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Merger Arbitrage Mondays – June 18, 2018

  • June 18, 2018

Merger activity increased last week with two new deals announced and five pending deals closing. Several deals with large spreads on account of regulatory hurdles including Bayer’s acquisition of Monsanto, AT&T’s (T) acquisition of Time Warner and China Oceanwide’s acquisition of Genworth (GNW) recently managed to get past those hurdles.

For a while last week it looked like Qualcomm’s (QCOM) acquisition of NXP Semiconductors (NXPI) would get past its last hurdle of approval by Chinese regulators but then it turned out that celebrations were premature. There were three semiconductor deals with large spreads a few weeks ago including the acquisition of Microsemi Corporation by Microchip Technology Incorporated (MCHP), the acquisition of Cavium (CAVM) by Marvell Technology Group (MRVL) and the acquisition of NXP Semiconductors by Qualcomm. The Microsemi acquisition closed on May 29th and the spreads on the other semiconductor deals narrowed considerably in May. Whether the NXPI deal gets the final nod from Chinese regulators will partly depend on ZTE’s fate and the growing trade war between the U.S. and China, which has now moved past the sable rattling phase.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

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

Deal Statistics:

Total Number of Deals Closed in 201869
Total Number of Deals Not Completed in 20186
Total Number of Pending Deals
Cash Deals37
Stock Deals13
Stock & Cash Deals18
Special Conditions9
Total Number of Pending Deals77
Total Deal Size$987.77 billion

New Deals:

  1. The acquisition of Envision Healthcare Corporation (EVHC) by KKR for $9.9 billion or $46.00 per share in cash. We added EVHC as a potential deal to the Deals in the Works section on November 14, 2017 and the price after the news of the potential deal came out was $28.52.
  2. The acquisition of USG Corporation (USG) by Knauf for $7 billion or $44.00 per share in cash. We added USG as a potential deal to the Deals in the Works section on May 1, 2018 and the price after the news of the potential deal came out was $42.00.

Deal Updates:

  1. June 11, 2018: According to Reuters, California’s utilities regulator has told SJW Group (SJW) it must seek approval for its proposed merger with Connecticut Water Service (CTWS).
  2. On June 12, 2018, AT&T (T) won court approval to buy Time Warner (TWX), rebuffing an attempt by U.S. President Donald Trump’s administration to block the deal and likely setting off a wave of corporate mergers.
  3. On June 12, 2018, Hydro One Limited and Avista Corporation (AVA) announced that the Montana Public Service Commission has voted to approve the proposed merger, with conditions.
  4. On June 13, 2018, Granite (GVA) announced that Layne (LAYNshareholders voted to approve the adoption of the merger agreement with Granite at a special meeting of Layne’s shareholders.
  5. On June 14, 2018, A. Schulman (SHLM) announced that during a special stockholder meeting, A. Schulman stockholders approved the merger agreement under which LyondellBasell Industries (LYB) will acquire all of the outstanding shares of A. Schulman common stock.
  6. On June 15, 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 June 22, 2018, unless extended or earlier terminated.
  7. On June 15, 2018, Annaly Capital Management (NLY) announced that it has extended its previously announced exchange offer to purchase all of the outstanding shares of common stock of MTGE Investment Corp. (MTGE). The Offer will now expire on July 18, 2018, unless further extended.
  8. June 15, 2018: According to Reuters, Sprint (S) and T-Mobile (TMUS) have informed the Federal Communications Commission that they will formally file an application asking for approval to merge on Monday, June 18, 2018.

Closed Deals:

  1. The acquisition of Gener8 Maritime (GNRT) by Euronav NV (EURN) on June 12, 2018. It took 173 days for this deal to be completed.
  2. The acquisition of Ablynx NV (ABLX) by Sanofi (SNY) on June 12, 2018. It took 134 days for this deal to be completed.
  3. The acquisition of Layne Christensen Company (LAYN) by Granite Construction Incorporated (GVA) on June 14, 2018. It took 120 days for this deal to be completed.
  4. The acquisition of Time Warner (TWX) by AT&T (T) on June 14, 2018. It took 600 days for this deal to be completed.
  5. The acquisition of Blackhawk Network Holdings (HAWK) by Silver Lake and P2 Capital Partners on June 15, 2018. It took 150 days for this deal to be completed.

Top 10 deals with largest spreads:

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
AKRX04/24/2017Fresenius Kabi (N/A)$34.00$15.4206/30/2018120.49%3664.99%
RAD02/18/2018Albertsons Companies, Inc. (N/A)$2.50$1.7809/30/201840.45%141.96%
SHPG05/08/2018Takeda Pharmaceutical Company Limited (TKPYY)$194.74$161.7506/30/201920.40%19.75%
SCG01/03/2018Dominion Energy, Inc. (D)$44.36$37.3112/31/201818.90%35.20%
GNW10/23/2016China Oceanwide Holdings Group Co., Ltd. (N/A)$5.43$4.6507/01/201816.77%470.97%
CTWS03/15/2018SJW Group (SJW)$75.80$6512/31/201816.62%30.95%
GGP03/26/2018Brookfield Property Partners (BPY)$23.50$20.6607/31/201813.75%116.68%
STC03/16/2018Fidelity National Financial, Inc. (FNF)$49.54$43.6706/30/201913.44%13.01%
NXPI10/27/2016QUALCOMM Incorporated (QCOM)$127.50$113.1606/30/201812.67%385.45%
S04/29/2018T-Mobile US, Inc. (TMUS)$6.15$5.4906/30/201912.11%11.72%

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 SteadyMed (STDY), WGL Holdings (WGL), GGP Inc. (GGP), magicJack VocalTec (CALL), 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.

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