Merger Arbitrage Mondays – April 30, 2018

Merger activity increased last week with seven new deals announced and five 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 51
Total Number of Deals Not Completed in 2018 5
Total Number of Pending Deals
Cash Deals 41
Stock Deals 12
Stock & Cash Deals 16
Collars 1
Special Conditions 7
Total Number of Pending Deals 76
Total Deal Size $812.47 billion

New Deals:

  1. The acquisition of Vectren Corporation (VVC) by CenterPoint Energy (CNP) for $8.12 billion or $72.00 per share in cash. We added VVC as a potential deal to the Deals in the Works section on August 22, 2017 and the price after the news of the potential deal came out was $65.25.
  2. The acquisition of Charter Financial Corporation (CHFN) by CenterState Bank Corporation (CSFL) for $360.1 million in a cash plus stock deal. Under the terms of the agreement, Charter stockholders will receive 0.738 of a share of CSFL common stock and $2.30 in cash consideration for each outstanding share of Charter common stock.
  3. The acquisition of CYS Investments (CYS) by Two Harbors Investment (TWO) for $1.33 billion. In connection with the merger, CYS stockholders will exchange their shares of CYS common stock for newly issued shares of Two Harbors common stock as well as aggregate cash consideration of $15,000,000. The number of Two Harbors shares issued will be based on an exchange ratio to be determined by dividing 96.75% of CYS’ adjusted book value per share by 94.20% of Two Harbors’ adjusted book value per share. For illustrative purposes, assuming the merger occurs and the exchange ratio was based on March 31, 2018 adjusted book value per share, CYS stockholders would receive $7.79 of combined cash and stock consideration per share of CYS common stock owned, which represents a premium of approximately 17.7% over the CYS closing price per share on April 25, 2018. The actual exchange ratio for the merger will be publicly announced at least five business days prior to the required stockholder votes on the merger. We are treating this a “Special Conditions” deal with a deal value of $7.79/share.
  4. The acquisition of Mattersight Corporation (MATR) by an affiliate of NICE for $105.92 million or $2.7 per share in cash.
  5. The acquisition of Quality Care Properties (QCP) by Welltower (WELL) for $3.15 billion or $20.75 per share in cash. This deal is contingent upon ProMedica Health System assuming the rights and obligations of QCP pursuant to the original plan sponsor agreement between QCP and HCR ManorCare Inc. (“HCR ManorCare”) entered into on March 2, 2018. As a result, ProMedica will acquire HCR ManorCare at the completion of HCR ManorCare’s Chapter 11 bankruptcy process.
  6. The acquisition of Sprint Corporation (S) by T-Mobile US (TMUS) for $59 billion in an all stock deal. Under the terms of the agreement, Sprint shareholders will receive 0.10256 T-Mobile shares for each Sprint share or the equivalent of 9.75 Sprint shares for each T-Mobile US share. We added S as a potential deal to the Deals in the Works section on September 19, 2017 and the price after the news of the potential deal came out was $8.20.
  7. The acquisition of DCT Industrial Trust (DCT) by Prologis (PLD) for $8.4 billion in an all stock deal. Under the terms of the agreement, DCT shareholders will receive 1.02 Prologis shares for each DCT share they own.

Deal Updates:

  1. On April 23, 2018, McDermott International (MDR) confirmed that on April 20, 2018 its Board of Directors rejected an unsolicited, non-binding proposal received from Subsea 7 S.A. on April 17, 2018 to acquire all of the outstanding shares of McDermott common stock for USD 7.00 per share. McDermott International and CB&I (CBI) also announced that, following the closing of the combination, the combined company intends to retain the name McDermott.
  2. On April 23, 2018, Akorn (AKRXfiled a complaint in Delaware Chancery Court asking that Fresenius Kabi AG be required to fulfill its obligations under the definitive merger agreement.
  3. On April 24, 2018, Genworth Financial (GNW) and China Oceanwide Holdings Group reported that they have withdrawn and re-filed their joint voluntary notice with the Committee on Foreign Investment in the United States (CFIUS) to provide CFIUS additional time to review and discuss the proposed transaction between Genworth and Oceanwide.
  4. On April 24, 2018, Sinclair Broadcast Group (SBGI) announced that it will sell nine TV stations to Standard Media Group for $441.7 million as part of its plan to meet regulatory approval for its pending $3.9 billion acquisition of Tribune Media (TRCO).
  5. On April 25, 2018, Student Transportation (STB) announced that it has obtained a final court order from the Ontario Superior Court of Justice approving its previously announced arrangement with Spinner Can Acquireco, a company sponsored by Caisse de dépôt et placement du Québec and Ullico. The Arrangement is expected to close on or about Friday, April 27, 2018.
  6. On April 26, 2018, Sinovac Biotech (SVA) announced that it entered into Amendment No. 2 to the Amalgamation Agreement. The Amendment extends the Termination Date to May 26, 2018.
  7. On April 26, 2018, Rosetta Genomics (ROSG) announced that its shareholders approved a proposed merger with a subsidiary of Genoptix at an extraordinary general meeting of shareholders. The completion of the merger will be on or about May 27, 2018, subject to satisfaction of customary closing conditions.
  8. On April 27, 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 May 11, 2018, unless extended or earlier terminated.

Closed Deals:

  1. The acquisition of Cogentix Medical (CGNT) by LABORIE Medical Technologies on April 23, 2018. It took 42 days for this deal to be completed.
  2. The acquisition of U.S. Geothermal (HTM) by Ormat Technologies (ORA) on April 24, 2018. It took 90 days for this deal to be completed.
  3. The acquisition of Blue Buffalo Pet Products (BUFF) by General Mills (GIS) on April 24, 2018. It took 60 days for this deal to be completed.
  4. The acquisition of Archrock Partners (APLP) by Archrock (AROC) on April 26, 2018. It took 114 days for this deal to be completed.
  5. The acquisition of Student Transportation (STB) by company sponsored by Caisse de dépôt et placement du Québec and and Ullico on April 27, 2018. It took 58 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 $14.815 04/30/2018 129.50% 0.00%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.84 07/01/2018 91.20% 536.89%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.62 09/30/2018 54.32% 129.59%
NXPI 10/27/2016 QUALCOMM Incorporated (QCOM) $127.50 $102.49 05/31/2018 24.40% 287.32%
CBI 12/18/2017 McDermott International, Inc. (MDR) $17.03 $14.34 06/30/2018 18.78% 112.39%
SCG 01/03/2018 Dominion Energy, Inc. (D) $44.39 $37.52 12/31/2018 18.31% 27.27%
ESRX 03/08/2018 Cigna Corporation (CI) $91.09 $77.21 12/31/2018 17.98% 26.78%
GGP 03/26/2018 Brookfield Property Partners (BPY) $23.50 $19.96 07/31/2018 17.74% 70.36%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $48.75 $41.93 06/30/2019 16.26% 13.93%
DCT 04/29/2018 Prologis, Inc. (PLD) $67.91 $58.75 09/30/2018 15.59% 37.20%

List of all pending deals:

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

Disclaimer: I hold positions in WGL Holdings (WGL), AveXis (AVXS), 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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