Merger Arbitrage Mondays – October 04, 2010

  • October 3, 2010

Merger activity slid a little with “just” six new deals announced and eleven deals closing as it was the end of the third quarter.

Deal Statistics:

Total Number of Deals Closed in 201081
Total Number of Deals That Did Not Complete in 20105
Total Number of Pending Deals
Cash Deals50
Stock Deals11
Stock & Cash Deals12
Total Number of Pending Deals73

New Deals:

  1. The acquisition of AirTran Holdings (AAI) by Southwest Airlines (LUV) for $1.4 billion or $3.75 per share in cash and 0.321 Southwest share for each share of AirTran held.
  2. The acquisition of Alberto-Culver (ACV) by Consumer goods group Unilever for $3.7 billion or $37.50 per share in cash.
  3. The acquisition of NightHawk Radiology Holdings (NHWK) by privately held Virtual Radiologic for $170 million or $6.50 per share in cash. The offer represented a 100% premium over NightHawk’s previous closing.
  4. The acquisition of Keithly Instruments (KEI) by Danaher Corporation (DHR) for $340 million or $21.60 per share in cash.
  5. The acquisition of National Coal Corp. (NCOC) by Ranger Energy Investments for $8.6 million or $1.00 per share in cash.
  6. The acquisition of Dover Motorsports (DVD) by Dover Downs Gaming & Entertainment (DDE) in an all-stock merger where Motorsports stockholders will receive .501 shares of common stock of Gaming for each share of common stock or class A common stock of Motorsports.


Modified Deals:

  1. On Monday, September 27, 2010, Coca-Cola Co (KOwon the approval to buy the North American operations of its largest bottler (CCE) on the condition that it creates a firewall to safeguard rival Dr Pepper Snapple Group’s (DPS) confidential business information. This was a complex deal that I had participated in as discussed in the post Special Report Update: Coca-Cola Enterprises (subscription required) but booked profits when it went over my target price of $28.50 instead of waiting for the deal to close as I wanted to deploy the capital elsewhere.


Closed Deals:

  1. The acquisition of 3PAR (PAR) by Hewlett-Packard (HPQ) on September 27, 2010 for a price of $33 per share in cash, or an enterprise value of $2.35 billion.
  2. The acquisition of Micrus Endovascular (MEND) by Johnson & Johnson (JNJ) on September 27, 2010.
  3. The acquisition of Valeant Pharmaceuticals International (VRX) by Biovail Corporation on September 28, 2010.
  4. The acquisition of NBTY Inc. (NTY) by the Carlyle Group on October 01, 2010.
  5. The acquisition of Salary.com (SLRY) by Kenexa Corporation (KNXA) on October 01, 2010.
  6. The acquisition of The South Financial Group (TSFG) by the TD Bank Financial Group (TD) on October 01, 2010.
  7. The acquisition of Continental Airlines (CAL) by United Airlines (UAL) on October 01, 2010.
  8. The acquisition of Americredit (ACF) by General Motors (GM) on October 01, 2010.
  9. The acquisition of Hewitt Associates (HEW) by Aon Corporation (AON) on October 01, 2010.
  10. The acquisition of PMA Capital (PMACA) by Old Republic International Corporation on October 01, 2010.
  11. The acquisition of N. American operations of Coca-Cola Enterprises (CCE) by Coca-Cola Co. (KO) on October 01, 2010.


Top 10 Deals with largest spreads:

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnu.
Profit
TLCR06/07/2010Grifols (GRF.MC)$28.25$23.0512/31/2010 22.57% 93.63%
SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$6.75$5.5612/31/2010 21.40% 88.77%
MAJC09/21/2010Bayside Capital Partners (N/A)$0.45$0.3803/31/2011 18.42% 37.77%
ADAM08/30/2010Ebix Inc. (EBIX)$7.26$6.3612/31/2010 14.18% 58.81%
ATBC05/10/2010Jacksonville Bancorp (JAXB)$2.22$2.0512/31/2010 8.49% 35.21%
AAI09/27/2010Southwest Airlines (LUV)$7.90$7.3403/31/2011 7.68% 15.75%
PVG09/21/2010Penn Virginia Resource Partners (PVR)$24.83$23.5712/31/2010 5.36% 22.23%
AYE02/11/2010FirstEnergy (FE)$25.94$24.7203/31/2011 4.93% 10.12%
CADE09/22/2010Trustmark Corporation (TRMK)$2.11$2.0203/31/2011 4.68% 9.60%
Q04/22/2010Century Link (CTL)$6.62$6.3404/21/2011 4.38% 8.03%

List of all Pending Deals:

