
+ATBC05/10/2010Jacksonville Bancorp (JAXB)N/A$2.37$2.0409/30/2010 16.18% 113.55%
+EMMS05/25/2010JS Acquisition and Alden Global Capital (N/A)$3 billion$2.40$2.0709/30/2010 15.94% 111.90%
+SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$19.5 million$7.25$6.5608/16/2010 10.52% 548.45%
+AYE02/11/2010FirstEnergy (FE)$8.5 billion$25.03$23.0703/31/2011 8.48% 13.22%
+Q04/22/2010Century Link (CTL)$10.6 billion$6.06$5.6904/21/2011 6.42% 9.19%
+BGH06/11/2010Buckeye Partners LP (BPL)$1.14 billion$46.14$43.7612/31/2010 5.44% 13.80%
+ATAC07/19/2010Genco Distribution System Inc. (N/A)$513 million$25.00$24.0612/31/2010 3.91% 9.90%
+TTIL06/09/2010Teoco Corp. (N/A)$58 million$3.00$2.9109/30/2010 3.09% 21.71%
+VETS06/02/2010VCA Antech Inc (WOOF)$41.25 million$0.34$0.3309/30/2010 3.03% 21.27%
+PINN02/24/2010Investor Group lead by Scotia Waterous (USA) (N/A)$11 million$0.34$0.330108/21/2010 3.00% 91.22%
+XJT08/04/2010SkyWest (SKYW)$133 million$6.75$6.5612/31/2010 2.90% 7.34%
+ALOY06/24/2010ZelnickMedia (N/A)$126.5 million$9.80$9.5312/31/2010 2.83% 7.18%
+BNE02/24/2010RR Donnelley (RRD)$481 million$11.50$11.1909/30/2010 2.77% 19.45%
+DIVX06/02/2010Sonic Solutions (SNIC)$323 million$8.22$8.0309/30/2010 2.32% 16.32%
+ECLP06/09/2010Allscripts-Misys Healthcare (MDRX)$1.3 billion$20.22$19.7811/15/2010 2.22% 8.29%
+GLG05/17/2010Man Group (N/A)$1.6 billion$4.50$4.4109/30/2010 2.04% 14.32%
+OMNI06/04/2010Wellspring Capital Management (N/A)$122 million$2.75$2.7011/15/2010 1.85% 6.90%
+LSBX07/15/2010People's United Financial Inc. (PBCT)$96 million$21.00$20.6312/31/2010 1.79% 4.55%
+PMACA06/10/2010Old Republic International (ORI)$228 million$7.14$7.0209/30/2010 1.77% 12.45%
+NTY07/15/2010The Carlyle Group (N/A)$3.8 billion$55.00$54.0612/31/2010 1.74% 4.41%
+PRPX02/17/2010L.B. Foster Co. (FSTR)$112 million$11.71$11.5208/31/2010 1.65% 27.36%
+WAIN06/29/2010Eastern Bank (N/A)$163 million$19.00$18.7012/31/2010 1.60% 4.07%
+ACF07/22/2010General Motors Co. (N/A)$3.5 billion$24.50$24.1312/31/2010 1.53% 3.89%
+PSYS05/17/2010Universal Health (N/A)$3.1 billion$33.75$33.2512/31/2010 1.50% 3.81%
+MIR04/12/2010RRI Energy In. (RRI)$1.6 billion$11.14$10.9912/31/2010 1.38% 3.50%
+EFJI05/17/2010Francisco Partners (N/A)N/A$1.50$1.4809/30/2010 1.35% 9.49%
+WMZ05/24/2010Williams Partners L.P. (WPZ)$35.27$34.8209/30/2010 1.28% 8.98%
+GNA06/02/2010Gerdau (GGB)$1.7 billion$11.00$10.8708/31/2010 1.20% 19.84%
+HEW07/12/2010Aon Corp (AON)$4.9 billion$49.91$49.3511/15/2010 1.14% 4.25%
