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Merger Arbitrage Mondays – November 21, 2011

  • November 21, 2011

Merger activity decreased last week with only two new deals announced. The most interesting development is however the deal that was not announced. There has been speculation that a number of entities are considering a bid for Yahoo (YHOO) including a combination of Alibaba’s Jack Ma and Japanese bank Softbank as well as a potential bid by private equity firm Silver Lake along with Microsoft (MSFT) and others.

Call option activity has spiked over the last couple of weeks. Open interest for $16 December 2011 calls stands at 76,162 contracts and open interest for $16 January 2012 calls is 191,420.  Traders had picked up a large number of calls for the November, December and January expirations and the November calls expired worthless. In that light, the story in the Wall Street Journal last Thursday that Silver Lake is considering a bid was interestingly timed. The stock spiked briefly on Friday morning and eventually gave back those gains. Based on trading activity on Friday, the market appears to be taking these rumors with a pinch of salt.

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 2011180
Total Number of Deals Not Completed in 20115
Total Number of Pending Deals
Cash Deals35
Stock Deals17
Stock & Cash Deals9
Total Number of Pending Deals61

New Deals:

  1. The acquisition of Bluegreen Corporation (BXG) by BFC Financial Corporation (BFCF.PK) in an all stock deal, where shareholders of Bluegreen’s Common Stock will be entitled to receive eight shares of BFC’s Class A Common Stock for each share of Bluegreen’s Common Stock they hold. BFC currently owns approximately 52% of Bluegreen’s Common Stock. This is an interesting transaction given the spread, which is currently 15.15% or 24.8% annualized. Given that this is an all stock deal and that BFC Financial is traded on the pink sheets, shorting the company to capture the spread might be challenging. BFC Financial is an interesting company in its own right. The stock trades well below book value and the company owns a controlling interest in Florida based regional bank BankAtlantic (BBX) as well as a stake in Benihana (BNHN). BankAtlantic has a high Troubled Asset Ratio (TAR) of 82.9 as of Q2 2011 when compared to the national median TAR of 14.3 .
  2. The acquisition of Valpey-Fisher Corporation (VPF) by CTS Corporation for $18 million or $4.15 per share in cash.

Updated Deals:

  1. On November 16, 2011, Conmed Healthcare Management Inc. (CONM) terminated its agreement to be acquired by Ayelet Investments LLC, which was unable to obtain needed financing for the deal.

Top 10 deals with largest spreads:

SymbolAnnounced

Date

Acquiring

Company

Closing

Price

Last

Price

Closing

Date

ProfitAnnualized

Profit

AATI05/26/2011Skyworks Solutions, Inc. (SWKS)$6.13$4.2012/31/201145.96%419.35%
MHS07/21/2011Express Scripts, Inc. (ESRX)$64.42$55.2806/30/201216.53%27.17%
ABVA07/27/2011Eagle Bancorp, Inc. (EGBN)$6.00$5.1612/31/201116.29%148.66%
BXG11/14/2011BFC Financial Corporation (BFCF.PK)$3.04$2.6406/30/201215.15%24.91%
CADC10/24/2011Novel Gain Holdings Limited (N/A)$2.65$2.3503/31/201212.77%35.57%
VTRO10/17/2011Inuvo, Inc. (INUV)$1.67$1.4903/31/201212.06%33.60%
EP10/16/2011Kinder Morgan, Inc. (KMI)$27.44$24.8003/31/201210.64%29.64%
TAM01/19/2011LAN Airlines S.A. (LFL)$21.11$19.2512/31/20119.68%88.36%
LOOP04/27/2011CoStar Group (CSGP)$18.82$17.6112/31/20116.87%62.72%
HNB06/02/2011BankUnited Inc. (BKU)$3.48$3.3212/31/20114.68%42.75%

List of all pending deals:

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


SymbolAnnounced

Date

Acquiring

Company

Deal

Type

Closing

Value

Closing

Price

Last

Price

VolumeClosing

Date

ProfitAnnu.

