Merger Arbitrage Mondays – April 11, 2016

  • April 10, 2016

Even as company insiders took a break from buying their own stock, the M&A folks stepped up their game with six new deals announced and eight closing. However what stood out was not the number of deals but the number of M&A related lawsuits that were filed and the regulatory actions taken to block certain deals.

The mutually agreed upon termination of the Pfizer – Allergan deal mentioned in the “Deal Updates” section below was driven by the Treasury Department unveiling a set of rules targeting inversions and specifically the Pfizer – Allergan deal. Then there was the lawsuit by the Justice Department to block the Halliburton – Baker Hughes merger. To top it off, Williams Companies (WMB) decided to sue its merger partner Energy Transfer Equity (ETE) to unwind a private offering by ETE that was not beneficial to Williams Companies. ETE investors bid the stock up 17% last week following this development.

These actions are reminders to merger arbitrageurs about some of the risks involved in this strategy. Some of the spreads are large for a reason. Towards the end of March, I was exchanging thoughts with an investor on Twitter who said, “Announced deal merger arb spreads are wider than they have been in years”.  My response was “Only for the ones with regulatory risk (Office depot, Anthem), in the energy sector or Chinese going private mergers”.

Speaking of Office Depot (ODP), the stock is up a whopping 48% over the last month after a federal judge expressed skepticism about the government’s case to block the merger with Staples (SPLS). We do have a new Chinese going private merger as discussed in the New Deals section below and unsurprisingly the spread on the deal is a large 9.64% (13.28% annualized).

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 201658
Total Number of Deals Not Completed in 20163
Total Number of Pending Deals
Cash Deals46
Stock Deals16
Stock & Cash Deals19
Special Conditions6
Total Number of Pending Deals87
Total Deal Size$781.08 billion

New Deals:

  1. The acquisition of Virgin America (VA) by Alaska Air Group (ALK) for $4 billion or $57.00 per share in cash.
  2. The acquisition of Chicopee Bancorp (CBNK) by Westfield Financial (WFD) in an all stock deal. Under the terms of the agreement, shareholders of Chicopee Bancorp will receive 2.425 shares of Westfield common stock for each share of Chicopee common stock.
  3. The acquisition of Ruckus Wireless (RKUS) by Brocade Communications Systems (BRCD) for approximately $1.2 billion in a cash plus stock deal. Under the terms of the agreement, shareholders of Ruckus Wireless will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock.
  4. The acquisition of Ku6 Media (KUTV) by Shanda Investment Holdings Limited for $1.08 per American Depositary Share of the Company.
  5. The acquisition of SL Industries (SLI) by Handy & Harman (HNH) for $166.32 million or $40.00 per share in cash.
  6. The acquisition of Alliance Fiber Optic Products (AFOP) by Corning (GLW) for $305 million or $18.50 per share in cash.

Deal Updates:

  1. On April 6, 2016, Pfizer (PFEannounced that the merger agreement between Pfizer and Allergan (AGN) has been terminated by mutual agreement of the companies.

Closed Deals:

  1. The acquisition of Homeinns Hotel Group (HMIN) by BTG Hotels Group on April 1, 2016. It took 116 days for this deal to be completed.
  2. The acquisition of Lake Shore Gold (LSG) by Tahoe Resources (TAHO) on April 1, 2016. It took 53 days for this deal to be completed.
  3. The acquisition of National Penn Bancshares (NPBC) by BB&T Corporation (BBT) on April 4, 2016. It took 231 days for this deal to be completed.
  4. The acquisition of LeapFrog Enterprises (LF) by VTech Holdings Limited on April 4, 2016. It took 59 days for this deal to be completed.
  5. The acquisition of Rentech Nitrogen Partners (RNF) by CVR Partners (UAN) on April 4, 2016. It took 238 days for this deal to be completed.
  6. The acquisition of Atmel Corporation (ATML) by Microchip Technology (MCHP) on April 4, 2016. It took 76 days for this deal to be completed.
  7. The acquisition of Youku Tudou (YOKU) by Alibaba Group Holding Limited (BABA) on April 5, 2016. It took 151 days for this deal to be completed.
  8. The acquisition of JAVELIN Mortgage Investment (JMI) by ARMOUR Residential REIT (ARR) on April 6, 2016. It took 35 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

