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Merger Arbitrage Mondays – June 2, 2014

  • June 2, 2014

Merger Activity declined last week with one new merger announced and two deals closing.

We have made a change to the way we classify deals in our articles and the Merger Arbitrage Tool. We used to have four types of deals listed including,

  1. cash only deals
  2. stock only deals
  3. cash plus stock deals
  4. special conditions

The special conditions deals were the ones that had collars where the number of shares in a stock only deal could vary based on the closing price of the acquiring company. Our system was set up to handle two collars. Recently we came across a deal that had three collars defined in the deal and we have also come across several deals that did not fit any of the four types mentioned above. These were deals that included contingent value rights (CVRs) and other conditions. We have usually treated those types of deals as “cash only deals” and have mentioned the special circumstances of the deal in our write-ups.

Going forward, we are going to classify these types of deals (the ones with CVRs and other conditions) as “special conditions” and are going to classify deals with two collars as “collars”. Hopefully this will help make things easier for those of you that prefer to focus on cash only deals and will make the tool more useful. As always we love to hear feedback on how we can improve this product.

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 201468
Total Number of Pending Deals
Cash Deals28
Stock Deals17
Stock & Cash Deals10
Special Conditions9
Total Number of Pending Deals64
Total Deal Size$302.86 billion

New Deals:

  1. The acquisition of PetroLogistics (PDH) by Flint Hills Resources, LLC for $2.1 billion or $14.00 per share in cash.

Deal Updates:

  1. On May 30, 2014, WSP Holdings (WH) announced that it has terminated its previously announced merger agreement for a going private transaction with Wuxi Heavy Industries, Ltd. (“Parent”), WHI Acquisitions, Ltd. (“Merger Sub”) and General Transactions, Inc.
  2. Hillshire Brands (HSH) received two buyout offers from Tyson Foods (TSN) and Pilgrim’s Pride (PPC) last week. These two companies might not want Hillshire to go forward with its acquisition of Pinnacle Foods (PF) and that’s the reason why the spread for Pinnacle Foods is very high this week.

Closed Deals:

  1. The acquisition of Zale Corporation (ZLC) by Signet Jewelers Limited (SIG) on May 29, 2014. It took 99 days for this deal to be completed.
  2. The acquisition of ArthroCare Corporation (ARTC) by Smith & Nephew on May 29, 2014. It took 115 days for this deal to be completed.

Top 10 deals with largest spreads:

SymbolAnnounced

Date

Acquiring

Company

Closing

Price

Last

Price

Closing

Date

ProfitAnnualized

Profit

PF05/12/2014The Hillshire Brands Company (HSH)$44.64$31.3109/30/201442.57%129.50%
CHTP05/08/2014H. Lundbeck A/S (N/A)$7.94$6.5309/30/201421.59%65.68%
TWGP01/06/2014ACP Re Ltd. (N/A)$2.50$2.1511/15/201416.28%35.79%
DTV05/18/2014AT&T, Inc. (T)$95.00$82.4405/31/201515.24%15.32%
EDS12/02/2013Pan Long Company Limited (N/A)$1.78$1.6003/31/201411.25%-65.18%
OVRL05/15/2014Sphere 3D Corporation (SPIHF)$4.29$3.8609/30/201411.11%33.80%
SYNM12/17/2013Renewable Energy Group, Inc. (REGI)$3.77$3.4003/31/201410.80%-62.55%
FFKY04/22/2014Community Bank Shares of Indiana Inc. (CBIN)$3.93$3.5512/31/201410.76%18.53%
QCOR04/07/2014Mallinckrodt plc (MNK)$99.75$90.1309/30/201410.67%32.47%
LIN03/22/2014Media General, Inc. (MEG)$27.82$25.1403/31/201510.66%12.88%