Profit

+AATI05/26/2011Skyworks Solutions, Inc. (SWKS)Cash Plus Stock$258.6 million$6.13$4.20422,69512/31/201145.96%419.35%
+MHS07/21/2011Express Scripts, Inc. (ESRX)Cash Plus Stock$29.1 billion$64.42$55.283,252,07506/30/201216.53%27.17%
+ABVA07/27/2011Eagle Bancorp, Inc. (EGBN)All Stock$31.2 million$6.00$5.1613,07612/31/201116.29%148.66%
+BXG11/14/2011BFC Financial Corporation (BFCF.PK)All StockN/A$3.04$2.64157,40606/30/201215.15%24.91%
+CADC10/24/2011Novel Gain Holdings Limited (N/A)All CashN/A$2.65$2.3555,59503/31/201212.77%35.57%
+VTRO10/17/2011Inuvo, Inc. (INUV)All StockN/A$1.67$1.4926,14903/31/201212.06%33.60%
+EP10/16/2011Kinder Morgan, Inc. (KMI)Cash Plus Stock$21 billion$27.44$24.8012,059,29603/31/201210.64%29.64%
+TAM01/19/2011LAN Airlines S.A. (LFL)All StockN/A$21.11$19.25833,89612/31/20119.68%88.36%
+LOOP04/27/2011CoStar Group (CSGP)Cash Plus Stock$860 million$18.82$17.6156,25112/31/20116.87%62.72%
+HNB06/02/2011BankUnited Inc. (BKU)Cash Plus Stock$71.4 million$3.48$3.3220012/31/20114.68%42.75%
+ORCH04/06/2011Laboratory Corporation of America Holdings (LH)All Cash$85.4 million$2.80$2.6946,04011/30/20114.09%165.84%
+GR09/21/2011United Technologies Corp. (UTX)All Cash$18.4 billion$127.50$123.181,575,18806/30/20123.51%5.77%
+MMI08/15/2011Google (GOOG)All Cash$12.5 billion$40.00$38.7611,490,73001/31/20123.20%16.45%
+CEG04/28/2011Exelon Corporation (EXC)All Stock$7.9 billion$40.62$39.651,252,92801/31/20122.45%12.61%
+PVSA06/15/2011F.N.B. Corporation (FNB)All Stock$130 million$23.46$23.0515,04812/31/20111.77%16.11%
+STBC04/28/2011Valley National Bancorp (VLY)All Stock$222 million$11.83$11.6312,11901/15/20121.72%11.41%
+VPF11/17/2011CTS Corp (N/A)All Cash$18 million$4.15$4.0851,27401/31/20121.72%8.82%
+ADPI11/07/2011JLL Partners, Inc. (N/A)All Cash$398 million$19.00$18.69353,70003/31/20121.66%4.62%
+HGIC09/29/2011Nationwide Mutual Insurance Co (N/A)All Cash$760 million$60.00$59.0463,11301/31/20121.63%8.36%
+ENP07/11/2011Vanguard Natural Resources (VNR)All Stock$545 million$20.19$19.9055,96812/31/20111.46%13.30%
+NETL09/12/2011Broadcom (BRCM)All Cash$3.7 billion$50.00$49.371,182,90806/30/20121.28%2.10%
+PNS11/10/2011Avnet (AVT)All Cash$22 million$2.40$2.3741,24301/31/20121.27%6.51%
+NDN10/11/2011affiliates of Ares Management LLC and Canada Pension Plan Investment Board (N/A)All Cash$1.6 billion$22.00$21.73696,52603/31/20121.24%3.46%
+INXI11/01/2011Presidio (N/A)All CashN/A$8.75$8.6519,45603/31/20121.16%3.22%
+SONE10/03/2011ACI Worldwide (ACIW)Cash Plus Stock$516 million$9.82$9.71352,03812/31/20111.14%10.39%
+MSSR11/08/2011Landry’s, Inc. (N/A)All Cash$131.6 million$8.75$8.66335,88501/15/20121.04%6.90%
+PNNW11/12/2010City of Nashua (N/A)All Cash$138 million$29.00$28.717,23212/31/20111.01%9.22%
+FNDT06/27/2011GTCR (N/A)All Cash$352.7$23.33$23.1019,82912/31/20111.00%9.09%
+CPX10/10/2011Superior Energy Services (SPN)Cash Plus Stock$2.7 billion$33.99$33.69720,42712/31/20110.89%8.10%
+PAET08/01/2011Windstream Corp. (WIN)All Stock$2.3 billion$5.35$5.31495,62401/31/20120.84%4.30%
+HS10/24/2011Cigna (CI)All Cash$3.8 billion$55.00$54.65960,36206/30/20120.64%1.05%
+ACMR10/04/2011affiliate of Sbar’s Inc (N/A)All Cash$40.8 million$1.60$1.5950,16312/31/20110.63%5.74%
