Merger Arbitrage Mondays – October 2, 2017

Merger activity decreased last week with three new deals announced and eight 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 163
Total Number of Deals Not Completed in 2017 9
Total Number of Pending Deals
Cash Deals 40
Stock Deals 25
Stock & Cash Deals 12
Special Conditions 9
Total Number of Pending Deals 86
Total Deal Size $917.44 billion

New Deals:

  1. The acquisition of Versar (NYSE: VSR and now OTCBB: VSRI) by affiliates of Kingswood Capital Management for $8.14 million or $0.15 per share in cash. The stock used to trade on the NYSE but was delisted after this announcement and so we will be removing it from the MAT. Disappointed investors did not mince words in the question/answer section of the company’s conference call on the day the deal was announced.
  2. The acquisition of Bay Bancorp (BYBK) by Old Line Bancshares (OLBK) for $128.6 million in an all stock deal. Under the terms of the Agreement, each share of Bay Bancorp common stock  will be exchanged for a number of OLB Shares calculated by dividing $11.80 by the volume weighted average closing prices of Old Line Bancshares common stock for the 20 trading days ending five trading days before the closing date of the Merger, subject to a minimum average price of $25.65 and a maximum average price of $29.16 and adjustments for the proceeds recognized in the recent settlement of certain litigation and the resolution of certain loans. As such, the per share consideration may be as low as 0.4047 OLB Shares if the average price is $29.16 or more and as high as 0.4600 OLB Shares if the average price is $25.65 or less, subject to the adjustments provided for in the Merger Agreement. The closing price we have in the MAT takes the collar into account but not the adjustments related to litigation and problem loans.
  3. The acquisition of Exa Corporation (EXA) by Dassault Systèmes for $400 million or $24.25 per share in cash.

Deal Updates:

  1. On September 15, 2017, Anchor Bancorp (ANCBstated in their 10K that the merger with Washington Federal (WAFD) is expected to be completed in the fourth calendar quarter of 2017.
  2. On September 19, 2017, Southwest Bancorp (OKSB) announced that on October 17, 2017, they will hold a special meeting of the shareholders of Southwest Bancorp to vote on a proposal to merge with Simmons First National Corporation (SFNC). We have changed the closing date for this deal to October 31, 2017.
  3. On September 22, 2017, Ensco (ESV) announced that leading independent proxy advisory firm Glass Lewis, has recommended that Ensco shareholders vote “FOR” the proposed all-stock transaction with Atwood Oceanics (ATW) at the company’s upcoming general meeting of shareholders on 5 October 2017. The company anticipates closing the transaction in the first week of October 2017.
  4. On September 25, 2017, United Rentals (URI) and Neff Corporation (NEFF) announced that on September 21, 2017, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976  with respect to the pending acquisition of Neff by United Rentals. The company has reaffirmed its expectation that the transaction will close in early October.
  5. On September 25, 2017, Parkway (PKY) announced that its stockholders approved the previously announced merger of Parkway with an affiliate of Canada Pension Plan Investment Board. The merger is expected to close on or about October 12, 2017, subject to the satisfaction or waiver of all closing conditions related to the transaction.
  6. September 26, 2017: Lumos Networks (LMOS) stated in their 10Q filing that the completion of the EQT Merger is expected to close within 90 days of the 10Q filing on August 7, 2017. We have changed the closing date for this deal to November 7, 2017.
  7. On September 26, 2017, RhythmOne (RTHM.L) announced a 1/10 reverse stock split. We have adjusted the share portion of the cash plus stock transaction to 0.7325 shares. YuMe (YUME) shareholders will now receive $1.70 per share in cash and 0.7325 shares in RhythmOne stock.
  8. On September 26, 2017, Gilead Sciences (GILD) and Kite Pharma (KITE) announced that the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to Gilead’s cash tender offer for Kite on September 25, 2017. With the expiration of the waiting period, the tender offer is expected to close in the beginning of October 2017, subject to customary closing conditions.
  9. On September 26, 2017, First Potomac Realty Trust (FPOshareholders approve acquisition by Government Properties Income Trust (GOV). The transaction is expected to close in October, subject to customary closing conditions.
  10. On September 27, 2017, Washington Federal (WAFD) and Anchor Bancorp (ANCB) announced that they have mutually agreed to amend their merger agreement. The amendment extends from December 31, 2017 to June 30, 2018 the date after which either party can elect to terminate the agreement if the transaction contemplated by the agreement has not yet been completed.
  11. On September 28, 2017, Angie’s List (ANGIannounced the results of the elections made by stockholders of Angie’s List regarding the form of merger consideration they will receive in connection with the acquisition of Angie’s List.
  12. On September 28, 2017, Alere (ALR) announced that it has settled with the U.S. Securities and Exchange Commission in regard to an investigation of accounting issues concerning the company’s foreign subsidiaries. Alere’s acquisition by Abbott Laboratories (ABT) will close on October 3, 2017.
  13. On September 29, 2017, Royal Bancshares of Pennsylvania (RBPAA) announced that the Merger with Bryn Mawr Bank Corporation (BMTC) has been approved by RBPI shareholders and by the Pennsylvania Department of Banking and Securities, one of two required bank regulatory agencies.  The closing of the Merger is expected to occur in the fourth quarter of 2017, pending receipt of final regulatory approval.