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

+PF05/12/2014The Hillshire Brands Company (HSH)Cash Plus Stock$4.3 billion$44.64$31.31949,25309/30/201442.57%129.50%
+CHTP05/08/2014H. Lundbeck A/S (N/A)Special Conditions$658 million$7.94$6.531,717,01009/30/201421.59%65.68%
+TWGP01/06/2014ACP Re Ltd. (N/A)All Cash$172.1$2.50$2.15954,95811/15/201416.28%35.79%
+DTV05/18/2014AT&T, Inc. (T)Special Conditions$48.5 billion$95.00$82.448,259,13405/31/201515.24%15.32%
+EDS12/02/2013Pan Long Company Limited (N/A)All Cash$60.1 million$1.78$1.6039,35403/31/201411.25%0.00%
+OVRL05/15/2014Sphere 3D Corporation (SPIHF)All Stock$81.13 million$4.29$3.8633,41709/30/201411.11%33.80%
+SYNM12/17/2013Renewable Energy Group, Inc. (REGI)All StockN/A$3.77$3.4068,40503/31/201410.80%0.00%
+FFKY04/22/2014Community Bank Shares of Indiana Inc. (CBIN)All Stock$17.9 million$3.93$3.5534312/31/201410.76%18.53%
+QCOR04/07/2014Mallinckrodt plc (MNK)Cash Plus Stock$5.6 billion$99.75$90.131,548,21909/30/201410.67%32.47%
+LIN03/22/2014Media General, Inc. (MEG)Special Conditions$2.6 billion$27.82$25.14115,56903/31/201510.66%12.88%
+NICK12/18/2013an indirect wholly-owned subsidiary of Prospect Capital Corporation (“Prospect”) (N/A)All Cash$340 million$16.00$14.5822,63406/12/20149.74%355.49%
+RDA11/11/2013Tsinghua Unigroup Ltd. (N/A)All Cash$910 million$18.50$16.93344,76706/30/20149.27%120.89%
+TWC02/13/2014Comcast Corporation (CMCSA)All Stock$45.2 billion$150.08$141.16844,81112/31/20146.32%10.87%
+DCIN05/15/2014Carmike Cinemas Inc. (CKEC)All StockN/A$6.11$5.77118,44009/30/20145.82%17.71%
+SWY03/06/2014AB Acquisition LLC (N/A)Special ConditionsN/A$36.15$34.342,667,21012/31/20145.27%9.07%
+CHRM05/19/2014Engadin Parent Limited (N/A)Special ConditionsN/A$4.70$4.5059809/30/20144.44%13.52%
+HCBK08/27/2012M&T Bank Corporation (MTB)All Stock$3.7 billion$10.20$9.774,317,10412/31/20144.39%7.56%
+NINE01/29/2014Ninetowns Holdings Limited (“Parent”) (N/A)All CashN/A$1.80$1.74N/A06/30/20143.45%44.95%
+FUBC05/08/2014Valley National Bancorp (VLY)All Stock$312 million$8.62$8.3584,15110/31/20143.28%7.93%
+NED04/02/2014Rainbow Education Holding Limited (N/A)All CashN/A$2.85$2.766,72508/15/20143.26%16.08%
+OBAF04/08/2014F.N.B. Corporation (FNB)All Stock$94 million$21.80$21.1512,75009/30/20143.07%9.34%
+EQU12/09/2013Petroflow Energy Corporation (N/A)All Cash$230 million$5.43$5.27222,13407/31/20143.04%18.78%
+SUSS04/28/2014Energy Transfer Partners, L.P. (ETP)All Stock$1.8 billion$81.70$79.31555,19609/30/20143.01%9.16%
+SPBC05/05/2014Green Bank (N/A)All Cash$46.2 million$29.55$28.707,68309/30/20142.96%9.01%
+PTEK04/30/2014Multimedia Games, Inc. (N/A)All CashN/A$1.35$1.31369,44912/31/20142.82%4.85%
+OABC04/29/2014Southside Bancshares Inc. (SBSI)Cash Plus Stock$307 million$24.64$24.0792,11312/31/20142.36%4.06%
+CHC01/13/2014CPT Wyndham Holdings Ltd. (N/A)All CashN/A$3.51$3.4313,16306/30/20142.33%30.40%
+FFCO04/14/2014CB Financial Services, Inc. (CBFV)All Stock54.5 million$22.60$22.1090011/15/20142.26%4.98%
+GA03/16/2014Giant Investment Limited (�Parent�) and Giant Merger Limited (N/A)All Cash$3 billion$12.00$11.76708,66912/31/20142.04%3.51%
+HAST03/17/2014Affiliate of Joel Weinshanker (N/A)All Cash$21.4 million$3.00$2.957,91006/30/20141.69%22.09%
+ICH10/28/2013RCS Capital Corporation (N/A)All Cash$52.5 million$7.25$7.142,55803/31/20141.54%0.00%
+DLLR04/02/2014affiliate of Lone Star Funds (N/A)All Cash$1.3 billion$9.50$9.371,697,51309/30/20141.39%4.22%
+TQNT02/24/2014RF Micro Devices Inc. (RFMD)All Stock$1.6 billion$15.76$15.561,804,51612/31/20141.30%2.23%
+FRX02/18/2014Actavis plc (ACT)Cash Plus Stock$25 billion$95.98$94.787,025,49606/30/20141.26%16.44%
