Merger Arbitrage Mondays – November 5, 2018

Merger activity increased last week with seven 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 was one new deal announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2018 138
Total Number of Deals Not Completed in 2018 14
Total Number of Pending Deals
Cash Deals 43
Stock Deals 30
Stock & Cash Deals 16
Special Conditions 5
Total Number of Pending Deals 94
Total Deal Size $1.29 trillion

New Deals:

  1. The acquisition of Penn Virginia Corporation (PVAC) by Denbury Resources (DNR) for $1.7 billion in a cah plus stock deal. Under the terms of the definitive merger agreement, shareholders of Penn Virginia will receive, subject to proration, a combination of 12.4 shares of Denbury common stock and $25.86 of cash for each share of Penn Virginia common stock.  Penn Virginia shareholders will be permitted to elect all cash, all stock or a mix of stock and cash, subject to proration, which will result in the aggregate issuance of approximately 191.6 million Denbury shares and payment of $400 million in cash.
  2. The acquisition of WildHorse Resource Development Corporation (WRD) by Chesapeake Energy Corporation (CHK) for $3.977 billion in a cash plus stock deal. Under the terms of the agreement, at the election of each WildHorse common shareholder, the consideration will consist of either 5.989 shares of Chesapeake common stock or a combination of 5.336 shares of Chesapeake common stock and $3 in cash, in exchange for each share of WildHorse common stock. We are treating this as a cash plus stock type of deal.
  3. The acquisition of Electro Scientific Industries (ESIO) by MKS Instruments (MKSI) for $1 billion or $30.00 per share in cash.
  4. The acquisition of LSC Communications (LKSD) by Quad/Graphics (QUAD) for $1.4 billion in an all stock deal. Under the terms of the agreement, LSC Communications shareholders will receive 0.625 shares of Quad Class A common stock for each LSC Communications share they own.
  5. The acquisition of Intersections (INTX) by WC SACD One Parent for $131.78 million or $3.68 per share in cash.
  6. The acquisition of Newfield Exploration Company (NFX) by Encana Corporation (ECA) for $7.7 billion in an all stock deal. Under the terms of the merger agreement, Newfield shareholders will receive 2.6719 Encana common shares for each share of Newfield common stock.
  7. The acquisition of Pacific Biosciences of California (PACB) by Illumina (ILMN) for $742.9 million or $8.00 per share in cash.

Deal Updates:

  1. On October 29, 2018, LifePoint Health (LPNT) announced that its stockholders approved the proposed agreement to merge LifePoint and RCCH HealthCare Partners.
  2. On October 30, 2018, T-Mobile US (TMUS) announced that it has received shareholder approval on proposals related to the company’s previously announced merger with Sprint Corporation (S).
  3. On November 1, 2018, Nevsun Resources (NSU) announced that it has been advised by Zijin Mining Group that Zijin has received the second of three required regulatory approvals from the People’s Republic of China for Zijin’s proposed friendly takeover bid of Nevsun.

Closed Deals:

  1. The acquisition of RLJ Entertainment (RLJE) by AMC Networks (AMCX) on October 31, 2018. It took 93 days for this deal to be completed.
  2. The acquisition of KapStone Paper and Packaging Corporation (KS) by WestRock Company (WRK) on November 2, 2018. It took 277 days for this deal to be completed.
  3. The acquisition of Senomyx (SNMX) by Firmenich on November 2, 2018. It took 46 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 $4.16 12/01/2018 30.53% 428.58%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $16.97 10/31/2018 21.39% -1561.52%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $11.45 12/31/2018 17.90% 116.70%
SCG 01/03/2018 Dominion Energy, Inc. (D) $46.76 $40.01 12/31/2018 16.86% 109.90%
RSYS 07/02/2018 Reliance Industries Limited (N/A) $1.72 $1.52 12/31/2018 13.16% 85.76%
ORBK 03/19/2018 KLA-Tencor Corporation (KLAC) $62.18 $55.3 12/31/2018 12.45% 81.12%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.03 $6.27 06/30/2019 12.06% 18.58%
SHPG 05/08/2018 Takeda Pharmaceutical Company Limited (TKPYY) $194.74 $176.28 06/30/2019 10.47% 16.13%
RHT 10/28/2018 IBM (IBM) $190.00 $172.24 12/31/2019 10.31% 8.94%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $46.14 $41.86 06/30/2019 10.22% 15.74%

List of all pending deals:

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