Closed Deals:

  1. The acquisition of ShoreTel (SHOR) by Mitel Networks Corporation (MITL) on September 25, 2017. It took 60 days for this deal to be completed.
  2. The acquisition of Cabelas Incorporated (CAB) by Bass Pro Shops on September 25, 2017. It took 357 days for this deal to be completed.
  3. The acquisition of Stonegate Bank (SGBK) by Home Bancshares (HOMB) on September 26, 2017. It took 183 days for this deal to be completes.
  4. The acquisition of Supreme Industries (STS) by Wabash National Corporation (WNC) on September 27, 2017. It took 50 days for this deal to be completed.
  5. The acquisition of Sevcon (SEV) by BorgWarner on September 27, 2017. It took 72 days for this deal to be completed.
  6. The acquisition of OneBeacon Insurance Group (OB) by Intact Financial Corporation on September 28, 2017. It took 149 days for this deal to be completed.
  7. The acquisition of PAREXEL International Corporation (PRXL) by Pamplona Capital Management on September 29, 2017. It took 101 days for this deal to be completed.
  8. The acquisition of Zhaopin Limited (ZPIN) by SEEK International Investments Pty on September 29, 2017. It took 176 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 $3.85 12/31/2017 41.04% 166.44%
MGI 01/26/2017 Ant Financial Services Group (N/A) $18.00 $16.11 12/31/2017 11.73% 47.58%
CBMX 07/31/2017 Invitae Corporation (NVTA) $8.33 $7.50 12/31/2017 11.07% 44.88%
ASBB 05/01/2017 First Bancorp (FBNC) $49.55 $45.10 10/01/2017 9.87% -3601.76%
NXTM 08/07/2017 Fresenius Medical Care (N/A) $30.00 $27.60 06/30/2018 8.70% 11.71%
GLBL 03/07/2017 Brookfield Asset Management Inc. (BAM) $5.10 $4.75 12/31/2017 7.37% 29.88%
COL 09/04/2017 United Technologies Corp. (UTX) $140.00 $130.71 09/30/2018 7.11% 7.15%
MON 09/14/2016 Bayer AG (BAYRY) $128.00 $119.82 01/31/2018 6.83% 20.59%
BRCD 11/02/2016 Broadcom Limited (AVGO) $12.75 $11.95 10/28/2017 6.69% 93.98%
HUN 05/22/2017 CLARIANT N (CLN.VX) $29.14 $27.42 12/31/2017 6.29% 25.50%

List of all pending deals:

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

Disclaimer: I hold positions in Fortress Investment Group (FIG), MaxPoint Interactive (MXPT) and CombiMatrix (CBMX). 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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