WMB09/28/2015Energy Transfer Equity, L.P. (ETE)$43.50$16.2406/30/2016167.86%765.85%
BHI11/16/2014Halliburton Company (HAL)$60.81$43.1104/30/201641.06%788.72%
CI07/24/2015Anthem, Inc. (ANTM)$177.45$130.4112/31/201636.07%49.88%
HUM07/03/2015Aetna Inc. (AET)$216.18$171.0312/31/201626.40%36.50%
ODP02/04/2015Staples, Inc. (SPLS)$9.66$7.6605/16/201626.13%272.45%
APOL02/08/2016A consortium of investors including The Vistria Group, LLC, funds affiliated with Apollo Global Management, LLC and and Najafi Companies (N/A)$9.50$7.81512/31/201621.56%29.81%
NKA06/14/2015Brookfield Infrastructure (N/A)$4.23$3.5212/31/201620.17%27.89%
RAD10/27/2015Walgreens Boots Alliance, Inc. (WBA)$9.00$8.0212/31/201612.22%16.89%
BXLT01/11/2016Shire plc (SHPG)$44.86$40.2606/30/201611.42%52.11%
ALR02/01/2016Abbott Laboratories (ABT)$56.00$50.2806/30/201611.38%51.90%

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

+WMB09/28/2015Energy Transfer Equity, L.P. (ETE)Special Conditions$37.7 billion$43.50$16.2416,672,80106/30/2016167.86%765.85%
+BHI11/16/2014Halliburton Company (HAL)Cash Plus StockN/A$60.81$43.115,278,74104/30/201641.06%788.72%
+CI07/24/2015Anthem, Inc. (ANTM)Cash Plus Stock$54.2 billion$177.45$130.412,366,86312/31/201636.07%49.88%
+HUM07/03/2015Aetna Inc. (AET)Cash Plus Stock$37 billion$216.18$171.031,404,74912/31/201626.40%36.50%
+ODP02/04/2015Staples, Inc. (SPLS)Cash Plus Stock$6.3 billion$9.66$7.664,191,93305/16/201626.13%272.45%
+APOL02/08/2016A consortium of investors including The Vistria Group, LLC, funds affiliated with Apollo Global Management, LLC and and Najafi Companies (N/A)All Cash$1.1 billion$9.50$7.8152,096,04812/31/201621.56%29.81%
+NKA06/14/2015Brookfield Infrastructure (N/A)All Cash$911.9 million$4.23$3.5213,86912/31/201620.17%27.89%
+RAD10/27/2015Walgreens Boots Alliance, Inc. (WBA)All Cash$17.2 billion$9.00$8.0213,075,07212/31/201612.22%16.89%
+BXLT01/11/2016Shire plc (SHPG)Cash Plus Stock$32 billion$44.86$40.266,075,10706/30/201611.42%52.11%
+ALR02/01/2016Abbott Laboratories (ABT)All Cash$5.8 billion$56.00$50.28542,21606/30/201611.38%51.90%
+IM02/17/2016Tianjin Tianhai Investment Company, Ltd. (N/A)All Cash$6 billion$38.90$35.041,142,58412/31/201611.02%15.23%
+KUTV04/05/2016Shanda Investment Holdings Limited (N/A)All CashN/A$1.08$0.98550,71112/31/20169.64%13.33%
+VBIV10/26/2015SciVac Therapeutics Inc. (SVACF)All StockN/A$2.50$2.2867,94204/30/20169.52%182.84%
+HTCH11/02/2015TDK Corporation (N/A)Special Conditions$126 million$4.00$3.69113,75906/30/20168.40%38.33%
+TYC01/25/2016Johnson Controls Inc. (JCI)All Stock$16.5 billion$38.24$35.422,569,57909/30/20167.96%16.88%
+ITC02/09/2016Fortis Inc. (FTS.TO)Cash Plus Stock$11.3 billion$45.64$42.91870,23112/31/20166.36%8.79%
