Merger Arbitrage Mondays – Alexion’s Acquisition Of Achillion Includes A Free Kicker

Merger activity increased last week with two new deals announced and one deal 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 2019 152
Total Number of Deals Not Completed in 2019 9
Total Number of Pending Deals
Cash Deals 35
Stock Deals 19
Stock & Cash Deals 10
Special Conditions 7
Total Number of Pending Deals 71
Aggregate Deal Consideration $1.18 trillion

New Deals:

  1. The acquisition of Jagged Peak Energy (JAG) by Parsley Energy (PE) for $2.27 billion in an all stock deal. Under the terms of the agreement, Jagged Peak shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley Class A common stock for each share of Jagged Peak common stock they own.
  2. The acquisition of Achillion Pharmaceuticals (ACHN) by Alexion Pharmaceuticals (ALXN) for $930 million or $6.30 per share in cash. The transaction includes the potential for additional consideration in the form of non-tradeable contingent value rights (CVRs), which will be paid to Achillion shareholders if certain clinical and regulatory milestones are achieved within specified periods. These include $1.00 per share for the U.S. FDA approval of danicopan and $1.00 per share for ACH-5228 Phase 3 initiation. We are going to treat this as a “Special Conditions” deal with a value of $6.30 for the purposes of our Merger Arbitrage Tool.

Deal Updates:

  1. On October 15, 2019, Allergan (AGN) announced that its shareholders have voted to approve the previously announced proposed acquisition of Allergan by AbbVie (ABBV).
  2. On October 15, 2019, Nanometrics Incorporated (NANO) and Rudolph Technologies (RTEC) announced that their combined company will be named Onto Innovation, following the close of their previously announced merger of equals. The transaction is expected to close before the end of October.
  3. On October 16, 2019, T-Mobile US’s (TMUS) proposed tie-up with Sprint (Swon formal approval from the Federal Communications Commission in a vote split along party lines.
  4. October 16, 2019: The Federal Trade Commission (FTC) has granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of SemGroup Corporation (SEMG) by Energy Transfer (ET).
  5. October 17, 2019: The Federal Trade Commission (FTC) granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of Roan Resources (ROAN) by Citizen Energy Operating.
  6. On October 18, 2019, Centene Corporation (CNC) and WellCare Health Plans (WCG) announced that the insurance departments of Arizona, Connecticut, Georgia, Ohio and Texas have now also approved Centene’s pending acquisition of WellCare, bringing the total number of states to approve the transaction to 24.

Closed Deals:

  1. The acquisition of International Speedway Corporation (ISCA) by NASCAR Holdings on October 18, 2019. It took 149 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
PACB 11/01/2018 Illumina, Inc. (ILMN) $8.00 $5.46 03/31/2020 46.52% 104.81%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $8.37 $6.42 01/31/2020 30.36% 108.63%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.31 12/31/2019 25.99% 133.59%
ABDC 08/13/2019 Crescent Capital BDC, Inc. (N/A) $11.02 $8.89 12/31/2019 23.96% 123.17%
ONCE 02/25/2019 Roche Holding AG (RHHBY) $114.50 $100.04 04/30/2020 14.45% 27.48%
MLNX 03/11/2019 NVIDIA Corporation (NVDA) $125.00 $111.01 12/31/2019 12.60% 64.79%
OHAI 08/01/2019 Portman Ridge Finance Corporation (PTMN) $1.46 $1.32 12/31/2019 10.61% 54.52%
TSG 10/02/2019 Flutter Entertainment PLC (PDYPF) $21.63 $19.76 09/30/2020 9.46% 10.01%
ACIA 07/08/2019 Cisco Systems, Inc. (CSCO) $70.00 $64.88 07/31/2020 7.89% 10.14%
AGN 06/25/2019 AbbVie Inc. (ABBV) $186.51 $173.6 03/31/2020 7.44% 16.76%

List of all pending deals:

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

Disclaimer: I hold long positions in Mellanox Technologies (MLNX), Pacific Biosciences of California (PACB), Celgene (CELG) and Bristol-Myers Squibb (BMY). 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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