Merger Arbitrage Mondays – April 2, 2018

Merger activity increased last week with five 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 were three new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 36
Total Number of Deals Not Completed in 2018 5
Total Number of Pending Deals
Cash Deals 43
Stock Deals 15
Stock & Cash Deals 14
Collars 1
Special Conditions 6
Total Number of Pending Deals 78
Total Deal Size $717.22 billion

New Deals:

  1. The acquisition of iKang Healthcare Group (KANG) by IK Healthcare Investment Limited in a Going Private Transaction for $1.5 billion. Under the terms of the agreement, IK Healthcare Investment Limited will acquire the Company for a cash consideration of US$41.20 per Class A common share or Class C common share of the Company or US$20.60 per American depositary share of the Company, each representing ½ of a Class A Share. We added KANG as a potential deal to the Deals in the Works section on March 12, 2018 and the price after the news of the potential deal came out was $18.80.
  2. The acquisition of Tallgrass Energy Partners (TEP) by Tallgrass Energy GP (TEGP) for $4.79 billion in an all stock deal. Under the terms of the merger agreement, TEGP will acquire the approximately 47.6 million TEP common units held by the public at a fixed exchange ratio of 2.0 TEGP Class A shares for each outstanding common unit.
  3. The acquisition of The Finish Line (FINL) by JD Sports Fashion for $412.08 million or $13.50 per share in cash.
  4. The acquisition of GGP (GGP) by Brookfield Property Partners (BPY) for $36.76 billion. Under the terms of the agreement, GGP shareholders will be entitled to elect to receive, for each GGP common share, either $23.50 in cash or either one BPY unit or one BPR share.  Elections are subject to proration which will be based on aggregate consideration in the transaction of (1) a fixed amount of $9.25 billion in cash and (2) approximately 254 million BPY units / BPR shares, which represents aggregate consideration of approximately 61% cash and approximately 39% of BPY or BPR equity. We added GGP as a potential deal to the Deals in the Works section on November 7, 2017 and the price after the news of the potential deal came out was $21.99.
  5. The acquisition of RSP Permian (RSPP) by Concho Resources (CXO) for $9.5 billion in an all stock deal. Under the terms of the definitive merger agreement, shareholders of RSP will receive 0.320 shares of Concho common stock in exchange for each share of RSP common stock.

Deal Updates:

  1. On March 26, 2018, Layne Christensen Company (LAYNcommented on a recently filed letter by Cetus Capital relating to Layne’s pending merger with Granite Construction Incorporated.
  2. On March 27, 2018, Sinovac Biotech (SVA) announced that on March 26, 2018, it entered into Amendment No. 1 to the Amalgamation Agreement. Under the terms of the agreement, the deal may be terminated by the Company or Parent if the amalgamation has not occurred on or before March 26, 2018. The amendment extends the termination date to April 26, 2018.
  3. On March 27, 2018, Southcross Energy Partners (SXE) announced that its unitholders have voted to approve the previously announced proposed merger of Southcross and American Midstream Partners (AMID).
  4. On March 27, 2018, Hydro One Limited and Avista Corporation (AVAannounced the achievement of an important milestone in the regulatory approval process of their proposed merger.
  5. On March 27, 2018, JA Solar Holdings (JASO) announced that Herman Zhao has resigned as Chief Financial Officereffective March 27, 2018 to pursue other interests.
  6. On March 27, 2018, Genworth Financial (GNW) and China Oceanwide Holdings Group announced they have agreed to a fourth waiver and agreement of each party’s right to terminate the previously announced merger agreement. The fourth waiver and agreement extends the previous deadline of April 1, 2018 to July 1, 2018, and allows additional time for regulatory reviews of the transaction.
  7. On March 27, 2018, Kindred Healthcare (KND) announced that the Court of Chancery of the State of Delaware has ruled in favor of Kindred and its Board of Directors and denied the motion for preliminary injunction filed by Brigade Capital Management regarding the pending acquisition of Kindred by affiliates of TPG Capital, Welsh, Carson, Anderson & Stowe and Humana (HUM).
  8. On March 27, 2018, NXP Semiconductors (NXPI) has sold its stake in a Chinese chip-design joint venture. The sale could potentially help ease competition concerns by lowering NXP’s exposure to the Chinese market as the country’s commerce ministry considers Qualcomm’s (QCOM) takeover bid. Qualcomm has received approval from the other eight of nine required regulators to finalize its acquisition.
  9. On March 28, 2018, DST Systems (DST) announced that at a Special Meeting, DST stockholders voted to approvethe Company’s merger with SS&C (SSNC).
  10. On March 29, 2018, Rite Aid Corporation (RAD) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, in connection with its previously announced merger with Albertsons Companies expired on March 28, 2018.
  11. On March 29, 2018, Stockholders of Pinnacle Entertainment (PNKapproved the acquisition of the Company by Penn National Gaming (PENN) by voting affirmatively to adopt the merger agreement for the transaction.
  12. In Akorn’s (AKRX) 10K filed on February 28, 2018, it is mentioned that the merger may not be completed in a timely manner or at all. Since the deal did not close as scheduled on March 31, 2018, we have extended the closing date for this deal to April 30, 2018.
  13.  In Tribune Media Company’s (TRCO) 10K filed on March 1, 2018, it is mentioned that the Company, currently anticipates the Merger will close in the second quarter of fiscal 2018, but it cannot be certain when or if the conditions for the Merger will be satisfied or waived.
  14. In Bear State Financial’s (BSF) 10K filed on March 16, 2018, it is mentioned that the Merger with Arvest Bank is expected to close during late March or April of 2018, subject to satisfaction of customary closing conditions, including regulatory approval. We have extended the closing date for this deal to April 30, 2018.
  15. We have extended the closing date for the JA Solar Holdings (JASO) deal to April 30, 2018, since the deal did not close as scheduled on March 31, 2018.

Closed Deals:

  1. The acquisition of Snyder’s-Lance (LNCE) by Campbell Soup Company (CPB) on March 26, 2018. It took 98 days for this deal to be completed.
  2. The acquisition of Almost Family (AFAM) by LHC Group (LHCG) on March 30, 2018. It took 134 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 $2.83 07/01/2018 91.87% 372.60%
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $18.71 04/30/2018 81.72% 1065.29%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.68 09/30/2018 48.81% 98.43%
ESRX 03/08/2018 Cigna Corporation (CI) $89.58 $69.08 12/31/2018 29.67% 39.67%
NXTM 08/07/2017 Fresenius Medical Care (N/A) $30.00 $24.86 09/30/2018 20.68% 41.69%
SCG 01/03/2018 Dominion Energy, Inc. (D) $45.11 $37.55 06/30/2018 20.13% 82.58%
AET 12/03/2017 CVS Health (CVS) $197.12 $169.00 12/31/2018 16.64% 22.25%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $50.71 $43.94 06/30/2019 15.41% 12.39%
JASO 11/17/2017 JASO Holdings Limited, JASO Parent Limited and JASO Acquisition Limited (N/A) $7.55 $6.56 04/30/2018 15.09% 196.73%
GGP 03/26/2018 Brookfield Property Partners (BPY) $23.50 $20.46 07/31/2018 14.86% 45.19%

List of all pending deals:

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

Disclaimer: I hold positions in GGP Inc. (GGP), magicJack VocalTec (CALL), 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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