+AMTG02/26/2016Apollo Commercial Real Estate Finance, Inc. (ARI)Cash Plus Stock$641 million$14.14$13.31128,89308/15/20166.20%17.96%
+CVC09/17/2015Altice (N/A)All Cash$17.7 billion$34.90$32.931,657,27506/30/20165.98%27.29%
+NPD03/16/2016China Neptunus Drugstore Holding Ltd. and Neptunus Global Limited (N/A)All Cash$258.66 million$2.62$2.4849,00509/30/20165.65%11.98%
+VAL03/20/2016The Sherwin-Williams Company (SHW)All Cash$11.3 billion$113.00$107.01729,30403/31/20175.60%5.77%
+HE12/03/2014NextEra Energy, Inc. (NEE)Special Conditions$4.3 billion$33.50$32.02256,71006/30/20164.62%21.09%
+MY02/03/2016A consortium of investors (the �Buyer Consortium�), including Mr. Chuanwei Zhang , the Chairman and Chief Executive Officer of the Company (N/A)All Cash$408 million$2.51$2.40405,59106/30/20164.58%20.91%
+AF10/29/2015New York Community Bancorp Inc. (NYCB)Cash Plus Stock$2 billion$15.53$14.85606,25912/31/20164.58%6.33%
+MTSN12/01/2015Beijing E-Town Dragon Semiconductor Industry Investment Center (N/A)All Cash$300 million$3.80$3.64194,89506/30/20164.40%20.05%
+FGL11/09/2015Anbang Insurance Group Co., Ltd. (N/A)All CashN/A$26.80$25.73937,36006/30/20164.16%18.97%
+CBNK04/04/2016Westfield Financial Inc. (WFD)All Stock$110 million$18.33$17.6813,26612/31/20163.69%5.11%
+MCOX12/22/2015Minat Associated Co. Ltd. (N/A)All CashN/A$4.00$3.873,00006/30/20163.36%15.33%
+VA04/04/2016Alaska Air Group, Inc. (ALK)All Cash$4 billion$57.00$55.151,407,85901/01/20173.35%4.62%
+MEG01/27/2016Nexstar Broadcasting Group, Inc. (NXST)Special Conditions$4.6 billion$17.14$16.60507,64112/15/20163.25%4.79%
+BNK11/09/2015Bank of the Ozarks, Inc. (OZRK)Special Conditions$402.5 million$25.00$24.2733,15504/30/20163.01%57.78%
+TWC05/26/2015Charter Communications, Inc. (CHTR)Cash Plus Stock$78.7 billion$209.56$204.461,158,86206/30/20162.49%11.38%
+FCTY03/10/2016Midland Financial Co. (N/A)All CashN/A$11.22$10.999,96812/31/20162.09%2.89%
+EDE02/09/2016Algonquin Power & Utilities Corp. (AQN.TO)All Cash$2.4 billion$34.00$33.37585,03103/31/20171.89%1.95%
+DATE12/07/2015FutureWorld Inc. (N/A)All CashN/A$7.56$7.4320,86104/30/20161.75%33.61%
+SNDK10/21/2015Western Digital Corporation (WDC)Cash Plus Stock$19 billion$77.79$76.522,402,45809/30/20161.66%3.52%
+PNX09/29/2015Nassau Reinsurance Group Holdings L.P. (N/A)All Cash$217.2 million$37.50$36.9029,82906/30/20161.63%7.42%
+ATNY02/29/2016an affiliate of private equity firm J. F. Lehman & Company (N/A)All Cash$110 million$2.00$1.9716,45806/30/20161.52%6.95%
+FMER01/26/2016Huntington Bancshares Incorporated (HBAN)Cash Plus Stock$3.4 billion$21.05$20.741,026,01309/30/20161.48%3.15%
+ADT02/16/2016An Affiliate of Certain Funds Managed By Affiliates of Apollo Global Management, LLC (N/A)All Cash$6.94 billion$42.00$41.442,341,73306/30/20161.35%6.17%