+NOVB01/21/2014TriCo Bancshares (TCBK)All Stock$178.4 million$21.59$21.342,61706/30/20141.18%15.40%
+TSH01/13/2014IberiaBank Corp. (IBKC)All Stock$161 million$72.58$71.823,95906/30/20141.06%13.77%
+ESC02/20/2014Brookdale Senior Living Inc. (BKD)All Stock$2.8 billion$31.60$31.28239,60309/30/20141.01%3.08%
+CBEY04/21/2014Birch Communications, Inc. (N/A)Special Conditions$323 million$9.97$9.87690,40710/31/20141.01%2.45%
+NTS10/21/2013Tower Three Partners LLC (N/A)All Cash$83 million$2.00$1.98415,49103/31/20141.01%0.00%
+AMAP04/11/2014affiliate of Alibaba Group Holding Limited (“Alibaba”) (N/A)All Cash$1.5 billion$21.00$20.83193,18309/30/20140.82%2.48%
+DFZ05/02/2014Mill Road Capital (N/A)All Cash$215 million$19.00$18.8819,37109/30/20140.64%1.93%
+YONG04/09/2014Full Alliance International Limited (N/A)All Cash$339 million$7.10$7.06189,04809/30/20140.57%1.72%
+PACR01/06/2014XPO Logistics, Inc. (XPO)Special Conditions$296 million$9.00$8.96N/A06/30/20140.45%5.82%
+CNOB01/21/2014Center Bancorp, Inc. (CNBC)All Stock$243 million$48.26$48.063,94809/30/20140.41%1.24%
+TAYC07/15/2013MB Financial Inc. (MBFI)Cash Plus Stock$680 million$21.26$21.1932,21406/30/20140.34%4.49%
+FWLT02/13/2014AMEC PLC (AMCBF)Cash Plus Stock$3.3 billion$33.94$33.86347,45612/31/20140.24%0.42%
+ARX05/20/2014Cobham plc (N/A)All Cash$1.46 billion$10.50$10.48359,50909/30/20140.19%0.58%
+ZIGO04/11/2014AMETEK, Inc. (AME)All Cash$280 million$19.25$19.22142,87206/30/20140.16%2.03%
+ANLY08/28/2013ACS Motion Control, Ltd. (ACSEF)All Cash$35 million$6.45$6.44N/A12/31/20130.16%0.00%
+VOCS04/07/2014GTCR Valor Merger Sub, Inc., an affiliate of GTCR LLC (N/A)All Cash$446.5 million$18.00$17.98138,19206/30/20140.11%1.45%
+TXI01/28/2014Martin Marietta Materials Inc. (MLM)All Stock$2.7 billion$85.96$85.89168,66806/30/20140.08%1.06%
+JOSB03/11/2014The Men’s Wearhouse, Inc. (MW)All Cash$1.8 billion$65.00$64.954,003,66906/30/20140.08%1.00%
+MKTG12/20/2013Oracle Corporation (ORCL)All Cash$1.5 billion$27.00$26.98N/A06/30/20140.07%0.97%
+EPL03/12/2014Energy XXI (Bermuda) Limited (EXXI)Cash Plus Stock$2.3 billion$37.88$37.91331,79306/30/2014-0.09%-1.14%
+JFBI01/23/2014HomeTrust Bancshares, Inc. (HTBI)Special Conditions$51.2 million$8.00$8.022,20506/30/2014-0.25%-3.25%
+SGK03/17/2014Matthews International Corporation (MATW)Cash Plus Stock$577 million$20.24$20.3078,95409/30/2014-0.30%-0.92%
+ISS06/06/2013Mr. Tianwen Liu, the Company’s CEO and the chairman of its Board of Directors, and ChinaAMC Capital Management Limited (N/A)All CashN/A$5.45$5.4921,88009/30/2014-0.73%-2.22%
+SWS04/01/2014Hilltop Holdings Inc. (HTH)Cash Plus Stock$260 million$7.12$7.18197,15512/31/2014-0.85%-1.46%
+NDZ03/28/2014Sterigenics (N/A)All Cash$727 million$11.75$11.95386,46212/31/2014-1.67%-2.88%
+PDH05/28/2014Flint Hills Resources, LLC (N/A)All Cash$2.1 billion$14.00$14.41898,26012/31/2014-2.85%-4.90%
+VSB01/27/2014Yadkin Financial Corporation (YDKN)All Stock$299 million$5.89$6.0913,72206/30/2014-3.27%-42.68%
+FURX04/28/2014Forest Laboratories Inc. (FRX)Special Conditions$1.1 billion$95.00$103.36264,74609/30/2014-8.09%-24.60%
+FBMI08/15/2013Mercantile Bank Corp. (MBWM)Cash Plus Stock$151.5 million$19.43$21.5961,45306/30/2014-10.00%-130.42%
+CHDX02/17/2014a buyer consortium (the “Buyer Consortium”) of an affiliate of TPG (together with its affiliates, “TPG”), an affiliate of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun”), and Ms. Roberta Lipson, the CEO of the Company (N/A)All Cash$369 million$19.50$23.6851,94112/31/2014-17.65%-30.39%

Voluntary Disclosure: I hold a long position in Safeway (SWY).

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria