Merger Arbitrage Mondays – July 2, 2018

Merger activity decreased last week with six new deals announced. The second of the three semiconductor deals that had large spreads because of concerns that Chinese regulators might not approve the deal, received Chinese regulatory approval last week. The acquisition of Cavium (CAVM) by Marvell (MRVL) saw the spread on the deal collapse to just 0.17%. The spread on the deal was as high as 17.49% on May 11th. The Microsemi acquisition closed on May 29th and that only leaves the acquisition of NXP Semiconductors (NXPI) by Qualcomm, which had a wide spread of 16.68% as of last Friday.

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 74
Total Number of Deals Not Completed in 2018 6
Total Number of Pending Deals
Cash Deals 41
Stock Deals 16
Stock & Cash Deals 21
Special Conditions 9
Total Number of Pending Deals 87
Total Deal Size $1.03 trillion

New Deals:

  1. The acquisition of Education Realty Trust (EDR) by Greystar Student Housing Growth and Income Fund for $4.6 billion or $41.50 per share in cash. We added EDR as a potential deal to the Deals in the Works section on June 1, 2018 and the price after the news of the potential deal came out was $37.94. Under the Merger Agreement, EdR will discontinue its regular quarterly dividends. However, if the transaction is completed after October 15, 2018, EDR stockholders will receive a per diem amount of approximately $0.00435 per share for each day from October 15, 2018 until (but not including) the closing date.
  2. The acquisition of Xerium Technologies (XRM) by Andritz AG (ANDR) for $1.27 billion or $13.50 per share in cash.
  3. The acquisition of Pinnacle Foods (PF) by Conagra Brands (CAG) for $10.9 billion. Under the terms of the agreement, each share of Pinnacle Foods common stock will be converted into the right to receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock. We added PF as a potential deal to the Deals in the Works section on May 31, 2017 and the price after the news of the potential deal came out was $60.68.
  4. The acquisition of Keryx Biopharmaceuticals (KERX) by Akebia Therapeutics (AKBA) for $567.35 million in an all stock deal. Under the terms of the agreement, Keryx shareholders will receive 0.37433 common shares of Akebia for each share of Keryx they own.
  5. The acquisition of Convergys Corporation (CVG) by SYNNEX Corporation (SNX) for $2.8 billion in an all stock deal. Under the terms of the agreement, Convergys shareholders will receive $13.25 per share in cash and 0.1193 shares of SYNNEX common stock for each Convergys common share they own, subject to a collar for an implied price of $26.50. The collar mentioned in the agreement states that, (i) if the Parent Closing Price is less than 85% of the Base Parent Trading Price, which is $111.0766, the Base Exchange Ratio will be 0.1263 (ii) if the Parent Closing Price is greater than 115% of the Base Parent Trading Price, the Base Exchange Ratio will be 0.1141. We added CVG as a potential deal to the Deals in the Works section on May 11, 2018 and the price after the news of the potential deal came out was $25.19.
  6. The acquisition of Echelon Corporation (ELON) by Adesto Technologies (IOTS) for $45 million or $8.50 per share in cash.

Deal Updates:

  1. On June 26, 2018, Tallgrass Energy Partners (TEP) and Tallgrass Energy (TEGP) announced that at a special meeting today, TEP unitholders overwhelmingly approved the stock-for-unit merger transaction.
  2. On June 27, 2018, The Walt Disney Company (DIS) announced that the Antitrust Division of the United States Department of Justice has cleared the pending acquisition by Disney of Twenty-First Century Fox (FOX).
  3. On June 27, 2018, LyondellBasell (LYB) announced that it has received antitrust clearance from the European Commission for its pending acquisition of A. Schulman (SHLM).
  4. On June 28, 2018, Genworth Financial (GNW) and China Oceanwide Holdings Group announced they have agreed to a fifth waiver and agreement of each party’s right to terminate the previously announced merger agreement. The fifth waiver and agreement extends the previous deadline of July 1, 2018 to August 15, 2018 to allow additional time for continued regulatory review of the transaction.
  5. On June 28, 2018, Marvell (MRVL) announced that China’s State Administration for Market Regulation has approved the company’s previously announced merger transaction with Cavium (CAVM). The merger remains subject to customary closing conditions and Marvell currently expects the merger to close in July 2018.
  6. On June 28, 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 July 6, 2018, unless extended or earlier terminated.
  7. On June 29, 2018, Kemper Corporation (KMPR) and Infinity Property and Casualty Corporation (IPCCannounced receipt of all regulatory approvals necessary to complete the previously announced proposed acquisition by Kemper of Infinity. The acquisition is subject to closing conditions and is expected to close on July 2, 2018.
  8. On June 29, 2018, WMIH Corp. (WMIH) and Nationstar Mortgage Holdings (NSM) announced that the stockholders of both companies approved all proposals relating to the merger of WMIH and Nationstar.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $16.59 07/31/2018 104.94% 1320.83%
RAD 02/18/2018 Albertsons Companies, Inc. (N/A) $2.50 $1.73 09/30/2018 44.51% 180.51%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.5 08/15/2018 20.67% 171.44%
SCG 01/03/2018 Dominion Energy, Inc. (D) $45.61 $38.52 12/31/2018 18.41% 36.93%
ESRX 03/08/2018 Cigna Corporation (CI) $90.12 $77.21 12/31/2018 16.72% 33.52%
NXPI 10/27/2016 QUALCOMM Incorporated (QCOM) $127.50 $109.27 07/06/2018 16.68% 1522.36%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $168.8 06/30/2019 15.37% 15.45%
CTWS 03/15/2018 SJW Group (SJW) $75.33 $65.32 12/31/2018 15.32% 30.72%
GGP 03/26/2018 Brookfield Property Partners (BPY) $23.50 $20.43 07/31/2018 15.03% 189.13%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $49.17 $43.07 06/30/2019 14.16% 14.24%

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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