Merger Arbitrage Mondays – Advent Attempts To Walk Away

Merger activity remained stuck in neutral last week with no new deals announced and no deals closing. We did have one deal enter into litigation and arbitrageurs are watching it closely to see if the courts can force the acquiring company to close the deal on the original terms.

There were a few updates for some active deals in our table. Forescout Technologies (FSCT) commenced a litigation against Advent International after Advent notified Forescout that it would not consummate the acquisition on May 18, 2020, as scheduled. The Board of Directors of Tetraphase Pharmaceuticals (TTPH) determined that the latest proposal from Melinta Therapeutics is a “Superior Offer”. Argonaut Gold and Alio Gold (ALO) announced that Argonaut (ARNGF) received approval from their shareholders for their merger agreement and CenterState Bank Corporation (CSFL) and South State Corporation (SSB) received approval from the Board of Governors of the Federal Reserve System for their merger of equals.

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. The Board of Directors of comScore (SCOR) announced last week that they remain focused on evaluating all financial and operational strategies that would maximize shareholder value, including a sale of the Company.

Weekly Spread Changes:

The table below shows weekly spread changes between May 15, 2020, and May 22, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
FSCT 23.4 Advent International (N/A) 41.03% 11.79% 29.24% All Cash
YTRA 1.01 Ebix, Inc. (EBIX) 20.59 103.86% 79.79% 24.07% All Stock
QES 0.815 KLX Energy Services Holdings, Inc. (KLXE) 1.66 -1.34% -18.07% 16.73% All Stock
LACQ 10.42 GTWY Holdings Limited (N/A) 10.36% 0.88% 9.48% Special Conditions
SDI 11.83 Turning Point Brands, Inc. (TPB) 22.96 10.63% 4.75% 5.88% All Stock
TTPH 2.64 AcelRx Pharmaceuticals, Inc. (ACRX) 1.52 -63.71% -59.71% -4.00% All Stock
ASFI 12.4 Stern Group (N/A) 0.00 -7.50% 0.70% -8.20% All Cash
QUMU 2.56 Synacor, Inc. (SYNC) 1.13 -28.93% -17.10% -11.83% All Stock
GNW 3.17 China Oceanwide Holdings Group Co., Ltd. (N/A) 71.29% 101.11% -29.82% All Cash
CDOR 3.17 NexPoint Hospitality Trust (N/A) 250.16% 282.76% -32.60% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 59
Total Number of Deals Not Completed in 2020 6
Total Number of Pending Deals
Cash Deals 24
Stock Deals 22
Stock & Cash Deals 4
Special Conditions 4
Total Number of Pending Deals 54
Aggregate Deal Consideration $531.04 billion

Deal Updates:

  1. On May 18, 2020, Advent International provided notice to Forescout (FSCT) that it would not be proceeding to consummate the acquisition of Forescout on May 18, 2020, as scheduled. Forescout and Advent are engaged in ongoing discussions regarding timing to close and the terms of the transaction. There can be no assurance that Forescout and Advent will be able to reach agreement on terms.
  2. On May 20, 2020, Kearny Financial (KRNY) and MSB Financial (MSBF) announced that the parties to the merger agreement have mutually agreed to extend the deadline by which shareholders of MSBF must properly submit election materials. Due to delays in distribution, the Election Deadline has been extended to June 15, 2020.
  3. On May 20, 2020, Forescout Technologies (FSCTfiled a complaint with the Delaware Court of Chancery asserting that affiliates of Advent International Corporation have violated the terms of their merger agreement with Forescout. Forescout is asking the Court to compel Advent to honor its commitments and immediately complete the pending acquisition of Forescout.
  4. On May 20, 2020, Argonaut Gold and Alio Gold (ALO) announced that Argonaut (ARNGF) shareholders and shareholders and certain securityholders of Alio approved all matters voted on at their respective annual general and special meetings including approving the transaction to combine companies.
  5. On May 21, 2020, Tetraphase Pharmaceuticals (TTPH) announced that its Board of Directors has determined that the latest proposal from Melinta Therapeutics is a “Superior Offer”. The Company has given notice to AcelRx of such determination and of its intention to consider changing its recommendation of the AcelRx Merger Agreement or terminating the AcelRx Merger Agreement unless AcelRx proposes revisions to the terms of the AcelRx Merger Agreement or makes another proposal on or prior to Friday, May 29, 2020 that, if accepted, would result in the Melinta proposal ceasing to be a Superior Offer.
  6. On May 22, 2020, MEET Group (MEET) announced that the upcoming special meeting of stockholders called for the purpose of approving proposals relating to the Agreement and Plan of Merger will now be held by means of a virtual format only.
  7. On May 22, 2020, the Board of Governors of the Federal Reserve System approved the previously announced merger of equals between CenterState Bank Corporation (CSFL) and South State Corporation (SSB) pursuant to the Agreement and Plan of Merger.

Top 10 deals with largest spreads:

Symbol Announced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
Profit Annualized
Profit
CDOR 07/22/2019 NexPoint Hospitality Trust (N/A) $11.10 $3.17 06/30/2020 250.16% 2467.77%
YTRA 07/17/2019 Ebix, Inc. (EBIX) $2.06 $1.01 06/30/2020 103.86% 1024.58%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.17 06/30/2020 71.29% 703.30%
FSCT 02/06/2020 Advent International (N/A) $33.00 $23.40 06/30/2020 41.03% 404.71%
TCO 02/10/2020 Simon Property Group, Inc. (SPG) $52.50 $39.3 06/30/2020 33.59% 331.34%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $3.98 06/30/2020 15.08% 148.72%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.43 06/30/2020 14.31% 141.15%
TCBI 12/09/2019 Independent Bank Group, Inc. (IBTX) $32.20 $28.52 06/30/2020 12.91% 127.33%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $14.91 06/30/2020 10.66% 105.20%
SDI 04/08/2020 Turning Point Brands, Inc. (TPB) $13.09 $11.83 06/30/2020 10.63% 104.84%

List of all pending deals:

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

Disclaimer: 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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