Merger Arbitrage Mondays – Willis Towers Watson and Aon plc combine in an all stock deal

Merger activity decreased last week with three new deals announced and four deals closing and one deal terminated.

Founded in 1828, Willis Towers Watson Public Limited Company (WLTW) is a leading global advisory, broking and solutions company. On March 5, 2019, Aon plc (AON) announced that it was considering an an all-share business combination with Willis Towers Watson. A little over a year later, the all stock combination of the two companies was confirmed on March 9, 2020.

The second deal announced last week was the merger of SB One Bancorp (SBBX) with Provident Financial Services (PFS). The combined organization will have approximately $12 billion in assets and will rank as the 3rd largest bank headquartered in New Jersey.

The intense bidding war between Brookfield (BIP) and Macquarie Infrastructure and Real Assets for the acquisition of Cincinnati Bell (CBB) finally came to an end after Cincinnati terminated its deal with Brookfield and agreed to be acquired by Macquarie Infrastructure.

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 last week.

Weekly Spread Changes

The table below shows weekly spread changes between March 6, 2020 and March 13, 2020.

Symbol Quote Acquiring
Company Quote
Last Week
Spread Change
CDOR 7.6895 NexPoint Hospitality Trust (N/A) 44.35% 6.02% 38.33% All Cash
FSBC 12.75 Evans Bancorp, Inc. (EVBN) 27 39.61% 7.68% 31.93% All Cash
SMRT 0.67 Kingswood Capital Management, L.P. (N/A) 0.00 34.33% 3.38% 30.95% All Cash
TGE 16.6 Blackstone Infrastructure Partners (N/A) 35.24% 8.93% 26.31% All Cash
PGNX 3.15 Lantheus Holdings, Inc. (LNTH) 12.92 27.15% 3.13% 24.02% All Stock
FIT 6.39 Google LLC (GOOG) 1219.73 15.02% 18.17% -3.15% All Cash
MINI 30.59 WillScot Corporation (WSC) 12.29 -3.38% 1.18% -4.56% All Stock
YTRA 2 Ebix, Inc. (EBIX) 16.29 -18.55% -12.19% -6.36% All Stock
NTGN 1.46 BioNTech SE (BNTX) 30.93 33.47% 43.69% -10.22% All Stock
CY 23.11 Infineon Technologies AG (IFNNY) 16.4825 3.20% 45.69% -42.49% All Cash

Due to the unrest in the financial market caused by the escalating coronavirus crisis, we saw significant weekly spread changes for various stocks in our list of active deals. Condor Hospitality Trust (CDOR) which is expected to close today had a weekly spread change of 38.33%, followed by FSB Bancorp (FSBC), Stein Mart (SMRT) and Tallgrass Energy (TGE).

Earlier this month, Infineon’s takeover of Cypress Semiconductor (CY) was supposed to be in trouble when there were reports that U.S. national security officials had recommended that President Donald Trump block the deal. This report sent Cypress shares down by almost 35%. In an odd turn of events, the following Monday, the Committee on Foreign Investment in the U.S. (CFIUS) went ahead and approved the deal, causing the stock to rally back up again.

Deal Statistics:

Total Number of Deals Closed in 2020 33
Total Number of Deals Not Completed in 2020 3
Total Number of Pending Deals
Cash Deals 41
Stock Deals 25
Stock & Cash Deals 5
Special Conditions 3
Total Number of Pending Deals 74
Aggregate Deal Consideration $528.22 billion

New Deals:

  1. The combination of Willis Towers Watson Public Limited Company (WLTW) and Aon plc (AON) for $34.45 billion in an all stock deal. Under the terms of the agreement, each WTW Shareholder will receive 1.08 New Aon Ireland Shares for each WTW Share (subject to any adjustment under Section 2.1(d)(v) of the Business Combination Agreement). We added WLTW as a potential deal to the Deals in the Works section on March 5, 2019, and the price after the news of the potential deal came out was $179.57.
  2. The merger of SB One Bancorp (SBBX) with Provident Financial Services (PFS) for $208.9 million in an all stock deal. Under the terms of the agreement, the exchange ratio will be fixed at 1.357 Provident shares for each share of SB One.
  3. The acquisition of  Cincinnati Bell (CBB) by Macquarie Infrastructure Partners for $2.9 billion or $15.50 per share in cash. We added CBB as a potential deal to the Deals in the Works section on January 24, 2020, and the price after the news of the potential deal came out was $13.75.

