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Merger Arbitrage Mondays – November 08, 2010

  • November 8, 2010

Merger activity remained steady last week with six new deals announced and three closing. You can find all the deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 201097
Total Number of Deals That Did Not Complete in 20106
Total Number of Pending Deals
Cash Deals60
Stock Deals15
Stock & Cash Deals12
Total Number of Pending Deals87

New Deals:

  1. The acquisition of EXCO Resources (XCO) by the Chairman & CEO of EXCO Resources for $4.4 billion or $20.50 per share in cash. This is a going private transaction and is awaiting board approval. Hence it is not yet included in our table below. Almost every deal that is announced these days is followed by a string of lawsuits or “investigations” by law firms. I found it very interesting that even before the board started considering this offer, a law firm had already launched an investigation into “whether the EXCO Board of Directors breached their fiduciary duties to EXCO stockholders by failing to adequately shop the Company before entering into this transaction”.
  2. The acquisition of Art Technology Group (ARTG) by Oracle (ORCL) for $1 billion or $6.00 per share in cash
  3. The acquisition of TechTeam Global (TEAM) by Brazil’s Stefanini International Holdings Ltd for $93.4 million or $8.35 per share in cash
  4. The acquisition of Wilmington Trust Corporation (WL) by M & T Bank Corporation (MTB) for $351 million or 0.051372 shares of M&T Bank common stock
  5. The acquisition of Comforce Corp (CFS) by an affiliate of ABRY Partners for $84.8 million or $2.50 per share in cash
  6. The acquisition of Tongjitang Chinese Medicines (TCM) by Hanmax Investment Limited, Fosun Industrial Company Limited and Tonsun International Company Limited for $4.50 per American Depositary Share in cash.

Modified Deals:

  1. The stock symbol and closing price of Majestic Capital have been updated to reflect a 1:10 reverse stock split, effective as of close of business on Nov 4, 2010. The closing price was updated from $0.45 to $4.50 and the stock symbol was changed from MAJC to MAJCD, which will be effective for a period of 20 days to reflect the split.
  2. The closing price of the AirTran (AAI) – Southwest (LUV) merger has been changed to $7.75 to reflect a clause in the deal that states, “The number of shares to be issued by Southwest Airlines is subject to adjustment if the average of Southwest Airlines closing prices for the 20 trading days ending three trading days prior to closing is below $10.90 or above $12.46. This adjustment mechanism is intended to provide at least $7.25 in value and up to $7.75 in value per share of AirTran common stock. If the average closing price noted above exceeds $12.46, the value will be $7.75 with fewer shares of Southwest common stock issued. If the average closing price noted above is less than $10.90, the value will be $7.25 with additional shares of Southwest common stock issued. Additionally, Southwest Airlines has the option of substituting cash in lieu of issuing incremental shares if the average closing stock price is less than $10.90.”
  3. Phoenix (PTEC) receives definitive offer from the Gores Group to acquire the company for $4.20 per share in cash. In accordance with the terms of the merger agreement between Phoenix and affiliates of Marlin Equity Partners dated August 17, 2010, the board of directors of Phoenix has determined that the definitive offer from Gores constitutes a Superior Proposal, and written notification of the board’s determination has been provided to Marlin.

Closed Deals:

  1. The acquisition of Actel Corporation (ACTL) by Microsemi Corporation (MSCC) on November 02, 2010
  2. The acquisition of Diamond Management and Technology Consultants (DTPI) by PwC US on November 02, 2010
  3. The acquisition of Penwest Pharmaceuticals (PPCO) by Endo Pharmaceuticals (ENDP) on November 04, 2010

Top 10 Deals with largest spreads:

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnu.
Profit
TLCR06/07/2010Grifols (GRF.MC)$28.09$23.4812/31/2010 19.62% 135.08%
DTG04/26/2010Avis (CAR)$54.81$48.1312/31/2010 13.88% 95.62%
MROE10/06/2010Old National Bancorp (ONB)$13.17$11.73303/31/2011 12.25% 31.28%
SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$6.75$6.0512/31/2010 11.57% 79.68%
ATBC05/10/2010Jacksonville Bancorp (JAXB)$2.31$2.17512/31/2010 6.21% 42.75%
CRXL10/06/2010Johnson & Johnson (JNJ)$34.40$32.5003/31/2011 5.85% 14.92%
ADAM08/30/2010Ebix Inc. (EBIX)$7.86$7.4412/31/2010 5.66% 38.99%
SHMR10/15/2010Essilor (N/A)$14.50$13.8706/30/2011 4.54% 7.09%
Q04/22/2010Century Link (CTL)$7.08$6.8004/21/2011 4.17% 9.28%
TCM11/01/2010Hanmax Investment Limited (N/A)$4.50$4.3303/31/2011 3.93% 10.02%

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$28.09$23.4812/31/2010 19.62% 135.08%
+DTG04/26/2010Avis (CAR)$1.56 billion$54.81$48.1312/31/2010 13.88% 95.62%
+MROE10/06/2010Old National Bancorp (ONB)$83.5 million$13.17$11.73303/31/2011 12.25% 31.28%
+SSE02/23/2010Naugatuck Valley Financial Corp (NVSL)$19.5 million$6.75$6.0512/31/2010 11.57% 79.68%
+ATBC05/10/2010Jacksonville Bancorp (JAXB)N/A$2.31$2.17512/31/2010 6.21% 42.75%
+CRXL10/06/2010Johnson & Johnson (JNJ)$2.41 billion$34.40$32.5003/31/2011 5.85% 14.92%
+ADAM08/30/2010Ebix Inc. (EBIX)$66 million$7.86$7.4412/31/2010 5.66% 38.99%
+SHMR10/15/2010Essilor (N/A)$130 million$14.50$13.8706/30/2011 4.54% 7.09%
+Q04/22/2010Century Link (CTL)$10.6 billion$7.08$6.8004/21/2011 4.17% 9.28%
+TCM11/01/2010Hanmax Investment Limited (N/A)N/A$4.50$4.3303/31/2011 3.93% 10.02%
+MAJCD09/21/2010Bayside Capital Partners (N/A)$7.8 million$4.50$4.3303/31/2011 3.93% 10.02%
+PVG09/21/2010Penn Virginia Resource Partners (PVR)$954 million$27.34$26.3412/31/2010 3.80% 26.20%
+AAI09/27/2010Southwest Airlines (LUV)$1.4 billion$7.75$7.4703/31/2011 3.75% 9.57%
+BGH06/11/2010Buckeye Partners LP (BPL)$1.14 billion$46.15$45.0512/31/2010 2.44% 16.80%
+NHWK09/27/2010Virtual Radiologic (N/A)$170 million$6.50$6.3503/31/2011 2.36% 6.03%
+CCBP08/09/2010F.N.B. Corporation (FNB)$70 million$41.78$40.8512/31/2010 2.28% 15.70%
+NAL08/19/2010First Niagara Financial Group (FNFG)$1.5 billion$13.68$13.3905/15/2011 2.20% 4.26%
+SVR10/28/2010Carlyle (N/A)$2.6 billion$31.00$30.4103/31/2011 1.94% 4.95%
+OCNW09/16/2010Calix Inc. (CALX)$171 million$7.48$7.3412/31/2010 1.88% 12.97%
+ID09/20/2010Safran (N/A)$1.1 billion$12.00$11.7803/31/2011 1.87% 4.77%
+BJGP10/28/2010Sanofi – aventis (N/A)$520.6 million$10.00$9.8203/31/2011 1.83% 4.68%
+SMTB07/15/2010People's United Financial Inc. (PBCT)$60 million$3.81$3.7512/31/2010 1.72% 11.88%
+AYE02/11/2010FirstEnergy (FE)$8.5 billion$23.94$23.5503/31/2011 1.65% 4.21%
+PRPX02/17/2010L.B. Foster Co. (FSTR)$112 million$11.80$11.6212/30/2010 1.55% 10.87%