+TIN09/06/2011International Paper (IP)All Cash$4.3 billion$32.00$31.841,664,92803/31/20120.50%1.40%
+CLFC12/09/2010Nara Bancorp Inc. (NARA)All Stock$285.7 million$6.82$6.79147,02011/30/20110.45%18.33%
+PGN01/10/2011Duke Energy Corporation (DUK)All Stock$13.7 billion$52.69$52.461,031,32312/31/20110.45%4.07%
+GLBL09/12/2011Technip (N/A)All Cash$1.1 billion$8.00$7.97830,61201/31/20120.38%1.94%
+FRPT11/07/2011General Dynamics Corp. (GD)All Cash$360 million$5.52$5.50704,81812/31/20110.36%3.32%
+MFW09/12/2011MacAndrews and Forbes (N/A)All CashN/A$25.00$24.9161,03312/31/20110.36%3.30%
+RNOW10/24/2011Oracle (ORCL)All Cash$1.5 billion$43.00$42.85511,86303/31/20120.35%0.98%
+PPDI10/03/2011affiliates of The Carlyle Group and Hellman & Friedman (N/A)All Cash$3.9 billion$33.25$33.15953,86012/31/20110.30%2.75%
+CV07/12/2011Gaz metro Limited Partnership (N/A)All Cash$702 million$35.25$35.1557,03012/31/20110.28%2.60%
+BEXP10/17/2011Statoil ASA (STO)All Cash$4.4 billion$36.50$36.402,099,44203/31/20120.27%0.77%
+ANDS10/17/2011Roche (N/A)All Cash$230 million$3.70$3.69847,38312/31/20110.27%2.47%
+SWTX10/07/2011Solutia Inc. (SOA)All Cash$113 million$13.60$13.5829,02612/31/20110.15%1.34%
+AMAC09/22/2011Tunstall Healthcare Group Limited (N/A)All Cash$82.3 million$8.55$8.5440,07912/31/20110.12%1.07%
+BBND10/11/2011Arris Group Inc. (ARRS)All Cash$172 million$2.24$2.24998,49812/31/20110.00%0.00%
+NST10/18/2010Northeast Utilities (NU)All Stock$4.17 billion$45.26$45.31236,91112/31/2011-0.10%-0.93%
+NLC07/20/2011Ecolab Inc. (ECL)All Stock$5.4 billion$37.98$38.072,466,55812/31/2011-0.23%-2.13%
+PMIC09/08/2011Ace (ACE)All CashN/A$20.30$20.3614,40003/31/2012-0.29%-0.82%
+GAS12/07/2010AGL Resources Inc. (AGL)Cash Plus Stock$2.4 billion$55.57$55.79197,16512/31/2011-0.39%-3.52%
+DPL04/19/2011AES Corporation (AES)All Cash$4.7 billion$30.00$30.20497,77701/31/2012-0.66%-3.40%
+ICLK11/01/2011Yahoo! Inc. (YHOO)All Cash$270 million$9.00$9.06310,15403/31/2012-0.66%-1.85%
+TKLC11/07/2011a consortium led by Siris Capital Group, LLC (N/A)All Cash$780 million$11.00$11.081,030,06003/31/2012-0.72%-2.01%
+TOBC06/20/2011Susquehanna Bancshares (SUSQ)All Stock$343 million$26.61$26.8737,33603/31/2012-0.96%-2.68%
+SNSTA11/03/2011SAC an affiliate of Hospitality Properties Trust (N/A)All Cash$174 million$31.00$31.34N/A03/31/2012-1.08%-3.02%
+CTBC10/26/2011Berkshire Hills Bancorp, Inc. (BHLB)All Stock$30 million$7.37$7.5090104/30/2012-1.75%-3.97%
+BFSB08/17/2011Investors Bancorp, Inc. (ISBC)All Cash$10.3 million$0.80$0.8412,50012/31/2011-4.88%-44.49%
+ADLR10/24/2011Cubist Pharmaceuticals (CBST)All Cash$190 million$4.25$4.67247,89412/31/2011-8.99%-82.07%
+SUG06/16/2011Energy Transfer Equity (ETE)All Stock$9.4 billion$37.56$41.93424,38703/31/2012-10.42%-29.04%
+BARI04/20/2011Brookline Bancorp (BRKL)Cash Plus Stock$234 million$36.64$42.6710,73212/31/2011-14.12%-128.86%
+NYX02/15/2011Deutsche Boerse (N/A)All StockN/A$13.93$27.083,068,60512/31/2011-48.57%-443.24%

Voluntary Disclosure: I am going to start a position in Bluegreen Corporation (BXG) after this article is published. I currently own $16 December 2011 calls in Yahoo (YHOO).