Merger Arbitrage Mondays – Nearly $12 Billion Of New Deals Announced

Merger activity increased with seven new deals announced and two 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 three new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2019 170
Total Number of Deals Not Completed in 2019 9
Total Number of Pending Deals
Cash Deals 41
Stock Deals 20
Stock & Cash Deals 9
Special Conditions 5
Total Number of Pending Deals 75
Total Deal Size $1.25 trillion

New Deals:

  1. The acquisition of Carbonite (CARB) by Open Text Corporation (OTEX) for $1.42 billion or $23.00 per share in cash. We added CARB as a potential deal to the Deals in the Works section on September 6, 2019, and the price after the news of the potential deal came out was $15.08.
  2. The merger of Foamix Pharmaceuticals (FOMX) with Menlo Therapeutics (MNLO) for $177.27 million in an all stock deal. Under the terms of the merger agreement, each share of Foamix stock will be exchanged for 0.5924 of a  share of Menlo common stock and a contingent stock right (“CSR”). There are certain adjustments to the ownership levels for each company’s shareholders as follows that result from an adjustment to the exchange ratio under the Merger Agreement prior to closing or post-closing through the issuance of CSRs to Foamix shareholders based on the results of two phase III trials for Menlo’s lead late stage product candidate serlopitant for the treatment of pruritus (itch) associated with prurigo nodularis (“PN”) :
    • If one of the Phase III PN trials fails to meet its primary endpoint at or before May 31, 2020, Foamix shareholders will receive an additional 0.6815 of a share of Menlo common stock for each Foamix share, increasing pro forma ownership of the combined company by Foamix shareholders to 76%
    • If both Phase III PN trials fail to meet their primary endpoints at or before May 31, 2020, Foamix shareholders will receive 1.2082 additional Menlo shares for each Foamix share, increasing pro forma ownership of the combined company by Foamix shareholders to 82%
    • If both the Phase III PN trials are successful with results announced by May 31, 2020, then no additional Menlo shares will be issued to Foamix shareholders and pro forma ownership by Foamix shareholders will remain 59%
    • In the event that the results of the Phase III PN trials are received prior to closing (or if the results of neither trial has been announced by May 31, 2020 and the closing occurs thereafter), then the exchange ratio will be amended based on the clinical trial results and no CSRs will be issued.
  3. The acquisition of KEMET Corporation (KEM) by Yageo Corporation for $1.8 billion or $27.20 per share in cash.
  4. The acquisition of Ladenburg Thalmann Financial Services (LTS) by The Advisor Group for $1.3 billion or $3.50 per share in cash. We added LTS as a potential deal to the Deals in the Works section on November 1, 2019, and the price after the news of the potential deal came out was $2.62.
  5. The acquisition of Craft Brew Alliance (BREW) by Anheuser-Busch for approximately $321 million or $16.50 per share in cash.
  6. The acquisition of Continental Building Products (CBPX) by Compagnie de Saint-Gobain S.A. for $1.4 billion or $37.00 per share in cash.
  7. The acquisition of Tech Data Corporation (TECD) by Apollo Global Management (APO) for $5.4 billion or $130.00 per share in cash. We added TECD as a potential deal to the Deals in the Works section on October 15, 2019, and the price after the news of the potential deal came out was $111.34.

Deal Updates:

  1. On November 11, 2019, Acacia Communications (ACIA) announced that it has received regulatory clearance from the German Federal Cartel Office with respect to the proposed acquisition of Acacia Communications by Cisco Systems (CSCO).
  2. On November 12, 2019, according to Bloomberg, AbbVie (ABBV) sold $30 billion of bonds to help finance its acquisition of Allergan (AGN).
  3. On November 13, 2019, Avon Products (AVP) announced that its shareholders approved the previously announced proposed acquisition of Avon by Natura &Co Holding S.A.
  4. On November 14, 2019, New Media Investment Group (NEWM) and Gannett (GCI) jointly announced that their respective special shareholder approved all of the proposals necessary to complete the previously announced acquisition of Gannett by New Media.
  5. On November 14, 2019, Callon Petroleum Company (CPE) and Carrizo Oil & Gas (CRZOannounced an amendment to the existing terms of their agreement for Callon to acquire Carrizo in an all-stock transaction. Under the amended terms, Carrizo shareholders will receive 1.75 shares of Callon common stock for each share of Carrizo common stock they own.
  6. On November 14, 2019, WesBanco (WSBC) and Old Line Bancshares (OLBK) jointly announced that they have received all necessary regulatory approvals for the pending merger between WesBanco and Old Line.
  7. On November 15, 2019, Eldorado Resorts (ERI) and Caesars Entertainment Corporation (CZR) announced that their respective stockholders approved certain actions in connection with Eldorado’s acquisition of Caesars.
  8. On November 15, 2019, Bristol-Myers Squibb Company (BMY) announced that the U.S. Federal Trade Commission (FTC) has accepted the proposed consent order in connection with the pending merger of Bristol-Myers Squibb and Celgene Corporation (CELG), thereby permitting the parties to close the transaction. They expect to close the transaction on November 20, 2019.
  9. On November 15, 2019, Valley National Bancorp (VLY) announced that shareholders of both Valley and Oritani Financial (ORITvoted in favor of the merger at their respective shareholder meetings. Valley now has received the necessary shareholder and regulatory approvals to complete the previously announced merger. The Merger is expected to be effective on December 1, 2019, subject to remaining closing conditions.

Closed Deals:

  1. The acquisition of Dova Pharmaceuticals (DOVA) by Swedish Orphan Biovitrum AB on November 12, 2019. It took 43 days for this deal to be completed.
  2. The acquisition of Empire Resorts (NYNY) by Kien Huat Realty III Limited and Genting Malaysia Berhad on November 15, 2019. It took 88 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 $4.67 03/31/2020 71.31% 192.79%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.9 12/31/2019 39.23% 325.44%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $8.01 $5.83 01/31/2020 37.34% 181.72%
ABDC 08/13/2019 Crescent Capital BDC, Inc. (N/A) $11.02 $9 12/31/2019 22.44% 186.19%
OHAI 08/01/2019 Portman Ridge Finance Corporation (PTMN) $1.46 $1.3 12/31/2019 12.31% 102.10%
TSG 10/02/2019 Flutter Entertainment PLC (PDYPF) $24.56 $22.48 09/30/2020 9.24% 10.61%
MLNX 03/11/2019 NVIDIA Corporation (NVDA) $125.00 $114.8 12/31/2019 8.89% 73.71%
FIT 11/01/2019 Google LLC (N/A) $7.35 $6.8 06/30/2020 8.09% 13.06%
AGN 06/25/2019 AbbVie Inc. (ABBV) $197.05 $183.61 03/31/2020 7.32% 19.80%
ACIA 07/08/2019 Cisco Systems, Inc. (CSCO) $70.00 $67.08 07/31/2020 4.35% 6.18%

List of all pending deals:

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

Disclaimer: I hold long positions in Sprint (S), 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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