Merger Arbitrage Mondays – May 8, 2017

Merger activity increased last week with eight new deals announced and two 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 was one new deal announced in the Deals in the Works section.

In case you missed them, I wrote three articles over the last year that cover various aspects of the merger arbitrage strategy including the rate of success over a period of seven years, the effect of deal delays and analysis of failed mergers to determine why they failed. You can find them at the following links,

Deal Statistics:

Total Number of Deals Closed in 2017 70
Total Number of Deals Not Completed in 2017 3
Total Number of Pending Deals
Cash Deals 54
Stock Deals 20
Stock & Cash Deals 12
Special Conditions 10
Total Number of Pending Deals 96
Total Deal Size $740.49 billion

New Deals:

  1. The acquisition of Jive Software (JIVE) by ESW Capital for $462 million or $5.25 per share in cash.
  2. The acquisition of ASB Bancorp (ASBB) by First Bancorp (FBNC) for $175 million in a cash or stock deal. Under the terms of the merger agreement, ASB Bancorp shareholders will receive 1.44 shares of First Bancorp’s common stock or $41.90 in cash, or a combination thereof, for each share of ASB Bancorp common stock. The total consideration will be prorated as necessary to ensure that 90% of the total outstanding shares of ASB Bancorp common stock will be exchanged for First Bancorp common stock and 10% of the total outstanding shares of ASB Bancorp common stock will be exchanged for cash.
  3. The acquisition of Span-America Medical Systems (SPAN) by Savaria Corporation for $80.2 million or $29.00 per share in cash.
  4. The acquisition of Angie’s List (ANGI) by IAC/InterActive (IAC) for $331.67 million or $8.50 per share in cash.
  5. The acquisition of OneBeacon Insurance Group (OB) by Intact Financial Corporation for $1.7 billion or $18.10 per share in cash.
  6. The acquisition of Capital Bank Financial (CBF) by First Horizon National (FHN) for $2.2 billion in a cash plus stock deal. Under the terms of the agreement, shareholders of Capital Bank Financial will be entitled to receive cash or stock with a value equivalent to 1.750 First Horizon shares and $7.90 in cash for each Capital Bank share held. In the aggregate, Capital Bank shareholders will receive a mix of approximately 80 percent stock and 20 percent cash.
  7. The acquisition of VWR Corporation (VWR) by Avantor for $6.4 billion or $33.25 per share in cash.
  8. Spark Networks (LOV) and Affinitas (“EliteSingles”) announced that they have entered into a definitive agreement to combine in a stock-for-stock merger The combination will create a company with more than $115 million. EliteSingles shareholders will own approximately 75% of the combined company and Spark shareholders will own approximately 25%. We have not added this deal to our database as it will result in the creation of a new company.

Deal Updates:

  1. On May 3, 2017, Straight Path Communications (STRP) announced that the Straight Path Board of Directors determined that a revised offer from a multi-national telecommunications company to acquire 100% of the issued and outstanding shares of Straight Path for $135.96 per share, reflecting an enterprise value of approximately $2.3 billion, which will be paid in Bidder stock in an all-stock transaction constitutes a “Superior Proposal” as defined in Straight Path’s previously announced definitive agreement and plan of merger with AT&T (T). Straight Path has notified AT&T of the Straight Path Board’s determination and, pursuant to the AT&T Merger Agreement, AT&T has the option for the next three business days to negotiate a possible amendment of that agreement to match or exceed the Bidder’s offer.
  2. On May 3, 2017, Ashford Hospitality Trust (AHT) announced that given FelCor Lodging Trust Incorporated’s (FCH) announced merger agreement with RLJ Lodging Trust (RLJ), Ashford Trust is abandoning its efforts to merge with FelCor.
  3. On May 4, 2017, CIBC (CM) and PrivateBancorp (PVTB) announced that they have entered into a second amendment that increases the cash consideration under the previously amended merger agreement. The revised terms were unanimously approved by both boards of directors. Under the Amended Agreement, PrivateBancorp stockholders will receive, upon completion of the proposed merger with CIBC, an additional US$3.00 in cash for each share of common stock of PrivateBancorp held, which consideration in the aggregate will be equal to US$27.20 in cash and 0.4176 of a CIBC common share for each share of common stock of PrivateBancorp held.
  4. On May 4, 2017, Great Plains Energy Incorporated (GXP) and Westar Energy (WR) announced that they have filed a Petition for Reconsideration with the Kansas Corporation Commission regarding its April 19, 2017, Order denying approval of Great Plains Energy’s acquisition of Westar.
  5. On May 5, 2017, Syngenta (SYT) announced that its shareholders accepted ChemChina’s offer to acquire Syngenta.

Closed Deals:

  1. The acquisition of Isle of Capri Casinos (ISLE) by Eldorado Resorts (ERI) on May 1, 2017. It took 224 day for this deal to be completed.
  2. The acquisition of Stillwater Mining Company (SWC) by Sibanye Gold Limited (SBGL) on May 4, 2017. It took 146 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
RAD 10/27/2015 Walgreens Boots Alliance, Inc. (WBA) $6.50 $4.11 07/31/2017 58.15% 252.68%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.79 06/30/2017 43.27% 298.00%
LSCC 11/03/2016 Canyon Bridge Capital Partners, Inc. (N/A) $8.30 $6.69 06/30/2017 24.07% 165.74%
WR 05/31/2016 Great Plains Energy Incorporated (GXP) $60.00 $52.52 06/30/2017 14.24% 98.08%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $116.20 12/31/2017 10.15% 15.64%
CAB 10/03/2016 Bass Pro Shops (N/A) $61.50 $56.20 09/30/2017 9.43% 23.74%
TWX 10/22/2016 AT&T, Inc. (T) $107.50 $98.37 12/31/2017 9.28% 14.29%
MBVT 10/24/2016 Community Bank System Inc. (CBU) $55.24 $50.70 05/12/2017 8.95% 816.69%
SGBK 03/27/2017 Home Bancshares, Inc. (HOMB) $49.00 $45.39 12/31/2017 7.95% 12.25%
ADGE 11/02/2016 Tecogen Inc. (TGEN) $0.34 $0.3162 06/30/2017 7.07% 48.70%

List of all pending deals:

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

Disclaimer: I hold positions in Cabela’s (CAB), Rite Aid (RAD), 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.

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