Merger Arbitrage Mondays – October 3, 2016

Merger activity decreased last week with two new deals announced and six deals closing. You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

We are pleased to announce an update to our Merger Arbitrage Tool that was requested by one of our subscribers. This new feature will take into account the ADR or ADS cancellation fee when calculating the profit (%) and annualized profit (%) for foreign companies that have American Depositary Receipts (ADR) or American Depositary Shares (ADS). The cancellation fee is usually just a few cents per share but in the case of low priced stocks, it can have a significant impact on the merger arbitrage spread. As a result of this change, the spread on the ACTS and TSL mergers is smaller than before.

Deal Statistics:

Total Number of Deals Closed in 2016 174
Total Number of Deals Not Completed in 2016 12
Total Number of Pending Deals
Cash Deals 55
Stock Deals 16
Stock & Cash Deals 11
Special Conditions 7
Total Number of Pending Deals 89
Total Deal Size $1146.19 billion

New Deals:

  1. The acquisition of EndoChoice Holdings (GI) by Boston Scientific Corporation (BSX) for $210 million or $8.00 per share in cash.
  2. The acquisition of Bats Global Markets (BATS) by CBOE Holding (CBOE) for $3.2 billion in a cash plus stock deal. Under the terms of the agreement, Bats stockholders will receive $10.00 per share in cash and 0.3201 of a share of CBOE Holdings common stock, representing a total consideration of approximately $32.50 per share.

Deal Updates:

  1. On September 26, 2016, Nexstar Broadcasting Group (NXST) announced that its wholly-owned subsidiary, Nexstar Broadcasting priced a $2.75 billion term loan B facility. The closing of the term loan B facility is subject to customary closing conditions and the closing of the Media General (MEG) acquisition. The pricing of the $2.75 billion term loan B facility combined with the previously issued $900 million senior notes marks the successful completion of the primary financing components needed to complete the acquisition of Media General.
  2. On September 26, 2016, Alere said that mediation efforts between Abbott Laboratories (ABT) and Alere (ALR) have broken down. With the failure of the talks, Alere will likely proceed with a lawsuit in the Delaware Court of Chancery where it is trying to force Abbott to complete its $5.6 billion purchase of Alere.
  3. On September 28, 2016, Cousins Properties Incorporated (CUZ) announced that it anticipates closing the previously announced merger between Cousins and Parkway Properties (PKY) on October 6, 2016.
  4. On September 28, 2016, InterOil Corporation (IOC) provided the following update regarding InterOil’s pending transaction with Exxon Mobil Corporation (XOM): As previously disclosed, the closing of the transaction with ExxonMobil requires a final order from the Supreme Court of Yukon. The hearing was held on September 27 and the court is considering the matter, including an objection filed by Phil Mulacek. Completion of the transaction prior to the end of September would require issuance of a final order no later than the close of business on Thursday, September 29. ExxonMobil and InterOil intend to close the transaction promptly after the final order is obtained.
  5. On September 29, 2016, Shareholders voted to approve SBE Entertainment Group’s acquisition of Morgans Hotel Group (MHGC).
  6. On September 29, 2016, The North Carolina Utilities Commission (NCUC) approved Duke Energy’s (DUK) acquisition of Piedmont Natural Gas (PNY). That action is the final regulatory approval needed to close the transaction. The transaction is expected to close on October 3, 2016.
  7. On September 30, 2016, U.S. regulators cleared the proposed buyout of Lexmark International (LXK) by a Chinese consortium.
  8. September 30, 2016, The judge who will rule on whether the government may stop health insurer Anthem (ANTM) from buying competitor Cigna (CI) said that she was considering splitting the trial into phases. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said that she was mulling hearing separately about the effect of the merger on the national market in one phase and on local markets in a second phase with a potential decision after the first set of arguments.
  9. On October 1, 2016, MediaNews Group said that it plans to nominate seven directors to replace the board of Monster Worldwide (MWW), stepping up a battle against the proposed sale of the online jobs site.

Closed Deals:

  1. The acquisition of Polycom (PLCM) by Siris Capital Group on September 27, 2016. It took 81 days for this deal to be completed.
  2. The acquisition of Outerwall (OUTR) by affiliates of certain funds managed by affiliates of Apollo Global Management on September 27, 2016. It took 64 days for this deal to be completed.
  3. The acquisition of Medivation (MDVN) by Pfizer (PFE) on September 28, 2016. It took 37 days for this deal to be completed.
  4. The acquisition of Rose Rock Midstream (RRMS) by SemGroup Corporation (SEMG) on September 30, 2016. It took 122 days for this deal to be completed.
  5. The acquisition of Epiq Systems (EPIQ) by OMERS Private Equity and Harvest Partners on September 30, 2016. It took 65 days for this deal to be completed.
  6. The acquisition of AVG Technologies N.V. (AVG) by Avast Software on September 30, 2016. It took 85 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
ALR 02/01/2016 Abbott Laboratories (ABT) $56.00 $43.24 12/31/2016 29.51% 121.02%
CI 07/24/2015 Anthem, Inc. (ANTM) $167.96 $130.32 03/31/2017 28.88% 58.89%
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 $7.95 12/31/2016 25.79% 105.75%
HUM 07/03/2015 Aetna Inc. (AET) $221.69 $176.89 12/31/2016 25.33% 103.87%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $102.20 12/31/2017 25.24% 20.30%
RAD 10/27/2015 Walgreens Boots Alliance, Inc. (WBA) $9.00 $7.69 12/31/2016 17.04% 69.86%
FGL 11/09/2015 Anbang Insurance Group Co., Ltd. (N/A) $26.80 $23.19 12/31/2016 15.57% 63.84%
SCTY 08/01/2016 Tesla Motors (TSLA) $22.44 $19.56 04/30/2017 14.74% 25.74%
WGBS 05/13/2016 Takara Bio USA Holdings, Inc. (N/A) $0.95 $0.83 03/31/2017 14.46% 29.48%
KLAC 10/21/2015 Lam Research Corporation (LRCX) $79.36 $69.71 12/31/2016 13.84% 56.74%

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 Apollo Education (APOL), Monster Worldwide (MWW) and Hutchinson Technology (HTCH). 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: or follow me on Twitter@asifsuria

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