Merger Arbitrage Mondays – October 22, 2018

Merger activity decreased last week with six new deals announced and five 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 was one new deal announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 131
Total Number of Deals Not Completed in 2018 14
Total Number of Pending Deals
Cash Deals 43
Stock Deals 27
Stock & Cash Deals 14
Special Conditions 5
Total Number of Pending Deals 89
Total Deal Size $1.23 trillion

New Deals:

  1. The acquisition of Cambium Learning Group (ABCD) by affiliates of Veritas Capital for $707.56 million or $14.50 per share in cash.
  2. The acquisition of SendGrid (SEND) by Twilio (TWLO) for $2 billion in an all stock deal. Under the terms of the agreement, shareholders of SendGrid will receive 0.485 shares of Twilio Class A common stock per share of SendGrid common stock.
  3. The acquisition of Hanwha Q CELLS (HQCL) by Hanwha Solar Holdings for $825 million or $9.90 per share in cash.
  4. The acquisition of Endocyte (ECYT) by Novartis AG for $2.1 billion or $24.00 per share in cash.
  5. The acquisition of InfraREIT (HIFR) by Oncor Electric Delivery Company for $2.215 billion or $21.00 per share in cash. We added HIFR as a potential deal to the Deals in the Works section on May 24, 2018 and the price after the news of the potential deal came out was $20.26.
  6. The acquisition of Valero Energy Partners (VLP) by Valero Energy Corporation (VLO) for $4.04 billion or $42.25 per share in cash. VLP declared a quarterly cash distribution of $0.551 per unit on all of its outstanding common units for the quarter ended September 30, 2018 (the “Third Quarter Distribution”). The Third Quarter Distribution is payable on November 9, 2018 to unitholders of record at the close of business on November 1, 2018. Under the Merger Agreement, prior to the closing of the Transaction, the GP Board may not declare, and the Partnership may not pay, any distribution other than the Third Quarter Distribution.

Deal Updates:

  1. On October 15, 2018, The Walt Disney Company (DISannounced amendments to terms of exchange offers and consent solicitations for 21st Century Fox America (FOX) Notes. The closing of the Acquisition is expected to occur in the first half of calendar year 2019.
  2. On October 15, 2018, Synovus Financial (SNV) and FCB Financial Holdings (FCB) jointly announced that each company will hold a special meeting on November 29, 2018, for the companies’ respective shareholders to consider and vote on the proposals related to the definitive merger agreement.
  3. On October 15, 2018, Connecticut Water Service (CTWS) sent a letter to shareholders in connection with the previously announced transaction with SJW Group (SJW) stating that the Special Meeting of Connecticut Water Shareholders to vote on the transaction will be held on November 16, 2018.
  4. On October 17, 2018, Tidewater (TDW) and GulfMark Offshore (GLF) announced that a special meeting of both companies has been scheduled for Thursday, November 15, 2018. Subject to approval of both the Tidewater and GulfMark stockholders and other customary closing conditions, the parties expect to close the transaction on or about November 15, 2018.
  5. On October 18, 2018, Takeda Pharmaceutical announced that Japan’s Fair Trade Commission had approved its acquisition of Shire (SHPG).
  6. On October 18, 2018, SUPERVALU (SVU) announced that at a special meeting of stockholders, stockholders of SUPERVALU approved the proposed acquisition of SUPERVALU by United Natural Foods (UNFI). SUPERVALU expects the transaction to close on October 22, 2018.
  7. On October 18, 2018, Perry Ellis International (PERY) announced that its shareholders have approved the proposed transaction with George Feldenkreis. The Company expects to announce consummation of the merger within the coming days.
  8. On October 19, 2018, Lachlan Murdoch, the Chairman and CEO of “FOX,” the company to be spun-off in connection with 21st Century Fox’s (21CF) (FOX) merger with The Walt Disney Company (DIS) announced that AMC’s President and General Manager Charlie Collier has been appointed as the Company’s Chief Executive Officer of Entertainment.
  9. On October 19, 2018, The Navigators Group (NAVG) announced today that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, in connection with its previously announced merger with a direct wholly owned subsidiary of The Hartford Financial Services Group (HIG), expired on October 18, 2018.

Closed Deals:

  1. The acquisition of Pinnacle Entertainment (PNK) by Penn National Gaming (PENN) on October 15, 2018. It took 301 days for this deal to be completed.
  2. The acquisition of Reis (REIS) by Moody’s Corporation (MCO) on October 15, 2018. It took 46 days for this deal to be completed.
  3. The acquisition of Xerium Technologies (XRM) by Andritz AG (ANDR) on October 17, 2018. It took 114 days for this deal to be completed.
  4. The acquisition of Energy XXI Gulf Coast (EGC) by Cox Oil affiliate on October 18, 2018. It took 122 days for this deal to be completed.
  5. The acquisition of Energy Transfer Partners (ETP) by Energy Transfer Equity (ETE) on October 19, 2018. It took 79 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.94 12/01/2018 37.82% 345.08%
SCG 01/03/2018 Dominion Energy, Inc. (D) $49.17 $40.89 12/31/2018 20.25% 105.61%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $17.21 10/31/2018 19.70% 798.86%
CALL 11/09/2017 B. Riley Financial, Inc. (RILY) $8.71 $7.37 12/31/2018 18.18% 94.81%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $11.5 12/31/2018 17.39% 90.68%
KS 01/29/2018 WestRock Company (WRK) $35.00 $30.76 12/31/2018 13.78% 71.87%
ORBK 03/19/2018 KLA-Tencor Corporation (KLAC) $61.56 $54.22 12/31/2018 13.54% 70.61%
OCLR 03/12/2018 Lumentum Holdings Inc. (LITE) $9.55 $8.57 12/31/2018 11.42% 59.52%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $175.01 06/30/2019 11.27% 16.39%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $47.42 $42.69 06/30/2019 11.07% 16.10%

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 Twilio (TWLO), 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.

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