Merger Arbitrage Mondays – August 8, 2011

  • August 8, 2011

Merger activity remained steady last week with three new deals announced and one closing. The recent drop in equity markets around the world did not spare stocks that are on our list of pending mergers. Spreads of several deals widened and I used the opportunity to start a position in education software company Blackboard (BBBB) as the all cash deal had a spread of over 7% or 18% annualized on Friday. The spread narrowed by the end of the trading day but still remains at 5.39%.

It will be interesting to watch the markets over the coming weeks (Dow futures point to a 267 point drop as I write this on Sunday night) and I may put more capital to work in some mergers with the understanding that a prolonged bear market will also mean more deals will fall apart than we have seen in the last couple of years.

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 2011132
Total Number of Deals Not Completed in 20111
Total Number of Pending Deals
Cash Deals38
Stock Deals24
Stock & Cash Deals11
Total Number of Pending Deals73

New Deals:

  1. The acquisition PAETEC Holding (PAET) by Windstream Corporation (WIN) in an all stock deal for $2.3 billion, where PAETEC shareholders will receive 0.460 shares of Windstream common stock for each PAETEC share owned.
  2. The acquisition of Global Traffic Network (GNET) by an affiliate of GTCR for $266 million or $14.00 per share in cash.
  3. The acquisition of Emdeon (EM) by Blackstone for $3 billion or $19.00 per share in cash.

Closed Deals:

  1. The acquisition of Hypercom Corporation (HYC) by Verifone Systems (PAY) on August 04, 2011

Top 10 deals with largest spreads:

GRAN04/27/2011FNB United Corp (FNBN)$1.35$0.77509/30/2011 74.19% 510.96%
CRU05/05/2011Capital Product Partners L.P. (CPLP)$12.23$8.3309/30/2011 46.82% 322.46%
FNDT06/27/2011S1 Corporation (SONE)$25.16$17.7512/31/2011 41.75% 105.09%
HRBN06/20/2011Tech Full Electric Company Limited (N/A)$24.00$17.2112/31/2011 39.45% 99.31%
TAM01/19/2011LAN Airlines S.A. (LFL)$22.03$16.8412/31/2011 30.83% 77.61%
MHS07/21/2011Express Scripts, Inc. (ESRX)$68.95$55.4806/30/2012 24.28% 27.10%
ALTH07/20/2011Amag Pharmaceuticals (AMAG)$2.03$1.7512/31/2011 15.89% 40.01%
CSR04/20/2011Rightmark Holdings Limited (N/A)$6.50$5.6709/30/2011 14.64% 100.81%
GLBC04/11/2011Level 3 Communications (LVLT)$34.24$30.6312/31/2011 11.79% 29.67%
ABVA07/27/2011Eagle Bancorp, Inc. (EGBN)$5.69$5.1012/31/2011 11.48% 28.90%

List of all pending deals:

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