Merger Arbitrage Mondays – Charles Schwab’s Acquisition of Ameritrade Trades At A Small Spread

Merger activity remained unchanged with three 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 no new deals announced in the Deals in the Works section.

Deal Statistics:

Total Number of Deals Closed in 2019 176
Total Number of Deals Not Completed in 2019 9
Total Number of Pending Deals
Cash Deals 45
Stock Deals 19
Stock & Cash Deals 6
Special Conditions 5
Total Number of Pending Deals 75
Aggregate Deal Consideration $1.31 trillion

New Deals:

  1. The acquisition of TD Ameritrade Holding Corporation (AMTD) by The Charles Schwab Corporation (SCHW) for $26 billion in an all stock deal. Under the terms of the agreement, TD Ameritrade stockholders will receive 1.0837 Schwab shares for each TD Ameritrade share. I am surprised the spread on this all stock deal is just 3.5%. Considering how much of the independent Registered Investment Advisor (RIA) market the combined entity will control, regulatory approval is the key risk for this deal.
  2. The acquisition of AVX Corporation (AVX) by Kyocera Corporation for $2.61 billion or $19.50 per share in cash. Kyocera currently owns approximately 72% of AVX’s outstanding shares.
  3. The merger of SORL Auto Parts (SORL) with Ruili International for $351.05 million or $4.72 per share in cash in a management led going-private transaction. We added SORL as a potential deal to the Deals in the Works section on April 25, 2019, and the price after the news of the potential deal came out was $3.89.

Deal Updates:

  1. On November 25, 2019, CBS Corporation (CBS) and Viacom (VIAB) announced that their pending merger is currently expected to close after market hours on Wednesday, December 4, 2019.
  2. On November 27, 2019, Tech Data (TECD) announced that it has entered into an amendment to its previously announced definitive agreement with Apollo Global Management (APO). The Amendment provides that the consideration to be received by holders of Tech Data common stock has been increased to $145 per share in cash from $130 per share in cash, among certain other changes.

Closed Deals:

  1. The acquisition of Oritani Financial (ORIT) by Valley National Bancorp (VLY) on November 29, 2019. It took 156 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 $5.14 03/31/2020 55.64% 169.24%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.96 12/31/2019 37.12% 467.22%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $8.06 $5.92 01/31/2020 36.08% 219.50%
ABDC 08/13/2019 Crescent Capital BDC, Inc. (N/A) $11.02 $9 12/31/2019 22.44% 282.49%
OHAI 08/01/2019 Portman Ridge Finance Corporation (PTMN) $1.46 $1.29 12/31/2019 13.18% 165.86%
MLNX 03/11/2019 NVIDIA Corporation (NVDA) $125.00 $114.9 03/31/2020 8.79% 26.74%
SORL 11/29/2019 Ruili International Inc. (N/A) $4.72 $4.42 06/30/2020 6.79% 11.74%
AGN 06/25/2019 AbbVie Inc. (ABBV) $196.27 $184.94 03/31/2020 6.13% 18.64%
TSG 10/02/2019 Flutter Entertainment PLC (PDYPF) $25.74 $24.29 09/30/2020 5.97% 7.19%
FIT 11/01/2019 Google LLC (N/A) $7.35 $6.96 06/30/2020 5.60% 9.69%

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) and Pacific Biosciences of California (PACB). 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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