Merger Arbitrage Mondays – March 26, 2018

Merger activity decreased last week with four new deals announced and two pending 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 2018 34
Total Number of Deals Not Completed in 2018 5
Total Number of Pending Deals
Cash Deals 42
Stock Deals 14
Stock & Cash Deals 14
Collars 1
Special Conditions 5
Total Number of Pending Deals 75
Total Deal Size $664.11 billion

New Deals:

  1. The acquisition of Stewart Information Services Corporation (STC) by Fidelity National Financial (FNF) for $1.2 billion in a cash plus stock deal. Under the terms of the agreement, Stewart shareholders will receive $25.00 in cash and 0.6425 common shares of Fidelity for each share of Stewart common stock they hold at closing. The spread on this deal was an unusually high 19.5% on Monday (without taking dividend payments into account) but declined through the week to end at 15.4% on Friday.
  2. The acquisition of Klondex Mines (KLDX) by Hecla Mining Company (HL) for $462 million in a cash plus stock deal. Under the terms of the agreement, Klondex shareholders may elect to receive either US$2.47 in cash (Cash Alternative) or 0.6272 of a Hecla share (Share Alternative), each full Hecla share being currently valued at US$3.94, subject in each case to pro-ration based on a maximum cash consideration of US$157.4 million and a maximum number of Hecla shares issued of 77.4 million. If all Klondex shareholders elect either the Cash Alternative or the Share Alternative, each Klondex shareholder would be entitled to receive US$0.8411 in cash and 0.4136 Hecla shares. Klondex shareholders may also elect to receive US$0.8411 in cash and 0.4136 of a Hecla share and Klondex shareholders who fail to make an election will automatically receive US$0.8411 in cash and 0.4136 of a Hecla share. Klondex shareholders will also receive shares of a newly formed company (Klondex Canada) which will hold Klondex’s Canadian assets, including the True North and Bison Gold Resources properties. We are treating this as a cash plus stock deal where Klondex shareholders will receive US$0.8411 in cash and 0.4136 of a Hecla share.
  3. The acquisition of Orbotech (ORBK) by KLA-Tencor Corporation (KLAC) for $3.2 billion in a cash plus stock deal. Under the terms of the agreement, Orbotech shareholders will receive $38.86 in cash and 0.25 of a share of KLA-Tencor common stock in exchange for each ordinary share of Orbotech.
  4. The acquisition of MuleSoft (MULE) by salesforce.com (CRM) for $6.5 billion in a cash plus stock deal. Under the terms of the transaction, the MuleSoft acquisition consideration will be composed of $36.00 in cash and 0.0711 shares of Salesforce common stock per MuleSoft Class A and Class B common share.

Deal Updates:

  1. March 19, 2018: General Dynamics (GDintends to proceed with its tender offer to acquire all outstanding shares of (CSRA) for $40.75 per share in cash, or a total of $9.6B, despite CACI’s (CACI) unsolicited stock and cash offer of $44 per share.
  2. On March 19, 2018, General Mills (GIS) announced that on March 16, 2018, the U.S. Federal Trade Commission granted early termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.  With the receipt of this clearance, the condition of the announced merger transaction between General Mills and Blue Buffalo Pet Products (BUFF) has been completely satisfied. General Mills continues to expect the transaction to close by May 2018.
  3. On March 19, 2018, magicJack VocalTec (CALL) announced that at an extraordinary general meeting of magicJack shareholders, the shareholders approved the Agreement and Plan of Merger by B. Riley Financial (RILY).
  4. March 19, 2018: According to The Wall Street Journal, Boeing (BA) dropped an opposition to plans for two of its largest suppliers, Rockwell Collins (COL) and United Technologies (UAL) to merge, reflecting pressure on the aerospace industry to deliver its record backlog of jetliners.
  5. On March 20, 2018, General Dynamics (GD) and CSRA (CSRA) announced that they have entered into an amendment to their definitive merger agreement under which General Dynamics will acquire all outstanding shares of CSRA for $41.25 per share in cash, an increase from the prior $40.75 per share offer. The transaction is now valued at $9.7 billion, including the assumption of $2.8 billion in CSRA debt.
  6. On March 21, 2018, The European Union approved Bayer’s (BAYRY) buyout of Monsanto (MON) in a massive agriculture business deal, but says they will have to shed over $7.4 billion in firms and other remedies to ensure fair competition in the market.
  7. On March 21, 2018, LyondellBasell (LYB) announced that the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, with respect to its pending acquisition of A. Schulman (SHLM).
  8. March 21, 2018: According to Bloomberg, in the latest complication for Qualcomm (QCOM), China’s regulators are seeking more protections for local companies before approving the U.S. chipmaker’s proposed purchase of NXP Semiconductors (NXPI).
  9. On March 21, 2018, The Georgia Public Service Commission unanimously approved the merger of Dominion Energy (D), and SCANA Corporation (SCG)
  10. On March 21, 2018, Penn National Gaming (PENN) announced that at separate meetings, The Pennsylvania Gaming Control Board and the West Virginia Lottery Commission approved the Company’s pending acquisition of Pinnacle Entertainment (PNK). The completion of the proposed transaction is contingent on receipt of additional regulatory approvals, as well as certain other conditions.
  11. On March 22, 2018, The government and AT&T (Texchanged opening salvos in a federal trial Thursday as the U.S. seeks to block the telephone giant from absorbing Time Warner (TWX), in a case that could shape how consumers get — and how much they pay for — streaming TV and movies.
  12. On March 23, 2018, Snyder’s-Lance (LNCE) announced that its shareholders, at a special meeting, approved the previously announced proposed acquisition of the Company by Campbell Soup Company (CPB). The closing of the transaction is anticipated to occur on or about Monday, March 26, 2018, subject to the satisfaction of customary closing conditions at such time.
  13. On March 23, 2018, Qualcomm Incorporated (QCOM) announced that Qualcomm River Holdings has extended the offering period of its previously announced cash tender offer to purchase all of the outstanding common shares of NXP Semiconductors (NXPI). The tender offer is now scheduled to expire on April 2, 2018, unless extended or earlier terminated, in either case pursuant to the terms of the Purchase Agreement.
  14. March 23, 2018: Kearny Financial (KRNY) and Clifton Bancorp (CSBK) expect that their proposed merger transaction will be completed prior to market hours on April 2, 2018.
  15. March 23, 2018: DST Systems (DST) announced that it has extended its previously announced consent solicitation and solicitation of approvals for the termination agreement.

Closed Deals:

  1. The acquisition of Key Technology (KTEC) by Duravant on March 21, 2018. It took 55 days for this deal to be completed.
  2. The acquisition of Crystal Rock Holdings (CRVP) by Cott Corporation (COT) on March 23, 2018. It took 38 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
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.90 04/01/2018 87.24% 5307.18%
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $18.38 03/31/2018 84.98% 6203.81%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.49 09/30/2018 67.79% 131.60%
ESRX 03/08/2018 Cigna Corporation (CI) $88.67 $70.16 12/31/2018 26.38% 34.39%
NXTM 08/07/2017 Fresenius Medical Care (N/A) $30.00 $24.53 06/30/2018 22.30% 84.78%
SCG 01/03/2018 Dominion Energy, Inc. (D) $45.37 $37.20 06/30/2018 21.97% 83.52%
AET 12/03/2017 CVS Health (CVS) $195.99 $168.11 12/31/2018 16.58% 21.62%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $50.62 $43.86 06/30/2019 15.40% 12.20%
JASO 11/17/2017 JASO Holdings Limited, JASO Parent Limited and JASO Acquisition Limited (N/A) $7.55 $6.65 03/31/2018 13.53% 987.97%
TWX 10/22/2016 AT&T, Inc. (T) $103.61 $92.57 06/21/2018 11.93% 50.05%

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 Monsanto (MON), 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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