Merger Arbitrage Mondays – September 24, 2018

Merger activity increased last week with nine new deals announced and two 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. For folks who were long SteadyMed (STDY), brokers have started sending out letters with the form you can fill out to make sure 25% of the amount due is not withheld for taxes according to Israeli law. If and when the magicJack VocalTec (CALL) acquisition closes, you can expect to receive a similar form.

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

Deal Statistics:

Total Number of Deals Closed in 2018 113
Total Number of Deals Not Completed in 2018 13
Total Number of Pending Deals
Cash Deals 46
Stock Deals 19
Stock & Cash Deals 17
Special Conditions 4
Total Number of Pending Deals 86
Total Deal Size $1.17 trillion

New Deals:

  1. The acquisition of Select Income REIT (SIR) by Government Properties Income Trust (GOV) for $6.17 billion in an all stock deal. The merger will be a stock for stock exchange whereby SIR shareholders will receive 1.04 shares of GOV for each common share of SIR based upon a fixed exchange ratio. Also as a condition of the merger, after receiving shareholder approval for the merger and prior to its closing, SIR will distribute as a special dividend all 45 million of the common shares it owns in ILPT to SIR shareholders. SIR shareholders will receive approximately 0.502 shares of ILPT for every one share owned of SIR.  Based upon closing prices on September 14, 2018, SIR shareholders will receive $11.69 per share from the ILPT share distribution and $17.57 per share in GOV for a total of $29.26 per share. After the deal was announced, both GOV and ILPT declined sharply because the dividends of both companies will be cut post-merger. So the deal is currently not worth anywhere near the $29.26/share indicated after the deal was announced. We are treating this as a special conditions deal.
  2. The acquisition of Nexeo Solutions (NXEO) by Univar (UNVR) for $2 billion in a cash plus stock deal. Under the terms of the agreement, each share of Nexeo stock issued and outstanding will be converted into 0.305 shares of Univar common stock and $3.29 in cash.
  3. The acquisition of Senomyx (SNMX) by Firmenich for $51.57 million or $1.50 per share in cash.
  4. The acquisition of Nevada Gold & Casinos (UWN) by Maverick Casinos for $40.19 million or $2.50 per share in cash.
  5. The acquisition of Command Security Corporation (MOC) by Prosegur Compañía de Seguridad, S.A. for $53.07 million or $2.85 per share in cash.
  6. The acquisition of Enbridge Energy Management (EEQ) by Enbridge (ENB) in an all stock deal. Under the terms of the agreement, shareholders of Enbridge Energy Management will receive 0.3350 common shares of Enbridge for each Listed Share of EEQ.
  7. The acquisition of Enbridge Energy Partners (EEP) by Enbridge (ENB) in an all stock deal. Under the terms of the agreement, shareholders of Enbridge Energy Partners will receive 0.3350 common shares of Enbridge for each Class A common unit of EEP. The acquired equity of the combined transactions is valued at US $3.5 billion based on the closing price of Enbridge’s common shares on September 17, 2018. ENB is also in the process of acquiring Spectra Energy Partners (SEP), in a $3.3 billion deal that was announced last month.
  8. The acquisition of Blue Hills Bancorp (BHBK) by Independent Bank (INDB) for $797.97 million in a cash plus stock deal. Under the terms of the agreement, each Blue Hills Bancorp stockholder will receive 0.2308 of a share of Independent common stock and $5.25 in cash for each share of Blue Hills Bancorp common stock.
  9. The acquisition of Mazor Robotics (MZOR) by Medtronic (MDT) for $1.64 billion or $58.50 per share in cash.

Deal Updates:

  1. September 17, 2018: According to Reuters, Cigna’s (CI) acquisition of Express Scripts Holding (ESRX) has passed U.S. antitrust scrutiny.
  2. On September 18, 2018, MB Financial (MBFI) announced that it received the requisite approvals of its common stockholders for the Company’s pending merger with Fifth Third Bancorp (FITB).
  3. On September 19, 2018, shareholders at Rent-A-Center (RCIIapproved the company’s merger with Vintage Capital.
  4. On September 19, 2018, AV Homes (AVHI) announced that the election deadline by which AV Homes stockholders may elect the form of merger consideration they wish to receive in connection with the pending merger between AV Homes and a subsidiary of Taylor Morrison Home Corporation will be on September 27, 2018.
  5. On September 20, 2018, Penn National Gaming (PENN) announced that, the Company received approval from The Colorado Division of Gaming in connection with its pending acquisition of Pinnacle Entertainment (PNK).
  6. On September 20, 2018, Hydro One Limited and Avista Corporation (AVA) announced that Hydro One has received a notice from Avista to extend the transaction End Date to March 29, 2019 , as provided for in the merger agreement.
  7. September 22, 2018: According to Reuters, Comcast (CMCSAbeat Twenty-First Century Fox (FOX) in the battle for Sky after offering 30.6 billion pounds ($40 billion) in an auction. Comcast’s knock-out offer thwarted Murdoch’s long-held ambition to win control of Sky, and is also a setback for Walt Disney (DIS) which would have likely been its ultimate owner.

Closed Deals:

  1. The acquisition of Education Realty Trust (EDR) by Greystar Student Housing Growth and Income Fund on September 20, 2018. It took 87 days for this deal to be completed.
  2. The acquisition of Cheniere Energy Partners LP Holdings (CQH) by Cheniere Energy (LNG) on September 20, 2018. It took 93 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $13.22 09/30/2018 157.19% 9562.15%
SCG 01/03/2018 Dominion Energy, Inc. (D) $47.40 $34.86 12/31/2018 35.97% 133.96%
SIR 09/17/2018 Government Properties Income Trust (GOV) $29.26 $21.54 01/31/2019 35.84% 101.41%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.26 12/01/2018 27.46% 147.42%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $17.7 10/31/2018 16.38% 161.63%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $11.61 09/30/2018 16.28% 990.31%
EGC 06/18/2018 Cox Oil affiliate (N/A) $9.10 $7.87 10/10/2018 15.63% 356.54%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $50.47 $45.31 06/30/2019 11.39% 14.89%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.08 $6.39 06/30/2019 10.86% 14.20%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $178.38 06/30/2019 9.17% 12.00%

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 Radisys (RSYS) and magicJack VocalTec (CALL). 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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