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

Profit

+TLCR06/07/2010Grifols (GRF.MC)$3.4 billion$28.25$23.0512/31/2010 22.57% 93.63%
+SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$19.5 million$6.75$5.5612/31/2010 21.40% 88.77%
+MAJC09/21/2010Bayside Capital Partners (N/A)$7.8 million$0.45$0.3803/31/2011 18.42% 37.77%
+ADAM08/30/2010Ebix Inc. (EBIX)$66 million$7.26$6.3612/31/2010 14.18% 58.81%
+ATBC05/10/2010Jacksonville Bancorp (JAXB)N/A$2.22$2.0512/31/2010 8.49% 35.21%
+AAI09/27/2010Southwest Airlines (LUV)$1.4 billion$7.90$7.3403/31/2011 7.68% 15.75%
+PVG09/21/2010Penn Virginia Resource Partners (PVR)$954 million$24.83$23.5712/31/2010 5.36% 22.23%
+AYE02/11/2010FirstEnergy (FE)$8.5 billion$25.94$24.7203/31/2011 4.93% 10.12%
+CADE09/22/2010Trustmark Corporation (TRMK)$23.8 million$2.11$2.0203/31/2011 4.68% 9.60%
+Q04/22/2010Century Link (CTL)$10.6 billion$6.62$6.3404/21/2011 4.38% 8.03%
+BGH06/11/2010Buckeye Partners LP (BPL)$1.14 billion$45.08$43.5012/31/2010 3.64% 15.11%
+NCOC09/28/2010Ranger Energy Investments (N/A)$8.6 million$1.00$0.9712/15/2010 3.09% 15.68%
+NHWK09/27/2010Virtual Radiologic (N/A)$170 million$6.50$6.3703/31/2011 2.04% 4.18%
+RAE09/20/2010Battery Ventures (N/A)$95 million$1.60$1.5712/31/2010 1.91% 7.93%
+ALOY06/24/2010ZelnickMedia (N/A)$126.5 million$9.80$9.6312/31/2010 1.77% 7.32%
+SMTB07/15/2010People's United Financial Inc. (PBCT)$60 million$3.86$3.8012/31/2010 1.70% 7.06%
+ID09/20/2010Safran (N/A)$1.1 billion$12.00$11.8003/31/2011 1.69% 3.48%
+MFE08/19/2010Intel Corporation (INTC)$7.68 billion$48.00$47.2412/31/2010 1.61% 6.67%
+NAL08/19/2010First Niagara Financial Group (FNFG)$1.5 billion$12.89$12.6905/15/2011 1.59% 2.61%
+CCBP08/09/2010F.N.B. Corporation (FNB)$70 million$39.61$39.0012/31/2010 1.55% 6.43%
+EPE09/07/2010Enterprise Products (EPD)$8 billion$60.08$59.1712/31/2010 1.53% 6.34%
+PRPX02/17/2010L.B. Foster Co. (FSTR)$112 million$11.80$11.63512/30/2010 1.42% 5.95%
+OCNW09/16/2010Calix Inc. (CALX)$171 million$7.90$7.7912/31/2010 1.41% 5.83%
+BNE02/23/2010RR Donnelley (RRD)$481 million$11.50$11.3609/30/2010 1.23% 0.00%
+STU09/17/2010Discover Financial Services (N/A)N/A$30.00$29.6412/31/2010 1.21% 5.04%
+NRGP08/09/2010Inergy (NRGY)$2.07 billion$31.13$30.7912/31/2010 1.11% 4.59%
+ATAC07/19/2010Genco Distribution System Inc. (N/A)$513 million$25.00$24.7412/31/2010 1.05% 4.36%
+DIVX06/02/2010Sonic Solutions (SNIC)$323 million$9.41$9.3210/07/2010 1.01% 123.08%
+PTV08/17/2010Reynolds Group Holdings (N/A)$6 billion$33.25$32.9512/31/2010 0.91% 3.78%
+WAIN06/29/2010Eastern Bank (N/A)$163 million$19.00$18.8312/31/2010 0.90% 3.74%
+XJT08/04/2010SkyWest (SKYW)$133 million$6.75$6.6912/31/2010 0.90% 3.72%
+OICO09/14/2010ITT Corporation (ITT)$29 million$12.50$12.4012/31/2010 0.81% 3.34%
+INET09/20/2010an affiliate of Hellman & Friedman Capital Partners (N/A)$640 million$13.35$13.2512/31/2010 0.75% 3.13%
+MIR04/12/2010RRI Energy In. (RRI)$1.6 billion$10.06$9.9912/31/2010 0.74% 3.08%
+OMNI06/04/2010Wellspring Capital Management (N/A)$122 million$2.75$2.7311/15/2010 0.73% 6.37%
+ADCT07/13/2010Tyco Electronics (TEL)$1.24 billion$12.75$12.6612/31/2010 0.71% 2.95%
