Merger Arbitrage Mondays – August 7, 2017

Merger activity decreased last week with five new deals announced, 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 was one new deal announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2017 125
Total Number of Deals Not Completed in 2017 7
Total Number of Pending Deals
Cash Deals 62
Stock Deals 22
Stock & Cash Deals 11
Special Conditions 6
Total Number of Pending Deals 101
Total Deal Size $845.01 billion

New Deals:

  1. The acquisition of Scripps Networks Interactive (SNI) by Discovery Communications (DISCK) for $14.6 billion in a cash plus stock deal. Scripps shareholders will receive $90 per share under the terms of the agreement, comprised of $63.00 per share in cash and $27.00 per share in Class C Common shares of Discovery stock. The stock portion will be subject to a collar based on the volume weighted average price of Discovery Class C Common Shares over the 15 trading days ending on the third trading day prior to closing. Scripps shareholders will receive 1.2096 Discovery Class C Common shares if the Average Discovery Price is at or below $22.32, and 0.9408 Discovery Class C Common shares if the Average Discovery Price is at or above $28.70. If the Average Discovery Price is greater than $22.32 but less than $28.70, Scripps shareholders will receive a number of shares between 1.2096 and 0.9408 equal to $27.00 in value. If the Average Discovery Price is between $22.32 and $25.51, Discovery has the option to pay additional cash instead of issuing more shares. Scripps shareholders will have the option to elect to receive their consideration in cash, stock or the mixture described above, subject to pro rata cut backs to the extent cash or stock is oversubscribed. Because of the complex structure of this deal, we are treating it as a Special Conditions deal with a deal price of $90.
  2. The acquisition of CDI Corp. (CDI) by affiliates of AE Industrial Partners for $168 million or $8.25 per share in cash.
  3. The acquisition of PharMerica Corporation (PMC) by KKR & Co. (KKR) for $1.39 billion or $29.25 per share in cash.
  4. The acquisition of Numerex (NMRX) by Sierra Wireless (SWIR) for $107 million in an all stock deal. Under the terms of the Merger Agreement, Numerex shareholders will receive a fixed exchange ratio of 0.1800 common shares of Sierra Wireless for each share of Numerex common stock.
  5. The acquisition of CombiMatrix Corporation (CBMX) by Invitae Corporation (NVTA) for $20.22 million. The consideration payable to the holders of currently outstanding shares of CombiMatrix common stock is $27 million, based on a fixed price per share of Invitae’s common stock of $9.49 and subject to an adjustment for “Net Cash” of CombiMatrix at closing. Based on the Company’s current forecasts and estimates of Net Cash, and based on a fixed price per share of Invitae’s common stock of $9.49, the Company presently estimates that the CombiMatrix price per share received by CombiMatrix common stockholders would be between approximately $8.00 and $8.65. We are using the midpoint of this range as the closing price for this deal.

Deal Updates:

  1. On August 1, 2017, Mobileye (MBLY) announced that on July 31, 2017 the Korea Fair Trade Commission approved the previously announced all cash tender offer by Cyclops Holdings, a wholly-owned subsidiary of Intel Corporation, to purchase all of the outstanding ordinary shares of Mobileye pursuant to the Purchase Agreement.
  2. On August 2, 2017, Straight Path Communications (STRP) stockholders voted in favour of the proposal, to adopt the merger agreement between Straight Path Communications, Verizon Communications (VZ) and Waves Merger Sub.
  3. On August 2, 2017, Sabra Health Care (SBRA) reiterated the unanimous recommendation of its Board of Directors that Sabra shareholders vote “FOR” the Company’s proposed merger with Care Capital Properties (CCP) and common stock issuance proposal at the Company’s Special Meeting of Stockholders on August 15, 2017. Sabra also issued a statement in response to the report recently issued by proxy advisory firm, Institutional Shareholder Services regarding the merger.
  4. August 2, 2017: Genworth (GNW) and Oceanwide continue to work diligently to satisfy the closing conditions under their previously announced proposed transaction and are committed to closing the transaction as soon as possible. In addition to clearance by CFIUS, the closing of the proposed transaction remains subject to the receipt of required regulatory approvals in the U.S., China, and other international jurisdictions and other closing conditions. Because the timing of the regulatory reviews will delay the completion of the transaction beyond the originally targeted time frame of the middle of 2017, Genworth and Oceanwide have agreed in principle to extend the August 31, 2017, deadline set forth in the merger agreement to November 30, 2017.
  5. On August 4, 2017, NOVADAQ Technologies (NVDQ) announced that at the special meeting of the shareholders of the Corporation, shareholders overwhelmingly approved the previously announced plan of arrangement pursuant to which Stryker Corporation (SYK) will acquire all of the outstanding common shares of NOVADAQ.
  6. On August 4, 2017, DuPont (DD) and The Dow Chemical Company (DOW) announced that all required regulatory approvals and clearances have been received, that all conditions to closing of their merger of equals have been satisfied, and that their merger of equals will close after the market closes on August 31, 2017. Shares of Dow and DuPont will cease trading at the close of the New York Stock Exchange on August 31. Shares of DowDuPont will begin trading on the NYSE under the stock ticker symbol “DWDP” on September 1, 2017. The companies continue to expect the intended spin-offs to occur within 18 months of closing.

Closed Deals:

  1. The acquisition of Nexvet Biopharma Public Limited Company (NVET) by Zoetis (ZTS) on July 31, 2017. It took 109 days for this deal to be completed.
  2. The acquisition of Intrawest Resorts Holdings (SNOW) by an entity controlled by affiliates of the Aspen Skiing Compan and KSL Capital Partners on July 31, 2017. It took 112 days for this deal to be completed.
  3. The acquisition of Xactly Corporation (XTLY) by Vista Equity Partners on July 31, 2017. It took 62 days for this deal to be completed.
  4. The acquisition of Gas Natural (EGAS) by First Reserve Energy Infrastructure on August 4, 2017. It took 297 days for this deal to be completed.
  5. The acquisition of UCP (UCP) by Century Communities (CCS) on August 4, 2017. It took 115 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.42 11/30/2017 58.77% 186.54%
LSCC 11/03/2016 Canyon Bridge Capital Partners, Inc. (N/A) $8.30 $6.63 09/30/2017 25.19% 170.26%
CAB 10/03/2016 Bass Pro Shops (N/A) $61.50 $52.34 09/30/2017 17.50% 118.29%
MGI 01/26/2017 Ant Financial Services Group (N/A) $18.00 $15.64 12/31/2017 15.09% 37.72%
ATW 05/30/2017 Ensco plc (ESV) $8.51 $7.65 09/30/2017 11.27% 76.16%
HUN 05/22/2017 CLARIANT N (CLN.VX) $28.22 $25.77 12/31/2017 9.51% 23.77%
XCRA 04/10/2017 an affiliate of Sino IC Capital and Unic Capital Management (N/A) $10.25 $9.38 12/31/2017 9.28% 23.19%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $117.84 12/31/2017 8.62% 21.55%
HCOM 07/10/2017 Cincinnati Bell (CBB) $32.54 $30.75 12/31/2018 5.81% 4.15%
CBMX 07/31/2017 Invitae Corporation (NVTA) $8.33 $7.90 12/31/2017 5.44% 13.61%

List of all pending deals:

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

Disclaimer: I hold positions in Staples (SPLS), Whole Foods (WFM), Cabela’s (CAB) and Fortress Investment Group (FIG). 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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