Merger Arbitrage Mondays – Spread On The Taubman Centers Deal Narrows Significantly

Merger activity continued to remain lackluster last week with no new deals announced and four deals closing. There were only two new deals announced in the month of April, the lowest we have seen since we started tracking M&A data more than 10 years ago. I expect May to remain a low volume month but expect a big uptick in smaller acquisitions later this year as the survivors of the crisis start accessing cheap capital for tuck-in acquisitions.

We changed the formula for the spread on the acquisition of FGL Holdings (FG) by Fidelity National Financial, Inc. (FNF) to reflect the fact that at this point most shareholders are likely to receive approximately $7.50 in cash and a stock portion that translates into roughly 0.103 shares of Fidelity National Financial, Inc. (FNF). We had this deal listed as a “special conditions” kind of deal and have now changed it to a “cash plus stock” type of deal. We appreciate the feedback and collaboration we received from subscribers in adjusting the formula for this deal.

The spread for the acquisition of the retail REIT Taubman Centers (TCO) by Simon Property Group (SPG) narrowed considerably last week after Taubman filed a proxy statement with no changes to the cash consideration of the deal. Some arbitrageurs were concerned that the deal might get renegotiated to a lower price and the filing of the proxy statement appears to have put those fears temporarily to rest.

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 last week.

Weekly Spread Changes:

The table below shows weekly spread changes between April 25, 2020 and May 1, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
RESI 10.83 Amherst Residential, LLC (N/A) 0.00 15.42% 1.46% 13.96% All Cash
LACQ 10.41 GTWY Holdings Limited (N/A) 10.47% 0.97% 9.50% Special Conditions
YTRA 1.31 Ebix, Inc. (EBIX) 19.09 45.73% 37.17% 8.56% All Stock
TCBI 27.65 Independent Bank Group, Inc. (IBTX) 29.95 11.69% 5.33% 6.36% All Stock
CORV 0.39 ADVANZ PHARMA (N/A) 7.69% 1.82% 5.87% Special Conditions
WEBK 30.69 Cambridge Bancorp (CATC) 54.29 2.60% 8.03% -5.43% All Stock
TSG 29.11 Flutter Entertainment PLC (PDYPF) 118.62001 -8.19% -0.14% -8.05% All Stock
TCO 41.97 Simon Property Group, Inc. (SPG) 63.2 25.09% 40.26% -15.17% All Cash
FG 10.27 Fidelity National Financial, Inc. (FNF) 26.01 -0.89% 21.95% -22.84% Cash Plus Stock
DLPH 9.56 BorgWarner Inc. (BWA) 27.16 28.81% 53.67% -24.86% All Stock

Deal Statistics:

Total Number of Deals Closed in 2020 54
Total Number of Deals Not Completed in 2020 5
Total Number of Pending Deals
Cash Deals 25
Stock Deals 23
Stock & Cash Deals 6
Special Conditions 3
Total Number of Pending Deals 57
Total Deal Size $531.19 billion

Deal Updates:

  1. On April 29, 2020, KEMET Corporation (KEM) announced that, in connection with the pending acquisition of KEMET by Yageo Corporation, the parties received a notice from the Anti-Monopoly Bureau of the State Administration for Market Regulation in China (SAMR) of its unconditional approval of the pending acquisition of KEMET by Yageo under the Anti-Monopoly Law of China.
  2. On April 30, 2020, The Federal Reserve announced that it was extending the comment period on Morgan Stanley’s (MS) proposed acquisition of E*Trade Financial (ETFC) to June 4 in response to the novel coronavirus pandemic.
  3. On April 30, 2020, The Stars Group (TSG) announced that it expects to complete the pending combination with Flutter Entertainment on May 5, 2020, subject to customary closing conditions.

Closed Deals:

  1. The acquisition of Mellanox Technologies (MLNX) by NVIDIA Corporation (NVDA) on April 27, 2020. It took 413 days for this deal to be completed.
  2. The acquisition of PB Bancorp (PBBI) by Centreville Bank on April 30, 2020. It took 191 days for this deal to be completed.
  3. The acquisition of FSB Bancorp (FSBC) by Evans Bancorp (EVBN) on April 30, 2020. It took 133 days for this deal to be completed.
  4. The acquisition of Carolina Financial Corporation (CARO) by United Bankshares (UBSI) on May 1, 2020. It took 165 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
CDOR 07/22/2019 NexPoint Hospitality Trust (N/A) $11.10 $3.68 06/30/2020 201.63% 1268.88%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.39 06/30/2020 60.18% 378.70%
YTRA 07/17/2019 Ebix, Inc. (EBIX) $1.91 $1.31 06/30/2020 45.73% 287.75%
DLPH 01/28/2020 BorgWarner Inc. (BWA) $12.31 $9.56 12/31/2020 28.81% 43.45%
TCO 02/10/2020 Simon Property Group, Inc. (SPG) $52.50 $41.97 06/30/2020 25.09% 157.89%
RESI 02/18/2020 Amherst Residential, LLC (N/A) $12.50 $10.83 06/30/2020 15.42% 97.04%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $4.01 06/30/2020 14.21% 89.45%
TCBI 12/09/2019 Independent Bank Group, Inc. (IBTX) $30.88 $27.65 06/30/2020 11.69% 73.55%
LACQ 12/30/2019 GTWY Holdings Limited (N/A) $11.50 $10.41 06/30/2020 10.47% 65.89%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $15.04 06/30/2020 9.71% 61.09%

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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