+CLU09/16/2010Clearwater Paper Corporation (CLW)$247 million$12.00$11.9212/31/2010 0.67% 2.78%
+PZZ08/16/2010Leonard Green & Partners (N/A)$363 million$8.50$8.4512/31/2010 0.59% 2.45%
+LSBX07/15/2010People's United Financial Inc. (PBCT)$96 million$21.00$20.8812/31/2010 0.57% 2.38%
+NUHC09/20/2010Arrow Electronics (ARW)$130 million$7.00$6.9612/31/2010 0.57% 2.38%
+ME04/15/2010Apache (APA)$2.7 billion$24.55$24.4212/31/2010 0.53% 2.21%
+OSTE08/17/2010Medtronic (MDT)$123 million$6.50$6.4712/31/2010 0.46% 1.92%
+PSYS05/17/2010Universal Health (N/A)$3.1 billion$33.75$33.6012/31/2010 0.45% 1.85%
+BKC09/02/20103G Capital (N/A)$3.26 billion$24.00$23.9012/31/2010 0.42% 1.74%
+PPCO08/09/2010Endo Pharmaceuticals (ENDP)$144 million$5.00$4.9812/31/2010 0.40% 1.67%
+TUNE09/08/2010Zoran Corporation (ZRAN)$84 million$2.92$2.9112/31/2010 0.34% 1.43%
+AMPH09/01/2010ProAssuarance (PRA)$233 million$32.50$32.3912/31/2010 0.34% 1.41%
+DTG04/26/2010Hertz (HTZ)$1.56 billion$49.97$49.8612/31/2010 0.23% 0.93%
+MAM03/12/2010Emera Inc (N/A)$75.7 million$45.00$44.9012/31/2010 0.22% 0.92%
+GLG05/17/2010Man Group (N/A)$1.6 billion$4.50$4.4910/15/2010 0.22% 7.39%
+ZGEN09/07/2010Bristol Myers Squibb Company (BMY)$885 million$9.75$9.7312/31/2010 0.21% 0.85%
+NYM07/15/2010ProSight (N/A)$230 million$25.75$25.7012/31/2010 0.19% 0.81%
+NZ09/20/2010International Business Machines (IBM)$1.7 billion$27.00$26.9512/31/2010 0.19% 0.77%
+ICXT08/16/2010FLIR Systems (FLIR)$274 million$7.55$7.5412/31/2010 0.13% 0.55%
+HGRD07/28/2010an affiliate of the private equity firm Vestar Capital (N/A)$294 million$8.20$8.1910/31/2010 0.12% 1.65%
+ARST09/13/2010Hewlett-Packard Company (HPQ)$1.5 billion$43.50$43.4512/31/2010 0.12% 0.48%
+RSCR09/07/2010Onex Corp (N/A)$390 million$13.25$13.2412/31/2010 0.08% 0.31%
+AEZ07/28/2010Hess Corp (HES)$450 million$8.36$8.3612/31/2010 0.05% 0.21%
+KEI09/28/2010Danaher Corporation (DHR)$340 million$21.60$21.6012/31/2010 0.00% 0.00%
+ACAP07/08/2010The Doctors Company (N/A)$386 million$41.50$41.5112/31/2010 -0.02% -0.10%
+UNCA08/13/2010IBM (IBM)$480 million$21.00$21.0212/31/2010 -0.10% -0.39%
+DTPI08/24/2010PricewaterhouseCoopers (N/A)$378 million$12.50$12.5512/31/2010 -0.40% -1.65%
+ALY08/12/2010Seawell (N/A)$890 million$4.25$4.2712/31/2010 -0.47% -1.94%
+ACV09/27/2010Unilever PLC (N/A)$3.7 billion$37.50$37.8712/31/2010 -0.98% -4.05%
+PTEC08/17/2010Marlin Equity Partners (N/A)$139 million$3.85$3.9012/31/2010 -1.28% -5.32%
+PTEC08/17/2010Marlin Equity Partners (N/A)$139 million$3.85$3.9012/31/2010 -1.28% -5.32%
+COGT08/30/20103M Co. (MMM)$943 million$10.50$10.8312/31/2010 -3.05% -12.64%
+DYN08/13/2010Blackstone Group (BX)$4.7 billion$4.50$4.7012/31/2010 -4.26% -17.65%
+TRBN08/12/2010Emergent BioSolution (EBS)$96.8 million$4.27$4.4912/31/2010 -4.80% -19.91%
+ABII06/30/2010Celgene (CELG)$2.9 billion$73.20$77.0012/31/2010 -4.93% -20.44%
+DVD09/27/2010)–Dover Downs Gaming & Entertainment Inc (DDE)N/A$1.72$1.9612/31/2010 -12.07% -50.06%
+BXC07/22/2010Cerberus Capital Management (N/A)$111.1 million$3.40$4.0012/31/2010 -15.00% -62.22%
+OTIX09/13/2010William Demant (N/A)$50 million$8.60$10.4012/31/2010 -17.31% -71.79%

Contributing Author: Ann Kumar