+MNRK12/17/2015Towne Bank (TOWN)All Stock$221 million$17.05$16.8315,31206/30/20161.31%5.98%
+FNFG10/30/2015KeyCorp. (KEY)Cash Plus Stock$4.1 billion$9.59$9.471,046,28609/30/20161.26%2.68%
+IHS03/21/2016Markit Ltd. (MRKT)All StockN/A$121.67$120.18333,59212/31/20161.24%1.72%
+WIBC12/07/2015BBCN Bancorp, Inc. (BBCN)All Stock$1 billion$10.26$10.14196,80606/30/20161.21%5.52%
+DSKY12/31/2015Dream Investment Holdings Limited (N/A)All CashN/A$14.00$13.8673,24906/30/20161.01%4.61%
+CPGX03/17/2016TransCanada Corporation (TRP)All Cash$13 billion$25.50$25.255,293,27112/31/20160.99%1.37%
+GAS08/24/2015Southern Company (SO)All Cash$12 billion$66.00$65.38383,83612/31/20160.95%1.31%
+CNL10/20/2014Macquarie Infrastructure and Real Assets (MIRA) and British Columbia Investment Management Corporation (bcIMC) (N/A)All Cash$4.7 billion$55.37$54.875,288,06304/30/20160.91%17.51%
+RRM02/26/2016SES (N/A)All Cash$242 million$13.29$13.1949308/15/20160.76%2.20%
+HOT11/16/2015Marriott International, Inc. (MAR)Special Conditions$13.6 billion$79.53$78.977,640,46706/30/20160.71%3.24%
+KLAC10/21/2015Lam Research Corporation (LRCX)Cash Plus Stock$10.6 billion$72.56$72.07599,77906/30/20160.68%3.10%
+ARG11/17/2015Air Liquide (N/A)All Cash$13.4 billion$143.00$142.05367,70708/15/20160.67%1.94%
+NTI12/21/2015Western Refining, Inc. (WNR)Cash Plus StockN/A$23.53$23.38105,15006/30/20160.62%2.83%
+BONA12/15/2015Mountain Tiger International Limited (N/A)All Cash$1 billion$13.70$13.63429,72406/30/20160.51%2.34%
+FCS11/18/2015ON Semiconductor Corp. (ON)All Cash$2.4 billion$20.00$19.901,271,99204/14/20160.50%61.14%
+CBNJ01/05/2016OceanFirst Financial Corp. (OCFC)Cash Plus Stock$208.1 million$13.53$13.4713,91509/30/20160.47%1.00%
+RSTI03/16/2016Coherent Inc. (COHR)All Cash$942 million$32.50$32.36476,94012/31/20160.43%0.60%
+PULB12/03/2015First Busey Corporation (BUSE)All Stock$210.7 million$15.56$15.5010,38606/30/20160.41%1.85%
+TFM03/14/2016Apollo Global Management, LLC (APO)All Cash$1.36 billion$28.50$28.391,189,13906/30/20160.39%1.77%
+SLI04/07/2016Handy & Harman Ltd. (HNH)All Cash$166.32 million$40.00$39.8554,43506/30/20160.38%1.72%
+TE09/05/2015Emera (N/A)All Cash$10.4 billion$27.55$27.451,264,54206/30/20160.36%1.66%
+AVNU01/29/2016Pinnacle Financial Partners Inc. (PNFP)Cash Plus Stock$201.4 million$19.35$19.2925,91609/15/20160.30%0.70%
+JAH12/14/2015Newell Rubbermaid Inc. (NWL)Cash Plus Stock$13 billion$58.79$58.625,139,49106/30/20160.29%1.32%
+AFOP04/07/2016Corning Inc. (GLW)All Cash$305 million$18.50$18.4510,044,89006/30/20160.27%1.24%
+VSCP03/25/2016BioTelemetry, Inc. (BEAT)All Cash$15.5 million$4.05$4.046,68609/30/20160.25%0.53%
