Merger Arbitrage Mondays – Tetraphase Pharmaceuticals finds a new home

Merger activity decreased last week with one new deal announced, two deals closing and one deal called off.

After terminating deals with AcelRx Pharmaceuticals (ACRX) and Melinta Therapeutics, Tetraphase Pharmaceuticals (TTPH) agreed to be acquired by La Jolla Pharmaceutical Company (LJPC) last week.

We had removed the Taubman Centers (TCO) deal from our list of active deals earlier this month, after Simon Property Group (SPG) attempted to walk away from its acquisition of the company. Shareholders of Taubman Centers, however approved and adopted the merger agreement last week, even though it seems very unlikely that Simon Property will complete the deal.

Two merger amendments were announced last week. More than a year after announcing their merger agreement, Waste Management (WM) and Advanced Disposal Services (ADSW) announced amendment to their merger agreement. The revised value of the deal is $30.3 per share. The deal’s previous value, when announced on April 15, 2019 was $33.15 per share. Asta Funding (ASFI) also announced an amendment to its merger agreement with the Stern Group, pursuant to which the purchase price has been increased by $1.63 per share from the original purchase price.

In the month of June, we have seen ten potential deals announced, five of which were announced last week.

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 June 19, 2020, and June 26, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GNW 2.49 China Oceanwide Holdings Group Co., Ltd. (N/A) 118.07% 102.61% 15.46% All Cash
QES 0.95 KLX Energy Services Holdings, Inc. (KLXE) 2.19 11.67% 0.79% 10.88% All Stock
CETV 3.355 PPF Group N.V. (N/A) 36.51% 28.29% 8.22% All Cash
LACQ 11.7 GTWY Holdings Limited (N/A) -1.71% -8.09% 6.38% Special Conditions
GILT 6.14 Comtech Telecommunications Corp. (CMTL) 15.18 37.77% 33.82% 3.95% Cash Plus Stock
ADSW 30.15 Waste Management, Inc. (WM) 102.81 0.50% 6.42% -5.92% All Cash
MSBF 11.05 Kearny Financial Corp. (KRNY) 7.54 -11.29% -3.95% -7.34% All Stock
QUMU 2.47 Synacor, Inc. (SYNC) 1.16 -24.39% -14.38% -10.01% All Stock
ASFI 12.92 Stern Group (N/A) -11.22% 5.71% -16.93% All Cash
TTPH 2.6 La Jolla Pharmaceutical Company (LJPC) 4.5 -23.08% 0.00% -23.08% Special Conditions

Deal Statistics:

Total Number of Deals Closed in 2020 71
Total Number of Deals Not Completed in 2020 11
Total Number of Pending Deals
Cash Deals 25
Stock Deals 14
Stock & Cash Deals 3
Special Conditions 2
Total Number of Pending Deals 44
Total Deal Size $535.97 billion

New Deals:

  1. The acquisition of Tetraphase Pharmaceuticals (TTPH) by La Jolla Pharmaceutical Company (LJPC) for $59 million. Under the terms of the definitive merger agreement, the upfront cash consideration in the transaction will be as follows: (i) $2.00 per share of Tetraphase common stock (including common stock underlying restricted stock units, performance-based stock units and pre-funded warrants); (ii) $2.68 per share of Tetraphase common stock underlying the common stock warrants issued by Tetraphase in November 2019; and (iii) $2.69 per share of Tetraphase common stock underlying the common stock warrants issued by Tetraphase in January 2020. Tetraphase equity holders would also be entitled to receive, for each share of Tetraphase common stock, one non-tradeable CVR. The holders of the CVRs would be entitled to receive payments of up to an additional $16.0 million in the aggregate upon the achievement of certain net sales of XERAVA™ in the United States (U.S.) as follows: (i) $2.5 million if 2021 XERAVA U.S. net sales are $20 million; (ii) $4.5 million if XERAVA U.S. net sales are $35 million during any calendar year ending on or prior to December 31, 2024; and (iii) $9.0 million if XERAVA U.S. net sales are $55 million during any calendar year ending on or prior to December 31, 2024.

