Merger Arbitrage Mondays – April 24, 2017

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

There were four new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2017 63
Total Number of Deals Not Completed in 2017 3
Total Number of Pending Deals
Cash Deals 51
Stock Deals 17
Stock & Cash Deals 12
Special Conditions 9
Total Number of Pending Deals 89
Total Deal Size $712.27 billion

New Deals:

  1. The acquisition of MOCON (MOCO) by AMETEK (AME) for $182 million or $30.00 per share in cash.
  2. The acquisition of KCG Holdings (KCG) by Virtu Financial (VIRT) for $1.56 billion or $20.00 per share in cash. We were tracking this potential deal in the Deals in the Works Tool since March 15th, the day after news broke about the potential deal. The stock closed at $16.90 on that day, providing a potential profit of 18% on the deal.
  3. The acquisition of C. R. Bard (BCR) by Becton, Dickinson and Company (BDX) FOR $24 billion in a cash plus stock deal. Under the terms of the agreement, shareholders of C. R. Bard will receive approximately $222.93 in cash and 0.5077 shares of BD stock per Bard share, or a total of value of $317.00 per Bard common share based on BD’s closing price on April 21, 2017.

Deal Updates:

  1. On April 17, 2017, Bass Pro Shops announced that it is lowering the price it will pay to buy  Cabela’s (CAB) as part of an amended merger agreement. Bass Pro will now acquire Cabela’s for $61.50 per share in cash, or about $5 billion. I decided to start a position in Cabela’s after this new agreement was negotiation as the deal still provided an IRR of over 15%.
  2. On April 17, 2017, Fidelity & Guaranty Life (FGL) announced that it has terminated its Merger Agreement with Anbang Insurance Group. The Company’s Board of Directors is continuing to evaluate strategic alternatives to maximize shareholder value and has received interest from a number of parties. The FGL stock did not drop below the deal price after the merger was terminated.
  3. On April 17, 2017, Stillwater Mining Company (SWC) announced that it has been informed that the review by the Committee on Foreign Investment in the United States (CFIUS) related to the proposed acquisition of the Company by Sibanye Gold Limited (SBGL) has been completed, and there are no unresolved national security issues with respect to the transaction. Both Stillwater and Sibanye Gold Limited have scheduled shareholders’ meetings on April 25, 2017 to conduct voting related to the proposed merger.
  4. On April 17, 2017, Energy Transfer Partners (ETP) announced that all three proxy advisory firms, Institutional Shareholder Services, Glass Lewis & Co., and Egan-Jones Proxy Services have recommended that ETP unitholders vote “FOR” approval of the proposed merger with Sunoco Logistics Partners (SXL), which will be considered at the April 26, 2017 special meeting of ETP unitholders.
  5. On April 18, 2017, The U.S. Federal Communications Commission said that it approved Time Warner’s (TWX) sale of a broadcast station in Atlanta to Meredith Corp (MDP), a transaction that could help speed Time Warner’s planned merger with AT&T (T).
  6. On April 18, 2017, InvenSense (INVN) announced that all necessary regulatory clearances have been received for the acquisition by TDK Corporation (TTDKY) of InvenSense, including from the Committee on Foreign Investment in the United States (CFIUS) and all other necessary regulatory authorities, and the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired. InvenSense will hold a special meeting of its stockholders on May 17, 2017, at which stockholders will be asked to approve, among other items, the previously announced transaction. The companies expect to close the transaction shortly thereafter.
  7. On April 19, 2017, The KCC rejected the merger application filed jointly by Westar Energy (WR) and Great Plains Energy (GXP) with the Kansas Corporation Commission requesting approval of the merger. Westar Energy is evaluating the written order.

Closed Deals:

  1. The acquisition of Nimble Storage (NMBL) by Hewlett Packard Enterprise Company (HPE) on April 17, 2017. It took 42 days for this deal to be completed.
  2. The acquisition of Ixia (XXIA) by Keysight Technologies (KEYS) on April 18, 2017. It took 78 days for this deal to be completed.
  3. The acquisition of Cardinal Financial (CFNL) by United Bankshares (UBSI) on April 21, 2017. It took 246 days for this deal to be completed.
  4. The acquisition of Air Methods Corporation (AIRM) by American Securities on April 21, 2017. It took 38 days for this deal to be completed.
  5. The acquisition of Chemtura Corporation (CHMT) by LANXESS AG  on April 21, 2017. It took 207 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
RAD 10/27/2015 Walgreens Boots Alliance, Inc. (WBA) $6.50 $3.80 07/31/2017 71.05% 264.63%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.07 06/30/2017 33.42% 182.04%
BCR 04/23/2017 Becton, Dickinson and Company (BDX) $317.00 $253.07 11/30/2017 25.26% 41.91%
LSCC 11/03/2016 Canyon Bridge Capital Partners, Inc. (N/A) $8.30 $6.85 03/31/2017 21.17% -321.93%
WR 05/31/2016 Great Plains Energy Incorporated (GXP) $60.00 $51.43 06/30/2017 16.66% 90.78%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $115.50 12/31/2017 10.82% 15.74%
CAB 10/03/2016 Bass Pro Shops (N/A) $61.50 $56.94 09/30/2017 8.01% 18.38%
GLBL 03/07/2017 Brookfield Asset Management Inc. (BAM) $5.10 $4.725 12/31/2017 7.94% 11.54%
MBVT 10/24/2016 Community Bank System Inc. (CBU) $52.43 $48.60 06/30/2017 7.87% 42.88%
ADGE 11/02/2016 Tecogen Inc. (TGEN) $0.34 $0.3185 06/30/2017 7.74% 42.18%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium and Plus members.

Disclaimer: I hold positions in Cabela’s (CAB), Rite Aid (RAD), Syngenta (SYT), Fortress Investment Group (FIG) and NXP Semiconductors (NXPI). 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

2 Comments

  1. GeorgeCiardi
    April 24, 2017 at 5:40 am

    There were a few other mergers I noticed the past week you might want to consider adding. They were:

    Forestar Group Inc. (FOR)
    Harmony Merger Corp. (HRMN)
    Nivalis Therapeutics, Inc (NVLS)

    Each are a bit of a funky deal type but might be interesting to watch.

  2. Asif Suria
    April 24, 2017 at 10:20 am

    Thank you George. We added FOR last week and it is on the tool. Regarding HRMN, it is a reverse merger and hence we are not tracking it. I will check out NVLS.

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