Merger Arbitrage Mondays – October 24, 2016

Merger Activity increased last week with five new deals announced and two 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 183
Total Number of Deals Not Completed in 2016 16
Total Number of Pending Deals
Cash Deals 59
Stock Deals 14
Stock & Cash Deals 11
Special Conditions 8
Total Number of Pending Deals 92
Total Deal Size $1221.22 billion

New Deals:

  1. The acquisition of Everyday Health (EVDY) by j2 Global (JCOM) for $465 million or $10.50 per share in cash.
  2. The acquisition of Time Warner (TWX) by AT&T (T) for $108.7 billion in a cash plus stock deal. Under the terms of the agreement, Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that Time Warner shareholders will receive 1.437 AT&T shares if AT&T’s average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T’s average stock price is above $41.349 at closing.
  3. The acquisition of Qunar Cayman Islands Limited (QUNR) by Ocean Management Holdings Limited and Ocean Management Merger Sub Limited for $4.44 billion or $30.39 per share in cash.
  4. The acquisition of Genworth Financial (GNW) by China Oceanwide Holdings Group for $2.7 billion or $5.43 per share in cash.
  5. The acquisition of B/E Aerospace (BEAV) by Rockwell Collins (COL) for $8.3 billion in a cash plus stock deal. Under the terms of the agreement, each B/E Aerospace shareowner will receive total consideration of $62.00 per share, comprised of $34.10 per share in cash and $27.90 in shares of Rockwell Collins common stock, subject to a 7.5% collar. If the volume weighted average price of Rockwell Collins common stock during this period is above $89.97, the stock portion of the consideration will be fixed at 0.3101 shares of Rockwell Collins common stock for each share of B/E Aerospace, and if it is below $77.41 per share, the stock portion of the consideration will be fixed at 0.3604 shares of Rockwell Collins common stock for each share of B/E Aerospace.

Deal Updates:

  1. On October 19, 2016, Joy Global (JOY) said that the company’s shareholders have overwhelmingly approved the proposed $3.7 billion acquisition of the Milwaukee surface and underground mining equipment maker by the U.S. unit of Japan’s Komatsu Ltd.
  2. On October 19, 2016, Allergan (AGN) and Tobira Therapeutics (TBRA) announced that the U.S. Federal Trade Commission has granted early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, with respect to Allergan’s pending acquisition of Tobira.
  3. On October 20, 2016, InterOil Corporation (IOC) provided an update on the court approval process regarding the pending transaction with Exxon Mobil Corporation (XOM). The Court of Appeal of the Yukon has accommodated an expedited hearing with respect to the appeal lodged by Phil Mulacek, which is scheduled to be heard on October 31, 2016. In addition, the Court of Appeal of Yukon granted a stay of the Supreme Court of Yukon’s order approving the transaction, pending the hearing. We have extended the closing date for this deal through November 30, 2016.
  4. On October 20, 2016, Analog Devices (ADI) and Linear Technology Corporation (LLTC) announced that on October 19, 2016 the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the proposed combination of Analog Devices and Linear Technology expired. As a result, the transaction has been cleared for U.S. antitrust purposes. In addition, Analog Devices and Linear Technology received clearance for the transaction from the German Federal Cartel Office on October 11, 2016.
  5. On October 20, 2016, Walgreens Boots Alliance (WBA) and Rite Aid Corporation (RAD) announced that, in accordance with the terms of their merger agreement dated 27 October 2015, they have mutually agreed to extend the end date of their merger agreement from 27 October 2016 to 27 January 2017. The companies now expect the transaction will close in early calendar 2017.
  6. On October 21, 2016, Alere (ALR) announced that its shareholders have voted to approve the previously announced merger with Abbott (ABT).

Closed Deals:

  1. The acquisition of Cynapsus Therapeutics (CYNA) by Sunovion Pharmaceuticals on October 21, 2016. It took 51 days for this deal to be completed.
  2. The acquisition of Press Ganey Holdings (PGND) by EQT Equity fund EQT VII on October 21, 2016. It took 73 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
Profit Annualized
Profit
CI 07/24/2015 Anthem, Inc. (ANTM) $167.03 $124.18 03/31/2017 34.50% 79.71%
RAD 10/27/2015 Walgreens Boots Alliance, Inc. (WBA) $9.00 $7.04 01/31/2017 27.84% 102.65%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $102.07 12/31/2017 25.40% 21.41%
ALR 02/01/2016 Abbott Laboratories (ABT) $56.00 $45.01 12/31/2016 24.42% 131.06%
HUM 07/03/2015 Aetna Inc. (AET) $218.17 $175.88 12/31/2016 24.05% 129.07%
BEAV 10/23/2016 Rockwell Collins (COL) $62.00 $50.61 03/31/2017 22.51% 51.99%
WGBS 05/13/2016 Takara Bio USA Holdings, Inc. (N/A) $0.95 $0.78 03/31/2017 21.79% 50.35%
TWX 10/22/2016 AT&T, Inc. (T) $107.50 $89.48 12/31/2017 20.14% 16.98%
FGL 11/09/2015 Anbang Insurance Group Co., Ltd. (N/A) $26.80 $22.45 12/31/2016 19.38% 104.01%
CVT 04/18/2016 affiliates of Vista Equity Partners (N/A) $36.00 $30.91 04/15/2017 16.47% 34.74%

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 WhiteWave Foods (WWAV), LinkedIn (LNKD), Tobira Therapeutics (TBRA), Apollo Education (APOL), Rite Aid (RAD) and Monster Worldwide (MWW). 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

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