Merger Arbitrage Mondays – May 14, 2018

Merger activity decreased last week with four new deals announced and one pending deal 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 two new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 53
Total Number of Deals Not Completed in 2018 5
Total Number of Pending Deals
Cash Deals 45
Stock Deals 12
Stock & Cash Deals 18
Collars 1
Special Conditions 9
Total Number of Pending Deals 84
Total Deal Size $945.81 billion

New Deals:

  1. The acquisition of Gramercy Property Trust (GPT) by affiliates of Blackstone Real Estate Partners VIII for $7.6 billion or $27.50 per share in cash.
  2. The acquisition of Xcerra Corporation (XCRA) by Cohu (COHU) for $627 million in a cash plus stock deal. Under the terms of the agreement, Xcerra shareholders will be entitled to receive $9.00 in cash and 0.2109 of a share of Cohu common stock, subject to the terms of the definitive agreement.
  3. The acquisition of Shire (SHPG) by Takeda Pharmaceutical Company Limited (TKPYY) for $77.78 billion in a cash plus stock deal. Under the terms of the acquisition, Shire shareholders will be entitled to receive, for each Shire share, $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda ADSs. We have used $20.61 as the price for the Takeda ADS and multiplied it by 1.678 for the stock portion of the deal. We have added this as a Special Conditions deal.
  4. The acquisition of ARMO BioSciences (ARMO) by Eli Lilly and Company (LLY) for $1.6 billion or $50 per share in cash. It is not often that we see deals where the acquiring company expects the deal to close in less than two months.

Deal Updates:

  1. On May 7, 2018, Monsanto (MON) Chairman and CEO Hugh Grant announced that he will leave the company after it’s acquired by Germany’s Bayer AG. The St. Louis company said that Grant will work to see the $57 billion deal through and oversee operations before it closes. Bayer expects the deal to close in the second quarter.
  2. On May 9, 2018, Media company Twenty-First Century Fox (FOX) agreed to buy seven TV stations from Sinclair Broadcast Group (SBGI) for $910 million. The move comes as Sinclair is selling some stations to meet regulatory approval for its pending acquisition of Tribune Media (TRCO).
  3. On May 10, 2018, Gener8 Maritime (GNRT) announced that it has established a record date of May 3, 2018, and a meeting date of June 11, 2018, for a special meeting of its shareholders to, among other things, consider and vote on a proposal to approve the previously announced Agreement and Plan of Merger with Euronav NV (EURN).
  4. On May 10, 2018, Linden Capital disclosed a 7.9% active stake in Layne Christensen (LAYN) and said that it has sent a letter to LAYN’s board voicing opposition to the current structure of the merger deal with Granite Construction (GVA).
  5. On May 11, 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 25, 2018, unless extended or earlier terminated.

Closed Deals:

  1. The acquisition of Chicago Bridge & Iron Company (CBI) by McDermott International (MDR) on May 10, 2018. It took 143 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 $14.03 06/30/2018 142.34% 1105.39%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.07 07/01/2018 76.87% 584.55%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.61 09/30/2018 55.28% 145.16%
NXPI 10/27/2016 QUALCOMM Incorporated (QCOM) $127.50 $99.01 05/31/2018 28.77% 617.81%
ESRX 03/08/2018 Cigna Corporation (CI) $91.04 $72.8 12/31/2018 25.05% 39.58%
SCG 01/03/2018 Dominion Energy, Inc. (D) $43.28 $35.29 12/31/2018 22.65% 35.79%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $49.59 $41.93 06/30/2019 18.26% 16.18%
CAVM 11/20/2017 Marvell Technology Group Ltd. (MRVL) $85.73 $72.97 06/30/2018 17.49% 135.83%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $166.45 06/30/2019 17.00% 15.06%
NXTM 08/07/2017 Fresenius Medical Care (N/A) $30.00 $26.29 09/30/2018 14.11% 37.06%

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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