+BNE02/23/2010RR Donnelley (RRD)$481 million$11.50$11.3312/31/2010 1.50% 10.33%
+MFE08/19/2010Intel Corporation (INTC)$7.68 billion$48.00$47.3206/30/2011 1.44% 2.24%
+CSCX10/19/2010Opto Circuits (N/A)N/A$2.30$2.2712/31/2010 1.32% 9.10%
+FMR10/28/2010Fairfax Financial Holdings (FRFHF.PK)$294 million$16.50$16.2903/31/2011 1.29% 3.29%
+TTES10/06/2010Robbins & Myers Inc. (RBN)$422 million$35.06$34.6312/31/2010 1.23% 8.47%
+CFS11/02/2010affiliate of ABRY Partners (N/A)$84.8 million$2.50$2.4712/31/2010 1.21% 8.36%
+RSCR09/07/2010Onex Corp (N/A)$390 million$13.25$13.1012/31/2010 1.15% 7.89%
+ROAC10/18/2010Swenson Granite Co. (N/A)$39 million$5.25$5.2003/31/2011 0.96% 2.45%
+NCOC09/28/2010Ranger Energy Investments (N/A)$8.6 million$1.00$0.99112/15/2010 0.91% 8.96%
+LSBX07/15/2010People's United Financial Inc. (PBCT)$96 million$21.00$20.8312/31/2010 0.82% 5.62%
+DDMX10/01/2010Greenbriar Equity Group (N/A)$210 million$21.25$21.0802/15/2011 0.81% 2.97%
+TEAM11/02/2010fanini International Holdings Ltd for $93.4 million (N/A)$93.4 million$8.35$8.2912/31/2010 0.72% 4.98%
+ROME10/12/2010Berkshire Hills Bancorp (BHLB)$74 million$11.13$11.0503/31/2011 0.72% 1.83%
+PZZ08/16/2010Leonard Green & Partners (N/A)$363 million$8.50$8.4412/31/2010 0.71% 4.90%
+KG10/12/2010Pfizer Inc. (PFE)$3.6 billion$14.25$14.1512/31/2010 0.71% 4.87%
+TUNE09/08/2010Zoran Corporation (ZRAN)$84 million$2.92$2.9012/31/2010 0.69% 4.75%
+ADCT07/13/2010Tyco Electronics (TEL)$1.24 billion$12.75$12.67512/31/2010 0.59% 4.08%
+ARTG11/02/2010Oracle (ORCL)$1 billion$6.00$5.9703/31/2011 0.50% 1.28%
+ACV09/27/2010Unilever PLC (N/A)$3.7 billion$37.50$37.3212/31/2010 0.48% 3.32%
+NUHC09/20/2010Arrow Electronics (ARW)$130 million$7.00$6.9712/31/2010 0.43% 2.96%
+ALOY06/24/2010ZelnickMedia (N/A)$126.5 million$9.80$9.7612/31/2010 0.41% 2.82%
+CLRT10/22/2010GE Healthcare (GE)$580 million$5.00$4.9801/31/2011 0.40% 1.75%
+AEZ07/28/2010Hess Corp (HES)$450 million$9.61$9.5712/31/2010 0.40% 2.75%
+INET09/20/2010an affiliate of Hellman & Friedman Capital Partners (N/A)$640 million$13.35$13.3012/31/2010 0.38% 2.59%
+HWK10/15/2010Carlisle (CSL)$413 million$50.00$49.8312/31/2010 0.34% 2.35%
+EPE09/07/2010Enterprise Products (EPD)$8 billion$66.03$65.8212/31/2010 0.32% 2.20%
+GIW10/25/2010Community Bank System (CBU)$101.8 million$9.50$9.4702/15/2011 0.32% 1.17%
+STU09/17/2010Discover Financial Services (N/A)N/A$30.00$29.9112/31/2010 0.30% 2.07%
+XJT08/04/2010SkyWest (SKYW)$133 million$6.75$6.7312/31/2010 0.30% 2.05%
+HBE10/06/2010Kratos Defense & Security Solutions (KTOS)$45 million$7.00$6.9812/31/2010 0.29% 1.97%
+NYM07/15/2010ProSight (N/A)$230 million$25.75$25.6812/31/2010 0.27% 1.88%
+WAIN06/29/2010Eastern Bank (N/A)$163 million$19.00$18.9512/31/2010 0.26% 1.82%
