Merger Arbitrage Mondays – August 1, 2016
Merger activity held steady last week with six new deals announced and four deals 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 2016 | 126 |
| Total Number of Deals Not Completed in 2016 | 10 |
| Total Number of Pending Deals |
| Cash Deals | 56 |
| Stock Deals | 17 |
| Stock & Cash Deals | 15 |
| Special Conditions | 9 |
| Total Number of Pending Deals | 97 |
| Total Deal Size | $969.38 billion |
New Deals:
- The acquisition of Outerwall (OUTR) by affiliates of certain funds managed by affiliates of Apollo Global Management for $1.6 billion or $52.00 per share in cash.
- The acquisition of National Interstate Corporation (NATL) by Great American Insurance Company for $660 million or $32.00 per share in cash. In addition, National Interstate will pay a special dividend of $0.50 per common share upon the closing of the merger.
- The acquisition of Linear Technology Corporation (LLTC) by Analog Devices (ADI) for $14.8 billion in a cash plus stock deal. Under the terms of the agreement, Linear Technology shareholders will receive $46.00 per share in cash and 0.2321 of a share of Analog Devices common stock for each share of Linear Technology common stock they hold at closing.
- The acquisition of Epiq Systems (EPIQ) by OMERS Private Equity and Harvest Partners for $1 billion or $16.50 per share in cash. The transaction is expected to close in the fourth quarter of 2016.
- The acquisition of Sequenom (SQNM) by Laboratory Corporation of America Holdings (LH) for $371 million or $2.40 per share in cash. The transaction is expected to close by the end of 2016.
- The acquisition of the core business and real estate of Yahoo! (YHOO) by Verizon (VZ) for $4.83 billion in cash. This acquisition excludes Yahoo!’s stake in Alibaba (BABA), Yahoo! Japan, certain minority investments and its non-core patents (called the Excalibur portfolio). Since this is not an acquisition of the entire company, we have not added this deal to our mergers database.
Deal Updates:
- On July 25, 2016, AMC Theatres (AMC) announced that it has entered into an amended and restated merger agreement pursuant to which AMC will acquire all outstanding shares of Carmike Cinemas (CKEC) for $33.06 per share in cash and stock. The amended merger agreement represents AMC’s “best and final” offer. The revised offer provides an additional $3.06 per share or 10.2% more than the previous offer. Carmike stockholders can elect to receive $33.06 in cash or 1.0819 AMC shares per Carmike share.
- On July 27, 2016 Alere (ALR) received a U.S. Department of Justice subpoena regarding government-billing practices. The company released a statement claiming that the billing concerned “accounted for significantly less than 1% of Alere’s total revenues” and is not material. Abbott Laboratories (ABT) already attempted to end its $5.8 billion acquisition of Alere in April. In related news, the CEO of Abbott made a large $31.62 million open market purchase of company stock and exercised 550,000 options without selling them immediately.
- On July 27, 2016 Hutchinson Technology (HTCH) reported that it received a letter from the Antitrust Division of the DOJ, which has opened an investigation relating to the sale of suspension assemblies for use in hard disk drives. The DOJ’s letter stated that neither HTI nor any HTI employee is currently a subject of the DOJ investigation. The FTC review of Hutchinson’s acquisition by TDK is still in progress.
Closed Deals:
- The acquisition of ExamWorks (EXAM) by Leonard Green & Partners, L.P on July 27, 2016. It took 91 days for this deal to be completed.
- The acquisition of SciQuest (SQI) by affiliates of Accel-KKR on July 28, 2016. It took 58 days for this deal to be completed.
- The acquisition of Hansen Medical (HNSN) by Auris Surgical Robotics on July 28, 2016. It took 99 days for this deal to be completed.
- The acquisition of Krispy Kreme Doughnuts (KKD) by JAB Beech on July 28, 2016. It took 80 days for this deal to be completed.
Top 10 deals with largest spreads:
| Closing Price |
|---|
| HTCH | 11/02/2015 | TDK Corporation (N/A) | $4.00 | $1.97 | 09/30/2016 | 103.05% | 616.58% |
| ALR | 02/01/2016 | Abbott Laboratories (ABT) | $56.00 | $37.50 | 12/31/2016 | 49.33% | 117.69% |
| CI | 07/24/2015 | Anthem, Inc. (ANTM) | $171.07 | $128.96 | 12/31/2016 | 32.65% | 77.89% |
| RAD | 10/27/2015 | Walgreens Boots Alliance, Inc. (WBA) | $9.00 | $7.00 | 12/31/2016 | 28.57% | 68.16% |
| HUM | 07/03/2015 | Aetna Inc. (AET) | $221.49 | $172.55 | 12/31/2016 | 28.36% | 67.66% |
| IM | 02/17/2016 | Tianjin Tianhai Investment Company, Ltd. (N/A) | $38.90 | $34.24 | 12/31/2016 | 13.61% | 32.47% |
| APOL | 02/08/2016 | A consortium of investors including The Vistria Group, LLC, funds affiliated with Apollo Global Management, LLC and and Najafi Companies (N/A) | $10.00 | $8.99 | 08/31/2016 | 11.23% | 132.28% |
| LXK | 04/19/2016 | consortium of investors led by Apex Technology Co., Ltd. (Apex) and PAG Asia Capital (PAG) (N/A) | $40.50 | $36.67 | 12/31/2016 | 10.44% | 24.92% |
| CVT | 04/18/2016 | affiliates of Vista Equity Partners (N/A) | $36.00 | $32.62 | 09/30/2016 | 10.36% | 62.00% |
| YDKN | 07/21/2016 | F.N.B. Corporation (FNB) | $27.35 | $25.19 | 03/31/2017 | 8.57% | 12.88% |
List of all pending deals:
The list of all pending deals is only available to InsideArbitrage Premium and Plus members.
Disclaimer: I hold long positions in Apollo Education (APOL), Hutchinson Technology (HTCH) and Yahoo! (YHOO). 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.
Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter@asifsuria
