Merger Arbitrage Mondays – March 12, 2018

Merger activity increased last week with five new deals announced, seven pending deals closing and one pending deal failing. It has been a tough couple of weeks for arbitrageurs with two deals failing and a big decline in Akorn’s (AKRX) stock. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

We added a new feature to the MAT to display a spread history chart for all active mergers and discussed it in this post last Friday. A spread history chart for Monsanto (MON) is shown below.

Monsanto Spread History

Monsanto Spread History

There were no new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 32
Total Number of Deals Not Completed in 2018 5
Total Number of Pending Deals
Cash Deals 42
Stock Deals 13
Stock & Cash Deals 8
Collars 1
Special Conditions 5
Total Number of Pending Deals 68
Total Deal Size $649.21 billion

New Deals:

  1. The acquisition of XL Group (XL) by AXA for $15.3 billion or $57.6 per share in cash.
  2. The acquisition of Rosetta Genomics (ROSG) by Genoptix for $2.35 million or $0.425 per share in cash. The $0.425 per share price is estimated because the companies indicated that “this purchase price equates to an amount that is preliminarily estimated to be $0.40 – $0.45”. This is the second time the companies are trying to merge. As we reported two weeks ago, they called off the merger when Rosetta Genomics was unable to get shareholder approval for the deal. The deal terms have changed and we are adding this as a new deal.
  3. The acquisition of CommerceHub (CHUBA) by GTCR and Sycamore Partners for $1.1 billion or $22.75 per share in cash.
  4. The acquisition of Bravo Brio Restaurant Group (BBRG) by Spice Private Equity, an affiliate of GP Investments for $100 million or $4.05 per share in cash.
  5. The acquisition of Express Scripts Holding Company (ESRX) by Cigna Corporation (CI) for $67 billion in a cash plus stock deal. Under the terms of the definitive agreement, the transaction consideration will consist of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share.

Deal Updates:

  1. On March 5, 2018, Sparton Corporation (SPAannounced the termination by Sparton and Ultra Electronics Holdings of their July 7, 2017 merger agreement.
  2. March 7, 2018: According to The Wall Street Journal, CVS Health (CVS) sold $40 billion of bonds on Tuesday to help pay for its acquisition of health insurer Aetna (AET) months before it needs the money, seeking to get ahead of an expected rise in interest rates and a flood of borrowing across the economy.
  3. March 9, 2018: According to Reuters, the U.S. Justice Department and AT&T (T) on Friday presented starkly different futures for online video if the wireless and pay-TV giant is allowed to buy Time Warner (TWX), as they laid out their cases for a blockbuster antitrust trial.
  4. On March 9, 2018, DST Systems (DSTannounced Consent Solicitation, Solicitation of Approvals of the Termination Agreement and Tender Offer.

Closed Deals:

  1. The acquisition of Juno Therapeutics (JUNO) by Celgene Corporation (CELG) on March 6, 2018. It took 43 days for this deal to be completed.
  2. The acquisition of Scripps Networks Interactive (SNI) by Discovery Communications (DISCK) on March 6, 2018. It took 218 days for this deal to be completed.
  3. The acquisition of Bioverativ (BIVV) by Sanofi (SNY) on March 8, 2018. It took 45 days for this deal to be completed.
  4. The acquisition of Calpine Corporation (CPN) by Energy Capital Partners on March 8, 2018. It took 202 days for this deal to be completed.
  5. The acquisition of General Communication (GNCMA) by Liberty Ventures (LVNTA) on March 8, 2018. It took 338 days for this deal to be completed.
  6. The acquisition of Calgon Carbon Corporation (CCC) by Kuraray on March 9, 2018. It took 169 days for this deal to be completed.
  7. The acquisition of Cascadian Therapeutics (CASC) by Seattle Genetics (SGEN) on March 9, 2018. It took 37 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
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $18.98 03/31/2018 79.14% 1520.24%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.13 04/01/2018 73.48% 1341.05%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.74 09/30/2018 43.68% 78.92%
SCG 01/03/2018 Dominion Energy, Inc. (D) $48.75 $39.13 06/30/2018 24.58% 81.58%
NXTM 08/07/2017 Fresenius Medical Care (N/A) $30.00 $24.37 06/30/2018 23.10% 76.66%
AET 12/03/2017 CVS Health (CVS) $203.03 $177.38 12/31/2018 14.46% 17.96%
ESRX 03/08/2018 Cigna Corporation (CI) $90.95 $80.75 12/31/2018 12.63% 15.68%
TWX 10/22/2016 AT&T, Inc. (T) $106.99 $95.26 06/21/2018 12.31% 44.50%
AVA 07/19/2017 Hydro One Limited (N/A) $53.00 $48.08 12/31/2018 10.23% 12.70%
ROSG 03/05/2018 Genoptix, Inc. (N/A) $0.43 $0.400 06/30/2018 7.50% 24.89%

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 Rite Aid (RAD) and Southcross Energy Partners (SXE). 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

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