+GYMB10/11/2010Bain Capital (N/A)$1.8 billion$65.40$65.2312/31/2010 0.26% 1.79%
+PTV08/17/2010Reynolds Group Holdings (N/A)$6 billion$33.25$33.1912/31/2010 0.18% 1.24%
+NRGP08/09/2010Inergy (NRGY)$2.07 billion$30.76$30.7112/31/2010 0.17% 1.15%
+ME04/15/2010Apache (APA)$2.7 billion$26.32$26.2812/31/2010 0.17% 1.15%
+CLU09/16/2010Clearwater Paper Corporation (CLW)$247 million$12.00$11.9812/31/2010 0.17% 1.15%
+CTV10/25/2010Carlyle (N/A)$3 billion$31.50$31.4503/31/2011 0.16% 0.41%
+ULCM10/12/2010affiliates of Platinum Equity (N/A)N/A$8.07$8.0612/31/2010 0.12% 0.85%
+AMPH09/01/2010ProAssuarance (PRA)$233 million$32.50$32.4612/31/2010 0.12% 0.85%
+MIR04/12/2010RRI Energy In. (RRI)$1.6 billion$10.94$10.9312/31/2010 0.12% 0.83%
+PSYS05/17/2010Universal Health (N/A)$3.1 billion$33.75$33.7112/31/2010 0.12% 0.82%
+MAM03/12/2010Emera Inc (N/A)$75.7 million$45.00$44.9512/31/2010 0.11% 0.77%
+AGAM10/18/2010St. Jude Medical (STJ)$1.04 billion$20.80$20.7812/31/2010 0.10% 0.66%
+COGT08/30/20103M Co. (MMM)$943 million$10.50$10.4912/31/2010 0.10% 0.66%
+NZ09/20/2010International Business Machines (IBM)$1.7 billion$27.00$26.9912/31/2010 0.04% 0.26%
+RAE09/20/2010Battery Ventures (N/A)$95 million$1.60$1.6012/31/2010 0.00% 0.00%
+THMD10/05/2010Irving Place Capital (N/A)$422 million$15.00$15.0012/31/2010 0.00% 0.00%
+OSTE08/17/2010Medtronic (MDT)$123 million$6.50$6.5012/31/2010 0.00% 0.00%
+KEI09/28/2010Danaher Corporation (DHR)$340 million$21.60$21.6012/31/2010 0.00% 0.00%
+OICO09/14/2010ITT Corporation (ITT)$29 million$12.50$12.5212/31/2010 -0.16% -1.10%
+ACTI10/11/2010Assa Abloy (N/A)$162 million$3.25$3.2612/31/2010 -0.31% -2.11%
+CGC10/01/2010Gammon Gold (GRS)$288 million$4.49$4.5312/31/2010 -0.80% -5.53%
+WL11/01/2010M & T Bank Corporation (MTB)$351 million$4.25$4.3106/30/2011 -1.43% -2.23%
+ACLI10/18/2010Affiliates of Platinum Equity (N/A)$777 million$33.00$33.6312/31/2010 -1.87% -12.90%
+NST10/18/2010Northeast Utilities (NU)$4.17 billion$41.66$42.5709/30/2011 -2.15% -2.40%
+DVD09/27/2010)–Dover Downs Gaming & Entertainment Inc (DDE)N/A$1.73$1.840112/31/2010 -6.07% -41.79%
+CADE10/06/2010Community Bancorp LLC (N/A)$38 million$2.25$2.4403/31/2011 -7.93% -20.24%
+PTEC08/17/2010Marlin Equity Partners (N/A)$139 million$3.85$4.2512/31/2010 -9.41% -64.82%
+PTEC08/17/2010Marlin Equity Partners (N/A)$139 million$3.85$4.2512/31/2010 -9.41% -64.82%
+OTIX09/13/2010William Demant (N/A)$50 million$8.60$10.9812/31/2010 -21.68% -149.28%
+ALY08/12/2010Seawell (N/A)$890 million$4.25$5.5312/31/2010 -23.15% -159.40%
+DYN08/13/2010Blackstone Group (BX)$4.7 billion$4.50$12/31/2010 0.00% 0.00%

Voluntary Disclosure: I have a long position in AAI and a short position in LUV. I also have a long position in FNFG.

Contributing Author: Ann Kumar