The third week of January, 2020 saw four new deals, all of which include a stock consideration. Two of these deals were cash plus stock deals, one was an all stock deal and we are classifying one of them as a “special conditions” deal.
The tough battle between WESCO (WCC) and Clayton, Dubilier & Rice for Anixter (AXE) finally came to an end after WESCO outbid CD&R with an approximately $100 bid, which is a 40% premium to AXE’s closing price of $71.40 on October 29, 2019, the day before CD&R announced their original deal for Anixter priced at $81/share. This deal has been classified as a special conditions deal in our Merger Arbitrage Tool, since the stock portion of the deal is subject to adjustments.
The second deal announced last week was the Primo Water (PRMW) acquisition by Cott Corporation (COT). Primo Water’s stock appreciated 26% after the deal was announced. Cott intends to transition into a pure-play water solutions provider through this acquisition. Cott sold its soft drink division to Refresco for $1.25 billion in 2018 and it plans to evaluate strategic alternatives for its S&D Coffee and Tea business, including a sale of S&D.
The acquisition of Pope Resources (POPE) by Rayonier (RYN) was the third deal announced last week. This deal between the two timber companies is structured as a cash or stock deal wherein POPE shareholders have the right to elect to receive either shares of Rayonier or cash in exchange for each unit of POPE resources. POPE’s stock shot up more than 35% after the deal was announced. Tom Ringo, President and CEO of Pope Resources said in a statement, “This transaction will provide our unitholders with the opportunity to defer capital gain recognition and participate in Rayonier’s long-term upside potential, benefitting from a well-managed and diversified timberland portfolio while still enjoying a strong dividend yield. Like Pope Resources, Rayonier has a rich heritage of sustainably managing timberlands, and we look forward to working closely with them to realize the benefits of this combination on behalf of our unitholders.”
BioNTech (BNTX), a German biotechnology company announced its initial public offering last October. Barely a few months later, the company announced last week that it is acquiring Neon Therapeutics (NTGN) in order to expand its cell therapy portfolio. The deal is structured as an all stock deal. NTGN’s stock appreciated more than 38% after the deal was announced.
Some of the risks involved in risk arbitrage include regulatory approvals, shareholder approvals, state and international approvals that determine the timely completion of a deal. In the deal updates section for this week, Caesars Entertainment Corporation (CZR) and El Paso Electric Company (EE) received state approvals for their respective deals. OMNOVA Solutions (OMN) received international approval from the European Commission and Innophos Holdings (IPHS) received shareholders approval pertaining to its acquisition.
Merger activity increased last week with four new deals announced, three deals closing and one deal terminated. 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 2020 | 10 |
Total Number of Deals Not Completed in 2020 | 2 |
Total Number of Pending Deals | |
Cash Deals | 40 |
Stock Deals | 20 |
Stock & Cash Deals | 6 |
Special Conditions | 6 |
Total Number of Pending Deals | 72 |
Aggregate Deal Consideration | $416.63 billion |
New Deals:
Deal Updates:
Closed Deals:
Deals Terminated:
Top 10 deals with largest spreads:
Symbol | Announced Date | Acquiring Company | Closing Price | Last Price | Closing Date | Profit | Annualized Profit |
---|---|---|---|---|---|---|---|
S | 04/29/2018 | T-Mobile US, Inc. (TMUS) | $8.43 | $4.82 | 01/31/2020 | 74.80% | 2275.13% |
GNW | 10/23/2016 | China Oceanwide Holdings Group Co., Ltd. (N/A) | $5.43 | $4.3 | 03/31/2020 | 26.28% | 133.22% |
NTGN | 01/16/2020 | BioNTech SE (BNTX) | $2.09 | $1.69 | 06/30/2020 | 23.69% | 53.05% |
ABDC | 08/13/2019 | Crescent Capital BDC, Inc. (N/A) | $11.02 | $9.22 | 03/31/2020 | 19.52% | 98.97% |
LACQ | 12/30/2019 | GTWY Holdings Limited (N/A) | $11.50 | $10.42 | 06/30/2020 | 10.36% | 23.21% |
FIT | 11/01/2019 | Google LLC (N/A) | $7.35 | $6.68 | 06/30/2020 | 10.03% | 22.46% |
TSG | 10/02/2019 | Flutter Entertainment PLC (PDYPF) | $26.87 | $25.16 | 09/30/2020 | 6.78% | 9.71% |
MLNX | 03/11/2019 | NVIDIA Corporation (NVDA) | $125.00 | $119.81 | 03/31/2020 | 4.33% | 21.96% |
AMTD | 11/25/2019 | The Charles Schwab Corporation (SCHW) | $52.39 | $50.53 | 12/31/2020 | 3.67% | 3.86% |
FSBC | 12/19/2019 | Evans Bancorp, Inc. (EVBN) | $17.80 | $17.24 | 06/30/2020 | 3.25% | 7.27% |
List of all pending deals:
Disclaimer: I hold long positions in Sprint (S) and Mellanox Technologies (MLNX). 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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