Merger Arbitrage Mondays – October 15, 2018

Merger activity increased last week with eight new deals announced and four 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.

There were two new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 126
Total Number of Deals Not Completed in 2018 14
Total Number of Pending Deals
Cash Deals 41
Stock Deals 27
Stock & Cash Deals 15
Special Conditions 5
Total Number of Pending Deals 88
Total Deal Size $1.22 trillion

New Deals:

  1. The acquisition of Rowan Companies (RDC) by Ensco (ESV) for $3.44 billion in an all stock deal. Under the terms of the transaction agreement, Rowan shareholders will receive 2.215 Ensco shares for each Rowan share.
  2. The acquisition of Navios Maritime Midstream Partners (NAP) by Navios Maritime Acquisition Corporation (NNA) for $270.33 million in an all stock deal. Under the terms of the Transaction, public unitholders of Navios Midstream may exchange each Navios Midstream common unit for either i) 6.292 newly issued shares of Navios Acquisition common stock (or 0.42 shares, after giving effect to the 1:15 reverse stock split) or ii) 1.0 share of a newly issued series of convertible participating preferred stock of Navios Acquisition. Each share of Preferred Stock will be convertible by its holder into 5.1 shares of Navios Acquisition common stock (or 0.34 shares, after giving effect to the 1:15 reverse stock split described below) at any time beginning six months after closing of the transaction. The reverse split is expected to happen before the closing of the transaction.
  3. The acquisition of Antero Midstream Partners (AM) by Antero Midstream GP (AMGP) for $7.41 billion in a cash plus stock deal. Under the terms of the agreement, Antero Midstream Partners public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned. Antero Resources (AR) will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock or a combination of cash and stock.
  4. The acquisition of Esterline Technologies Corporation (ESL) by TransDigm Group Incorporated (TDG) for $4 billion or $122.50 per share in cash. We added ESL as a potential deal to the Deals in the Works section on July 20, 2018 and the price after the news of the potential deal came out was $83.00.
  5. The acquisition of Imperva (IMPV) by Thoma Bravo for $2.1 billion or $55.75 per share in cash.
  6. The acquisition of MBT Financial (MBTF) by First Merchants Corporation (FRME) for $290.9 million in an all stock deal. Under the terms of the agreement, shareholders of MBTF will have the right to receive 0.275 shares of First Merchants common stock for each share of MBTF common stock owned.
  7. The acquisition of Corium International (CORI) by Gurnet Point Capital for $504 million or $12.50 per share in cash.  The agreement also provides for a Contingent Value Right (CVR) of $0.50 per share that is payable based on the U.S. Food and Drug Administration’s approval of Corium’s lead product candidate, Corplex Donepezil, for the treatment of Alzheimer’s disease, prior to March 31, 2020.
  8. The acquisition of L3 Technologies (LLL) by Harris Corporation (HRS) for $18.42 billion in an all stock deal. Under the terms of the agreement, L3 shareholders will receive a fixed exchange ratio of 1.30 shares of Harris common stock for each share of L3 common stock.

Deal Updates:

  1. On October 8, 2018, as part of the integration planning for its pending acquisition of Twenty-First Century Fox (FOX), The Walt Disney Company (DISannounced plans for a new organizational structure for its Media Networks segment, conditional upon closing of the 21st Century Fox transaction.
  2. On October 9, 2018, Pebblebrook Hotel Trust (PEB) and LaSalle Hotel Properties (LHO) announced that their pending merger transaction is on schedule for a planned closing date of November 30, 2018. Pebblebrook and LaSalle will each hold a special meeting of its shareholders on November 27, 2018 to approve Pebblebrook’s proposed acquisition of LaSalle.
  3. On October 10, 2018, Aetna (AET) and CVS Health Corporation (CVSentered into a consent decree with the United States Department of Justice that allows CVS Health’s proposed acquisition of Aetna to proceed, provided Aetna agrees to sell its individual standalone Medicare Part D prescription drug plans.
  4. On October 10, 2018, Orbotech (ORBK) announced that it has received, in connection with the pending merger transaction between Orbotech and KLA-Tencor Corporation, a ruling from the Israeli Tax Authority relating to the tax treatment of Orbotech options, restricted share units and shares issued to certain directors, employees and others.
  5. On October 11, 2018, Energy XXI Gulf Coast (EGC) provided an update regarding the closing of the merger with affiliates of Cox Oil. Based on Cox’s status updates, the companies have agreed to extend the required closing date to October 17, 2018.
  6. On October 11, 2018, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, expired with respect to the previously announced merger between SUPERVALU (SVU) and Jedi Merger Sub a wholly owned subsidiary of United Natural Foods (UNFI).
  7. On October 12, 2018, Broadcom (AVGO) and CA, Inc. (CAobtained clearance under the antitrust laws of the European Union with respect to Broadcom’s pending acquisition of CA. Broadcom expects the acquisition of CA to be completed on November 5, 2018, the first day of its 2019 fiscal year.

Closed Deals:

  1. The acquisition of Syntel (SYNT) by Atos S.E. on October 9, 2018. It took 79 days for this deal to be completed.
  2. The acquisition of Gramercy Property Trust (GPT) by affiliates of Blackstone Real Estate Partners VIII on October 10, 2018. It took 156 days for this deal to be completed.
  3. The acquisition of Web.com Group (WEB) by an affiliate of Siris Capital Group on October 10, 2018. It took 111 days for this deal to be completed.
  4. The acquisition of Envision Healthcare Corporation (EVHC) by KKR on October 11, 2018. It took 122 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
SIR 09/17/2018 Government Properties Income Trust (GOV) $29.26 $19.39 01/31/2019 50.90% 172.03%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.98 12/01/2018 36.43% 282.93%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $11.01 12/31/2018 22.62% 107.20%
SCG 01/03/2018 Dominion Energy, Inc. (D) $47.75 $39.28 12/31/2018 21.55% 102.17%
CALL 11/09/2017 B. Riley Financial, Inc. (RILY) $8.71 $7.28 12/31/2018 19.64% 93.11%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $17.25 10/31/2018 19.42% 443.03%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $170.41 06/30/2019 14.28% 20.20%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $47.52 $42.35 06/30/2019 12.21% 17.27%
ORBK 03/19/2018 KLA-Tencor Corporation (KLAC) $62.16 $55.46 12/31/2018 12.08% 57.24%
EGC 06/18/2018 Cox Oil affiliate (N/A) $9.10 $8.15 10/17/2018 11.66% 2127.30%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium members.

Disclaimer: I hold positions in Rockwell Collins (COL), Pandora (P), 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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter@asifsuria

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