Merger Arbitrage Mondays – July 3, 2017

Merger activity increased last week with nine new deals announced, six deals closing and a much followed deal failing after a length FTC review process. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

The failure of Rite Aid’s (RAD) acquisition by Walgreens Boots Alliance (WBA) culminated with Walgreens offering a new deal for nearly half of Rite Aid’s stores and paying a termination fee to Rite Aid as discussed in the deal updates section below. The entire saga lasted 20 months. While 96% of all deals announced since 2010 have closed, the 4% of the deals that don’t close can do a lot of damage to a portfolio and it is prudent to avoid deals with large spreads.

With this new deal with Walgreens, shareholders unfortunately don’t have any recourse as the deal is not subject to shareholder approval. The only silver lining is that a leaner less leveraged Rite Aid probably faces better prospects than the current depressed share price appears to indicate provided there are significant changes to the leadership of the company.

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

Deal Statistics:

New Deals:

1. The acquisition of Handy & Harman (HNH) by Steel Partners Holdings (SPLP-PA) for $693.48 million in an all stock deal. Under the agreement, Steel Partners will commence an exchange offer to acquire all the outstanding shares of Handy & Harman’s common stock for 1.484 Series A preferred units of Steel Partners for each Handy & Harman share tendered.
2. The acquisition of Sinovac Biotech (SVA) in a going private transaction for $437.59 million or $7.00 per share in cash.
3. The acquisition of First Potomac Realty Trust (FPO) by Government Properties Income Trust (GOV) for $1.4 billion or $11.15 per share in cash.

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