Merger Arbitrage Mondays – March 21, 2011

  • March 20, 2011

Merger activity increased last week with four new deals announced and two deals closing. Over the weekend, AT&T (T) announced that it was buying T-Mobile USA in a deal worth $39 billion. Sprint’s (S) stock had trended upwards in recent week on expectations that it would merge with T-Mobile. This announcement by AT&T could put some downward pressure on Sprint stock in the short-term but I think consolidation in the industry will prove to be beneficial in the long-term.

We have not included the AT&T deal in the new deals section below because T-Mobile is a unit of Deutsche Telekom (DTEGY.PK).

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 201139
Total Number of Deals Not Completed in 20111
Total Number of Pending Deals
Cash Deals42
Stock Deals22
Stock & Cash Deals13
Special Conditions1
Total Number of Pending Deals78

New Deals:

  1. The acquisition of Lubrizol Corporation (LZ) by Berkshire Hathaway for $9.7 billion or $135 per share in cash.
  2. The acquisition of Animal Health International (AHII) by Lextron for $251 million or $4.25 per share in cash.
  3. The acquisition of K-Sea Transportation Partners (KSP) by Kirby Corporation (KEX) for $335.3 million. Upon completion of the merger, K-Sea’s common unitholders will have the right to elect to receive either (a) $8.15 in cash; or (b) $4.075 in cash plus 0.0734 of a share of Kirby’s common stock for each common unit. K-Sea’s preferred unit holders will receive $4.075 in cash and 0.0734 of a share of Kirby’s common stock for each preferred unit. K-Sea’s general partner will receive $8.15 in cash for each general partner unit and $18 million in cash for K-Sea’s incentive distribution rights.
  4. The acquisition of Celera Corporation (CRA) by Quest Diagnostics (DGX) for $344 million or $8.00 per share in cash.


Closed Deals:

  1. The acquisition of Jo-Ann Stores (JAS) by Leonard Green & Partners LP on March 18, 2011.
  2. The acquisition of Genoptix by Novartis AG on March 14, 2011.


Updated Deals:

  1. Chile’s LAN Airlines (LFL) said a regulatory investigation into complaints about the merger could take between 6 to 9 months and the merger will most likely not complete before the fourth quarter. We have updated the closing date to 12/31/2011.


Top 10 Deals with largest spreads:

SymbolAnnounced
Date
Acquiring

Company

Closing

Price

Last
Price
Closing
Date
ProfitAnnu.
Profit
LTXC11/18/2010Verigy Ltd (VRGY)$12.24$8.4506/30/2011

44.85%

162.09%
TAM01/19/2011LAN Airlines S.A. (LFL)$22.24$19.2012/31/2011 15.83% 20.27%
DNBK01/20/2011People's United Financial Inc. (PBCT)$23.00$21.3506/30/2011 7.73% 27.93%
NGAS12/27/2010Magnum Hunter Resources Corp. (MHR)$0.60$0.56106/30/2011 7.67% 27.73%
MEE01/29/2011Alpha Natural Resources, Inc. (ANR)$66.66$62.1306/30/2011 7.29% 26.36%
AAI09/27/2010Southwest Airlines (LUV)$7.75$7.3003/31/2011 6.16% 225.00%
SHMR10/15/2010Essilor (N/A)$14.50$13.7206/30/2011 5.69% 20.55%
HYC11/17/2010Verifone Systems (PAY)$11.68$11.0609/30/2011 5.64% 10.67%
NOVL11/21/2010Attachment Corporation (N/A)$6.10$5.8004/30/2011 5.17% 47.20%
CASB03/04/2011Opus Bank (N/A)$0.45$0.430206/30/2011 4.60% 16.63%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium and Plus members.


Voluntary Disclosure: I have a long positions in Sprint (S) and First Niagara (FNFG)