Merger activity sputtered to a stop again last week with no new deals announced and one deal closing. This is the fifth week this year with no new deals announced. There were however some potential deals that were announced last week.
On Monday, May 11, 2020, according to Bloomberg, Amazon.com (AMZN) had discussed a potential takeover of AMC Entertainment Holdings (AMC). At a time when the COVID-19 pandemic has resulted in a significant increase in demand for meal-delivery business, Uber Technologies (UBER) announced that it is seeking to acquire Grubhub (GRUB). According to Reuters, on May 12, 2020, Hedge fund Elliott Management publicly called on Alexion Pharmaceuticals (ALXN) to sell itself, a week after Alexion Pharmaceuticals entered into a merger agreement to acquire Portola Pharmaceuticals (PTLA). On May 13, 2020, according to Bloomberg, Billionaire Anil Agarwal announced that he plans to take Indian commodities giant Vedanta (VEDL) private in order to simplify his investments. Tetraphase Pharmaceuticals (TTPH) received an unsolicited bid from Melinta Therapeutics almost two months after entering into a merger agreement with AcelRx Pharmaceuticals (ACRX).
Most of these potential deals could make sense but I am perplexed by the rumor of Amazon.com wanting to acquire AMC. I could see the synergies with Amazon.com acquiring Whole Foods but fail to see it with a leveraged movie theatre company. Uber Eats was the fastest growing division for Uber pre-crisis and it makes sense that they want to try to gain additional market share by acquiring a competitor like Grubhub. Considering Grubhub acquired Yelp’s Eat24 meal delivery service in 2017, it is possible that regulator might look at the deal closely if this rumored acquisition goes through. Although with Doordash and Postmates, there is plenty of competition in this space.
In the deal updates section, Legg Mason received approval from its shareholders for its merger with Franklin Resources, Standard Diversified (SDI) and Turning Point Brands (TPB) were granted early termination by the FTC under the HSR Act and WABCO Holdings (WBC) and ZF Friedrichshafen AG received regulatory clearance from the Chinese State Administration for Market Regulation.
While not exactly a deal update, investors analyzed the language in Simon Property Group’s (SPG) 10Q filing for any hints about how the mall REIT was thinking about its acquisition of Taubman Centers (TCO). An investor that goes by the moniker Wolf of M Street on Twitter highlights some of this change in language in this tweet.
The spread on the deal spiked sharply after this 10Q for the third quarter ended March 31, 2020 was filed as you can see from the spread history chart below and from our Weekly Spread Changes table below.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.
There were five new deals announced in the Deals in the Works section last week.
Weekly Spread Changes:
The table below shows weekly spread changes between May 8, 2020, and May 15, 2020.
|CDOR||2.9||NexPoint Hospitality Trust (N/A)||282.76%||222.67%||60.09%||All Cash|
|GNW||2.7||China Oceanwide Holdings Group Co., Ltd. (N/A)||101.11%||76.30%||24.81%||All Cash|
|TCO||38.53||Simon Property Group, Inc. (SPG)||51.32||36.26%||18.72%||17.54%||All Cash|
|FSCT||29.52||Advent International (N/A)||11.79%||2.42%||9.37%||All Cash|
|BREW||15.015||Anheuser-Busch (N/A)||9.89%||5.57%||4.32%||All Cash|
|CORV||0.413333||ADVANZ PHARMA (N/A)||1.61%||6.44%||-4.83%||Special Conditions|
|TTPH||2.19||AcelRx Pharmaceuticals, Inc. (ACRX)||1.4||-59.71%||-51.64%||-8.07%||All Stock|
|LACQ||11.4||GTWY Holdings Limited (N/A)||0.88%||10.58%||-9.70%||Special Conditions|
|QUMU||2.35||Synacor, Inc. (SYNC)||1.21||-17.10%||-1.48%||-15.62%||All Stock|
|YTRA||0.97||Ebix, Inc. (EBIX)||17.44||79.79%||110.82%||-31.03%||All Stock|
|Total Number of Deals Closed in 2020||59|
|Total Number of Deals Not Completed in 2020||6|
|Total Number of Pending Deals|
|Stock & Cash Deals||4|
|Total Number of Pending Deals||54|
|Aggregate Deal Consideration||$531.04 billion|
- On May 11, 2020, 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 Standard Diversified (SDI) by Turning Point Brands (TPB).
- On May 15, 2020, Tetraphase Pharmaceuticals (TTPH) received an unsolicited proposal from Melinta Therapeutics to acquire Tetraphase for $27.0 million in cash, plus an additional $12.5 million in cash potentially payable under contingent value rights to be issued in the transaction. The Tetraphase Board is evaluating the Melinta Proposal and has not made a determination as to whether the proposal constitutes a superior offer under the terms of the AcelRx Merger Agreement.
- On May 15, 2020, WABCO Holdings (WBC) and ZF Friedrichshafen AG announced that the Chinese State Administration for Market Regulation provided regulatory clearance for their previously announced merger. All required regulatory approvals have now been received and WABCO and ZF expect to close the merger on May 29, 2020.
- On May 15, 2020, shareholders of Legg Mason (LM) approved the company’s merger with Franklin Resources (BEN) at a special meeting of shareholders.
- The acquisition of SORL Auto Parts (SORL) by Ruili International on May 15, 2020. It took 168 days for this deal to be completed.
Top 10 deals with largest spreads:
|CDOR||07/22/2019||NexPoint Hospitality Trust (N/A)||$11.10||$2.9||06/30/2020||282.76%||2345.61%|
|GNW||10/23/2016||China Oceanwide Holdings Group Co., Ltd. (N/A)||$5.43||$2.7||06/30/2020||101.11%||838.76%|
|YTRA||07/17/2019||Ebix, Inc. (EBIX)||$1.74||$0.97||06/30/2020||79.79%||661.93%|
|TCO||02/10/2020||Simon Property Group, Inc. (SPG)||$52.50||$38.53||06/30/2020||36.26%||300.77%|
|TCBI||12/09/2019||Independent Bank Group, Inc. (IBTX)||$27.91||$24.12||06/30/2020||15.72%||130.41%|
|CETV||10/27/2019||PPF Group N.V. (N/A)||$4.58||$3.97||06/30/2020||15.37%||127.46%|
|FIT||11/01/2019||Google LLC (GOOG)||$7.35||$6.55||06/30/2020||12.21%||101.32%|
|FSCT||02/06/2020||Advent International (N/A)||$33.00||$29.52||06/30/2020||11.79%||97.79%|
|DLPH||01/28/2020||BorgWarner Inc. (BWA)||$11.96||$11.21||12/31/2020||6.70%||10.72%|
List of all pending deals:
List of all pending deals:
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