Deal Updates:

  1. On March 8, 2020, Forescout Technologies (FSCTannounced the expiration of the 30-day “go-shop” period under the terms of the merger agreement among Forescout and Advent International.
  2. On March 9, 2020, Cypress Semiconductor (CY) announced that it has been informed by the Committee on Foreign Investment in the United States (CFIUS) that CFIUS has completed its review of Cypress’s previously announced merger transaction with Infineon Technologies AG and determined that there are no unresolved national security concerns with respect to the proposed merger.
  3. On March 10, 2020, MutualFirst Financial (MFSF) announced that it received the requisite approvals of its stockholders for the Company’s pending merger with Northwest Bancshares at a special meeting of the Company’s stockholders.
  4. On March 11, 2020, KEMET Corporation (KEM) announced that the Committee on Foreign Investment in the United States (CFIUS) has notified the Company that it will continue its evaluation of the previously announced acquisition of KEMET by Yageo Corporation with a 45-day investigation period.
  5. On March 12, 2020, LogMeIn (LOGM) announced that its stockholders voted to adopt the previously announced definitive agreement in which LogMeIn will be acquired in a transaction led by Francisco Partners.
  6. On March 12, 2020, Pattern Energy Group (PEGI) announced that its stockholders voted to approve the Company’s pending merger transaction with Canada Pension Plan Investment Board at the Special Meeting of Stockholders.
  7. On March 12, 2020, El Paso Electric Company (EE) and The Infrastructure Investments Fund announced that the New Mexico Public Regulation Commission (NMPRC) approved IIF’s proposed acquisition of EPE.
  8. On March 12, 2020, California Public Utilities Commission (CPUC) announced that it has issued a proposal to approve the merger of Sprint (S) and T-Mobile (TMUS) with conditions.

Closed Deals:

  1. The acquisition of Foamix Pharmaceuticals (FOMX) by Menlo Therapeutics (MNLO) on March 9, 2020. It took 119 days for this deal to be completed.
  2. The acquisition of Zayo Group Holdings (ZAYO) by Digital Colony Partners and EQT Infrastructure IV fund on March 9, 2020. It took 306 days for this deal to be completed.
  3. The acquisition of InterXion Holding (INXN) by Digital Realty Trust (DLR) on March 13, 2020. It took 136 days for this deal to be completed.
  4. The acquisition of AK Steel Holding Corporation (AKS) by Cleveland-Cliffs (CLF) on March 13, 2020. It took 101 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
CDOR 07/22/2019 NexPoint Hospitality Trust (N/A) $11.10 $7.6895 03/16/2020 44.35% 16188.73%
FSBC 12/19/2019 Evans Bancorp, Inc. (EVBN) $17.80 $12.75 06/30/2020 39.61% 135.11%
TGE 12/17/2019 Blackstone Infrastructure Partners (N/A) $22.45 $16.6 06/30/2020 35.24% 120.21%
SMRT 01/31/2020 Kingswood Capital Management, L.P. (N/A) $0.90 $0.67 06/30/2020 34.33% 117.10%
NTGN 01/16/2020 BioNTech SE (BNTX) $1.95 $1.46 06/30/2020 33.47% 114.16%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.12 03/31/2020 31.80% 725.35%
PGNX 10/02/2019 Lantheus Holdings, Inc. (LNTH) $4.01 $3.15 05/15/2020 27.15% 162.45%
SORL 11/29/2019 Ruili International Inc. (N/A) $4.72 $3.77 06/30/2020 25.20% 85.96%
WEBK 12/05/2019 Cambridge Bancorp (CATC) $33.94 $28.21 06/30/2020 20.30% 69.24%
CZR 06/24/2019 Eldorado Resorts, Inc. (ERI) $10.04 $8.49 06/30/2020 18.23% 62.20%

List of all pending deals:

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

The number of active deals in our Merger Arbitrage Tool decreased last week to 74 as 4 active deals were completed. The aggregate deal consideration increased to $528.22 billion, from last week’s $493.4 billion. The spike occurred after the announcement of the $34.45 billion combination of Willis Towers Watson Public Limited Company (WLTW) and Aon plc (AON).

Condor Hospitality Trust (CDOR) moved to the top of our table of ‘Top 10 deals with largest spreads’ with a spread of 44.35%, followed by FSB Bancorp (FSBC) at 39.61% and Tallgrass Energy (TGE) at 35.24%.

Disclaimer: I hold a long position in 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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