Merger Arbitrage Mondays – August 1, 2011

  • August 1, 2011

Merger activity declined last week with three new deals announced and three closing.

You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 2011 131
Total Number of Deals Not Completed in 2011 1
Total Number of Pending Deals
Cash Deals 36
Stock Deals 24
Stock & Cash Deals 11
Total Number of Pending Deals 71

New Deals:

  1. The acquisition of OceanFreight (OCNFD) by DryShips (DRYS) in a cash plus stock deal worth $19.85/share or $239 million where OceanFreight’s shareholders will receive $11.25 in cash and 0.52326  of a share of common stock of Ocean Rig UDW Inc., a global provider of offshore ultra deepwater drilling services that is 78% owned by DryShips. Ocean Rig shares will be listed on the Nasdaq Global Select Market upon the closing of the merger.
  2. The acquisition of Alliance Bankshares Corporation (ABVA) by Eagle Bancorp (EGBN) for $31.2 million in an all stock deal, where Alliance shareholders will receive 0.4317 shares (the “Conversion Ratio”) of Eagle common stock for each share of Alliance common stock subject to adjustment based upon certain factors set forth in the Agreement. I have analyzed some complex deals in the past but the lengthy list of factors that could affect the conversion ratio of this deal takes the cake. It is therefore not surprising that the spread on the deal is so large. You can find additional information about the adjustment to the “conversion ratio” in this 8-K form filed with the SEC.
  3. The acquisition of Allied Healthcare International (AHCI) by Saga Group Limited for $175 million or $3.90 per share in cash.

Closed Deals:

  1. The acquisition of L-1 Identity Solutions (ID) by Safran on July 26, 2011
  2. The acquisition of Integral Systems (ISYS) by Kratos Defense & Security Solutions (KTOS) on July 28, 2011
  3. The acquisition of Sterling Bancshares (SBIB) by Comerica Incorporated (CMA) on July 28, 2011

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
GRAN 04/27/2011 FNB United Corp (FNBN) $1.49 $0.835 09/30/2011 77.84% 473.55%
HRBN 06/20/2011 Tech Full Electric Company Limited (N/A) $24.00 $16.43 12/31/2011 46.07% 110.64%
FNDT 06/27/2011 S1 Corporation (SONE) $25.57 $18.90 12/31/2011 35.28% 84.72%
TAM 01/19/2011 LAN Airlines S.A. (LFL) $23.56 $19.47 12/31/2011 21.02% 50.47%
MHS 07/21/2011 Express Scripts, Inc. (ESRX) $72.75 $62.88 06/30/2012 15.70% 17.15%
ABVA 07/27/2011 Eagle Bancorp, Inc. (EGBN) $5.82 $5.10 12/31/2011 14.19% 34.07%
CFSG 05/20/2011 Bain Capital Partners (N/A) $9.00 $7.89 11/15/2011 14.07% 48.44%
HYC 11/17/2010 Verifone Systems (PAY) $9.06 $8.11 09/30/2011 11.65% 70.89%
CSR 04/20/2011 Rightmark Holdings Limited (N/A) $6.50 $5.83 09/30/2011 11.49% 69.91%
CRU 05/05/2011 Capital Product Partners L.P. (CPLP) $12.59 $11.52 09/30/2011 9.28% 56.46%

List of all pending deals:

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