+PNY10/26/2015Duke Energy Corporation (DUK)All Cash$6.7 billion$60.00$59.86378,99612/31/20160.23%0.32%
+TUMI03/03/2016Samsonite International S.A. (N/A)All Cash$1.8 billion$26.75$26.69294,65706/30/20160.22%1.03%
+BLT12/10/2015American Securities LLC and P2 Capital Partners, LLC (N/A)All Cash$855 million$10.00$9.98532,39206/30/20160.20%0.91%
+HPY12/15/2015Global Payments Inc. (GPN)Cash Plus Stock$4.3 billion$101.56$101.38228,07805/31/20160.18%1.30%
+CKEC03/03/2016AMC Entertainment Holdings, Inc. (AMC)All Cash$1.1 billion$30.00$29.95297,68112/31/20160.17%0.23%
+POWR02/24/2016Southern Company (SO)All Cash$431 million$18.75$18.72264,53206/30/20160.16%0.73%
+NEWP02/23/2016MKS Instruments, Inc. (MKSI)All Cash$980 million$23.00$22.99167,57006/30/20160.04%0.20%
+RKUS04/04/2016Brocade Communications Systems, Inc. (BRCD)Cash Plus Stock$1.2 billion$13.73$13.723,197,13607/31/20160.04%0.12%
+NTLS08/10/2015Shenandoah Telecommunications Co. (SHEN)All Cash$640 million$9.25$9.25211,70203/31/20160.00%0.00%
+JMG10/07/2015Gannett Co., Inc. (GCI)All Cash$280 million$12.00$12.01352,88004/30/2016-0.08%-1.60%
+STR02/01/2016Dominion Resources, Inc. (D)All Cash$4.4 billion$25.00$25.031,060,14512/15/2016-0.12%-0.18%
+RSE02/25/2016an affiliate of Brookfield Asset Management Inc. (N/A)All Cash$2.8 billion$18.25$18.3195,21009/30/2016-0.33%-0.70%
+CKP03/02/2016an affiliate of CCL Industries Inc. (N/A)All Cash$443 million$10.15$10.20316,35909/30/2016-0.49%-1.04%
+BITI01/19/2016Acorda Therapeutics, Inc. (ACOR)All Cash$363 million$25.60$25.7917,53509/30/2016-0.74%-1.56%
+WCN01/19/2016Progressive Waste Solutions Ltd. (BIN)All StockN/A$63.36$63.94618,71306/30/2016-0.90%-4.11%
+COB11/23/2015Capital Bank Financial Corp. (CBF)All Stock$350 million$12.81$13.03223,70903/31/2016-1.69%56.10%
+CHEV11/24/2015MainSource Financial Group, Inc. (MSFG)All Stock$107.4 million$14.21$14.5328709/30/2016-2.19%-4.64%
+FXCB12/08/2015Univest Corporation of Pennsylvania (UVSP)All Stock$244.3 million$18.62$19.2222,45209/30/2016-3.15%-6.68%
+HFFC11/30/2015Great Western Bancorp. Inc. (GWB)All Stock$139.5 million$17.46$18.038,49306/30/2016-3.17%-14.45%
+LPSB03/10/2016Horizon Bancorp (HBNC)All Stock$94.1 million$15.15$15.804,32009/30/2016-4.14%-8.78%
+ABCW01/12/2016Old National Bancorp. (ONB)All Stock461 million$41.61$44.1823,33006/30/2016-5.81%-26.52%
+FSYS09/01/2015Westport Innovations Inc. (WPRT)All Stock$126.36 million$4.92$5.4421,07103/31/2016-9.60%318.41%
+CACQ12/22/2014Caesars Entertainment Corporation (CZR)All StockN/A$4.50$5.6415,89703/31/2015-20.18%19.54%

Disclaimer: Clients of Signal Partners, LLC  and I may have positions in any of these stocks at any time. Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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