+PFWD04/16/2010Oracle Corp. (ORCL)$685 million$17.00$16.8208/31/2010 1.07% 17.75%
+WEL04/09/2010Halliburton Company (HAL)$240 million$3.00$2.9709/30/2010 1.01% 7.09%
+NYM07/15/2010ProSight (N/A)$230 million$25.75$25.5212/31/2010 0.90% 2.28%
+MAM03/12/2010Emera Inc (N/A)$75.7 million$45.00$44.6012/31/2010 0.90% 2.27%
+SWWC03/03/2010Institutional Investors (N/A)$275 million$11.00$10.9103/31/2011 0.82% 1.29%
+ME04/15/2010Apache (APA)$2.7 billion$24.15$23.9609/30/2010 0.80% 5.65%
+SMTB07/15/2010People's United Financial Inc. (PBCT)$60 million$3.94$3.9112/31/2010 0.78% 1.98%
+ACAP07/08/2010The Doctors Company (N/A)$386 million$41.50$41.1812/31/2010 0.78% 1.97%
+QUOT06/11/2010LQ Acquisition (N/A)$19 million$4.00$3.9709/30/2010 0.76% 5.30%
+ODSY05/24/2010Gentiva Health Services (GTIV)$1.0 billion$27.00$26.8109/30/2010 0.71% 4.97%
+MEND07/12/2010Johnson & Johnson (JNJ)$480 million$23.40$23.2609/30/2010 0.60% 4.22%
+RCNI03/05/2010ABRY Partners (N/A)$536 million$15.00$14.9209/30/2010 0.54% 3.76%
+HGRD07/28/2010an affiliate of the private equity firm Vestar Capital (N/A)$294 million$8.20$8.1609/30/2010 0.49% 3.44%
+BSMD05/13/2010Merit Medical Systems (MMSI)$96 million$4.38$4.3609/30/2010 0.46% 3.22%
+AEZ07/28/2010Hess Corp (HES)$450 million$7.63$7.6012/31/2010 0.43% 1.08%
+VIRL06/10/2010Synopsys (SNPS)$315 million$12.00$11.9612/31/2010 0.33% 0.85%
+ADCT07/13/2010Tyco Electronics (TEL)$1.24 billion$12.75$12.7112/31/2010 0.31% 0.80%
+CRN04/19/2010GeoGroup (GEO)$685 million$28.15$28.0609/30/2010 0.30% 2.13%
+ATSI04/29/2010Medtronic (MDT)$350 million$4.00$3.9909/30/2010 0.25% 1.76%
+SII02/19/2010Schlumberger (SLB)$7.5 billion$43.43$43.3509/30/2010 0.18% 1.23%
+SXE05/07/2010CGI Group (N/A)$904 million$37.50$37.4809/30/2010 0.05% 0.37%
+TSFG05/17/2010TD Bank Financial Group (N/A)$61 million$0.28$0.2809/30/2010 0.00% 0.00%
+CPII05/10/2010Comtech (CMTL)$472.3 million$13.79$13.8509/30/2010 -0.42% -2.96%
+VRX06/21/2010Biovail Corporation (BVF)$3.3 billion$56.68$57.1112/31/2010 -0.75% -1.91%
+CAL05/03/2010United (UAUA)$1.2 billion$23.44$23.6312/31/2010 -0.82% -2.08%
+ABII06/30/2010Celgene (CELG)$2.9 billion$72.83$75.8012/31/2010 -3.92% -9.93%
+BXC07/22/2010Cerberus Capital Management (N/A)$111.1 million$3.40$3.6012/31/2010 -5.56% -14.08%
+MCCC06/01/2010Chief Executive Rocco Commisso (N/A)$590 million$6.00$7.20N/A -16.67% 0.00%
+DTG04/26/2010Hertz (HTZ)$1.3 billion$39.34$48.5612/31/2010 -18.99% -48.14%
+CCE02/25/2010The Coca-Cola Company (KO)$12.3 billionN/A$29.1710/01/2010 N/A N/A