Merger Arbitrage Mondays – April 04, 2011
Merger activity increased last week with six new deals announced and four deals closing.
I received an email over the weekend from someone who was new to the Merger Arbitrage strategy and wanted to learn more about it. I pointed him to my article on the Pfizer – Wyeth deal, which provides an introduction to the strategy for the uninitiated. I would also recommend reading the article John Paulson On The “Risk” In Risk Arbitrage by the folks at market folly.
Deal Statistics:
Total Number of Deals Closed in 2011 | 43 |
Total Number of Deals Not Completed in 2011 | 1 |
Total Number of Pending Deals |
Cash Deals | 46 |
Stock Deals | 21 |
Stock & Cash Deals | 13 |
Special Conditions | 1 |
Total Number of Pending Deals | 81 |
New Deals:
- The acquisition of Verigy (VRGY) by Advantest (ATE) for $1.1 billion or $15.00 per share in cash. Verigy announced the Advantest offer in December but the deal was finalized last week.
- The acquisition of Rural/Metro Corporation (RURL) by Warburg Pincus for $17.25 per share in cash. I had traded Rural a couple of times over the last year based on insider purchases by the CEO as you can see here.
- The acquisition of GSI Commerce (GSIC) by eBay Inc. (EBAY) for $2.4 billion or $29.25 per share in cash
- The acquisition of Spectrum control (SPEC) by API Technologies for $270 million or $20.00 per share in cash
- The acquisition of Technology Research (TRCI) by Coleman Cable (CCIX) for $51.5 million or $7.20 per share in cash
- The acquisition of GS Financial Corp (GSLA) by Home Bancorp (HBCP) for $26.2 million or $21.00 per share in cash
Deal Updates:
- Mentor Graphics (MENT) board rejects Icahn’s bid, says strategic plan is better for shareholders.
- On April 3, 2011 RAE Systems announced a revised higher offer of $1.88 per share by Vector Capital, a 7.4% increase from the previous offer of $1.75 per share. The revised offer was precipitated as a result of a competing offer of $1.90 per share by Battery Ventures, which was not determined to be a “superior offer” by the board.
- The Nasdaq (NDAQ) and ICE have made a joint offer for NYSE Euronext (NYX) that was worth $43 as of Friday’s close. Since NYX has not officially called off its merger with Deutsche Börse, the table below has not been updated to reflect the Nasdaq offer.
Closed Deals:
- The acquisition of Rome Bancorp (ROME) by Berkshire Hills Corporation (BHLB) on April 01, 2011
- The acquisition of Mercer Insurance Group (MIGP) by United Fire & Casualty Company on March 28, 2011
- The acquisition of Herley Industries (HRLY) by Kratos Defense & Security Solutions (KTOS) on March 31, 2011
- The acquisition of Qwest (Q) by CenturyLink (CTL) on April 1, 2011.
Top 10 Deals with largest spreads:
Symbol | Announced
Date | Acquiring Company | Closing Price | Last
Price | Closing
Date | Profit | Annu.
Profit |
---|
TAM | 01/19/2011 | LAN Airlines S.A. (LFL) | $23.61 | $20.29 | 12/31/2011 | 16.35% |
22.02% |
TLCR | 06/07/2010 | Grifols (GRF.MC) | $30.52 | $26.94 | 06/30/2011 |
13.27% |
55.69% |
CASB | 03/04/2011 | Opus Bank (N/A) | $0.45 | $0.42 | 06/30/2011 | 7.14% |
29.97% |
DNBK | 01/20/2011 | People's United Financial Inc. (PBCT) | $23.00 | $21.49 | 06/30/2011 |
7.03% |
29.48% |
RAE | 01/18/2011 | Vector Capital (N/A) | $1.88 | $1.76 | 06/30/2011 |
6.82% |
28.61% |
TGE | 03/21/2011 | Dawson Geophysical Company (DWSN) | $8.41 | $7.87 | 08/15/2011 |
6.80% |
18.67% |
VRGY | 03/28/2011 | Advantest (ATE) | $15.00 | $14.08 | 12/31/2069 |
6.53% |
0.11% |
SHMR | 10/15/2010 | Essilor (N/A) | $14.50 | $13.71 | 06/30/2011 |
5.76% |
24.17% |
HYC | 11/17/2010 | Verifone Systems (PAY) | $12.55 | $11.97 | 09/30/2011 |
4.82% |
9.82% |
AAI | 09/27/2010 | Southwest Airlines (LUV) | $7.75 | $7.46 | 06/30/2011 | 3.89% |
16.31% |
List of all pending deals:
The list of all pending deals is only available to InsideArbitrage Premium and Plus members.