Merger Arbitrage Mondays – November 12, 2018

Merger activity increased last week with twelve new deals announced and three 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 four new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 141
Total Number of Deals Not Completed in 2018 14
Total Number of Pending Deals
Cash Deals 47
Stock Deals 33
Stock & Cash Deals 17
Special Conditions 6
Total Number of Pending Deals 103
Total Deal Size $1.32 trillion

New Deals:

  1. The acquisition of Datawatch Corporation (DWCH) by Altair (ALTR) for $176 million or $13.10 per share in cash. We added DWCH as a potential deal to the Deals in the Works section on January 5, 2018 and the price after the news of the potential deal came out was $11.40.
  2. The acquisition of Inuvo (INUV) by ConversionPoint Technologies for $75.5 million or $2.22 per share in cash.
  3. The acquisition of Bojangles’ (BOJA) by Durational Capital Management and The Jordan Company for $675.15 million or $16.10 per share in cash. We added BOJA as a potential deal to the Deals in the Works section on September 28, 2018 and the price after the news of the potential deal came out was $15.70.
  4. The acquisition of ConvergeOne Holdings (CVON) by affiliates of CVC Fund VII for $1.8 billion or $12.50 per share in cash.
  5. The acquisition of Investment Technology Group (ITG) by Virtu Financial (VIRT) for $558.73 million or $30.30 per share in cash. We added ITG as a potential deal to the Deals in the Works section on October 4, 2018 and the price after the news of the potential deal came out was $27.65.
  6. The acquisition of Owens Realty Mortgage (ORM) by Ready Capital Corporation (RC) for $257.89 million in an all stock deal. Under the terms of the agreement, each ORM share will be converted into 1.441 Ready Capital shares, based on a fixed exchange ratio. The exchange ratio is subject to certain adjustments if either company’s book value per share, as defined in the merger agreement, declines by more than 3%.
  7. The acquisition of Asterias Biotherapeutics (AST) by BioTime (BTX) for $79.21 million in an all stock deal. Under the terms of the merger agreement, Asterias stockholders will receive 0.71 common share of BioTime for each share of common stock of Asterias they own.
  8. The acquisition of Western Gas Partners (WES) by Western Gas Equity Partners (WGP) for $11.47 billion in an all stock deal. Under the terms of the Agreement, the public unitholders of WES will receive 1.525 units of WGP per WES unit owned.
  9. The acquisition of ARRIS International (ARRS) by CommScope (COMM) for $7.4 billion or $31.75 per share in cash.
  10. The acquisition of Finisar Corporation (FNSR) by II-VI Incorporated (IIVI) for $2.15 billion in a cash plus stock deal. Under the terms of the agreement, Finisar’s stockholders will receive, $15.60 per share in cash and 0.2218 shares of II-VI common stock.
  11. The acquisition of Black Box Corporation (BBOX) by AGC Networks for $209.52 million or $1.08 per share in cash.
  12. The acquisition of Apptio (APTI) by an affiliate of Vista Equity Partners for $1.94 billion or $38.00 per share in cash.

Deal Updates:

  1. On November 5, 2018, Barrick Gold Corporation (ABX) announced that the Company’s shareholders have voted to approve the issuance of Barrick common shares in connection with the Merger of Barrick and Randgold Resources Limited (GOLD).
  2. On November 6, 2018, B. Riley Financial (RILY) and magicJack VocalTec (CALL) announced that they have received regulatory approval from the U.S. Federal Communications Commission related to B. Riley’s pending acquisition of magicJack. The parties have agreed to a scheduled closing date of November 14, 2018.
  3. On November 6, 2018, Walt Disney’s (DIS) offer to buy Twenty-First Century Fox Inc’s (FOXA) entertainment assets won approval from the European Commission, subject to Disney selling interests in factual TV channels in Europe.
  4. On November 7, 2018, Randgold Resources (GOLD) shareholders approved the all-stock takeover by Barrick Gold (ABX).
  5. On November 7, 2018, Hydro One Limited and Avista Corporation (AVAannounced the five independent directors selected to serve on the new Avista Board of Directors, if the proposed merger is approved by utility commissions in Washington, Idaho and Oregon.
  6. On November 7, 2018, Dun & Bradstreet (DNB) announced that Dun & Bradstreet stockholders voted to approve the proposed merger transaction with an investor group led by affiliates of CC Capital Partners LLC, Bilcar, LLC, Cannae Holdings, Inc. and funds affiliated with Thomas H. Lee Partners, L.P.
  7. On November 7, 2018, stockholders of K2M Group Holdings (KTWOapproved the adoption of the Agreement and Plan of Merger by and among Stryker Corporation, Austin Merger Sub Corp. and K2M.
  8. November 12, 2018: According to Reuters, Takeda Pharmaceutical announced that it will seek investor backing for its acquisition of Shire (SHPG) next month and aims to close the deal on January 8, 2019. Takeda also said that it would hold an extraordinary general meeting of shareholders to vote on the purchase on December 5, 2018.

Closed Deals:

  1. The acquisition of CA, Inc. (CA) by Broadcom (AVGO) on November 5, 2018. It took 117 days for this deal to be completed.
  2. The acquisition of WSI Industries (WSCI) by Polaris Industries (PII) on November 7, 2018. It took 62 days for this deal to be completed.
  3. The acquisition of K2M Group Holdings (KTWO) by Stryker Corporation (SYK) on November 9, 2018. It took 71 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
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.18 03/31/2019 88.14% 231.44%
APTI 11/11/2018 an affiliate of Vista Equity Partners (N/A) $38.00 $24.85 03/31/2019 52.92% 138.96%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $15.9 10/31/2018 29.56% -899.11%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $10.5 12/31/2018 28.57% 212.83%
BBOX 11/11/2018 AGC Networks Ltd (N/A) $1.08 $0.87 12/31/2018 24.14% 179.80%
SCG 01/03/2018 Dominion Energy, Inc. (D) $48.34 $40.18 12/31/2018 20.30% 151.19%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.63 12/01/2018 17.28% 331.93%
ORBK 03/19/2018 KLA-Tencor Corporation (KLAC) $62.68 $54.7 12/31/2018 14.59% 108.67%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.04 $6.19 06/30/2019 13.79% 21.89%
RSYS 07/02/2018 Reliance Industries Limited (N/A) $1.72 $1.54 12/31/2018 11.69% 87.07%

List of all pending deals:

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

Disclaimer: I hold positions in Finisar (FNSR), 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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