Merger Arbitrage Mondays – July 30, 2018

Merger activity increased last week with four new deals announced, two pending deals closing and one deal failing. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

Qualcomm’s (QCOM) acquisition of NXP Semiconductors (NXPI) fell through last week nearly 21 months after the deal was announced in October 2016. I participated in the merger briefly and exited the position when it was trading close to the original acquisition price of $110/share. The deal was renegotiated higher to $127.50 in February of this year after the activist firm Elliott Management got involved. Despite numerous extensions, approvals from various regulators and Qualcomm fending off a potential acquisition by Broadcom, the final straw that broke this deal’s back was failure to get approval from Chinese regulators.

The expanding trade war with a bolstered CFIUS and aggressive Chinese regulators will result in fewer cross-border deals. The ones that do are likely to have large spreads that reflect the risk of these deals falling apart and in some instances opportunities for arbitrageurs.

There was one new deal announced in the Deals in the Works section.

Deal Statistics:

New Deals:

1. The acquisition of LifePoint Health (LPNT) by funds managed by affiliates of Apollo Global Management for $5.6 billion or $65.00 per share in cash. We added LPNT as a potential deal to the Deals in the Works section on July 20, 2017 and the price after the news of the potential deal came out was $47.90.
2. The acquisition of FCB Financial Holdings (FCB) by Synovus Financial (SNV) for $2.9 billion in an all stock deal. Under the terms of the agreement, FCB shareholders will receive a fixed ratio of 1.055 shares of Synovus common stock for each common share of FCB. We added FCB as a potential deal to the Deals in the Works section on April 13, 2017 and the price after the news of the potential deal came out was $56.25.
3. The acquisition of Green Bancorp (GNBC) by Veritex Holdings (VBTX) for $1 billion in an all stock deal. Under the terms of the agreement, shareholders of Green will receive 0.79 shares of Veritex common stock for each share of Green common stock.

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