Deal Updates:

  1. On June 22, 2020, Tetraphase Pharmaceuticals (TTPH) announced that its Board of Directors received an unsolicited proposal from La Jolla Pharmaceutical Company to acquire Tetraphase for $43.0 million in cash, plus an additional aggregate amount of $16.0 million in cash potentially payable under contingent value rights. The Board determined that the La Jolla Proposal is a “Superior Offer” under the terms of the Agreement and Plan of Merger.
  2. On June 22, 2020, Argonaut Gold (ARNGF) and Alio Gold (ALOannounced the receipt of the clearance decisionfrom the Comisión Federal de Competencia Económica with respect to their pending merger. COFECE approval was the final government agency approval required before completing the merger, which is anticipated to occur between June 29, 2020 and July 3, 2020.
  3. On June 22, 2020, Adesto Technologies Corporation (IOTS) announced that the Committee on Foreign Investment in the United States (CFIUS) has completed its review of the pending acquisition of Adesto by Dialog Semiconductor (DLGNF) and determined that there are no unresolved national security concerns with respect to the proposed transaction. The parties expect the transaction to close on June 29, 2020.
  4. On June 24, 2020, Waste Management (WM) and Advanced Disposal Services (ADSW) announced that they have amended the terms of the definitive agreement under which a subsidiary of Waste Management will acquire all outstanding shares of Advanced Disposal for $30.30 per share in cash, representing a total enterprise value of $4.6 billion when including approximately $1.8 billion of Advanced Disposal’s net debt.
  5. On June 25, 2020, Asta Funding (ASFI) announced that it has entered into an amendment to the merger agreement with the Stern Group. Pursuant to the amendment, each share of outstanding common stock will be purchased for $13.10 in cash. The new purchase price represents an increase of $1.63 per share over the original purchase price.
  6. On June 25, 2020, Taubman Centers (TCO) announced that its shareholders approved and adopted the previously announced merger agreement with Simon Property Group (SPG). As previously announced, on June 10, 2020, Simon delivered a notice purporting to terminate the Merger Agreement, and commenced a lawsuit in Michigan state court in support of its purported termination.  Taubman continues to believe that Simon’s purported termination of the Merger Agreement is invalid and without merit, and that Simon continues to be bound to the Merger Agreement and to consummate the Transactions. Given Simon’s purported termination of the Merger Agreement and the pending litigation, it appears that Simon will not consummate the Transactions on June 30, 2020, despite Simon’s contractual obligation to do so.
  7. On June 25, 2020, Provident Financial Services (PFS) and SB One Bancorp (SBBX) announced the receipt of approval by the SB One shareholders in connection with the proposed merger of SB One with and into Provident. The parties anticipate closing the Merger as of the close of business on July 31, 2020.
  8. On June 25, 2020, TerraForm Power (TERP) announced that it has established a record date of June 26, 2020 and a stockholder meeting date of July 29, 2020 for a meeting of its stockholders to, among other things, vote to approve proposals related to the merger agreement between TerraForm Power and Brookfield Renewable Partners (BEP).
  9. On June 26, 2020, Caesars Entertainment Corporation (CZR) announced that the Federal Trade Commission has accepted a proposed consent order, which concludes the FTC’s Hart-Scott-Rodino review of Caesars’ pending merger with Eldorado Resorts (ERI). The FTC’s acceptance of the consent order satisfies all required antitrust clearances for the Merger.

Closed Deals:

  1. The acquisition of Progenics Pharmaceuticals (PGNX) by  Lantheus Holdings (LNTH) on June 22, 2020. It took 264 days for this deal to be completed.
  2. The acquisition of Anixter International (AXE) by WESCO International (WCC) on June 22, 2020. It took 161 days for this deal to be completed.

Terminated Deals:

  1. On June 24, 2020, Tetraphase (TTPHterminated its previously announced merger agreement with Melinta Therapeutics, dated as of June 4, 2020, in order to enter into the definitive merger agreement with La Jolla (LJPC). In connection with the termination of the definitive merger agreement with Melinta, Tetraphase paid Melinta a termination fee in the amount of $1,150,000.

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 $4.16 06/30/2020 166.83% 30445.91%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.49 06/30/2020 118.07% 21548.19%
FSCT 02/06/2020 Advent International (N/A) $33.00 $21.84 06/30/2020 51.10% 9325.55%
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.46 $6.14 10/31/2021 37.77% 28.13%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $3.355 06/30/2020 36.51% 6663.56%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.35 06/30/2020 15.75% 2874.02%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $119.57 06/30/2020 12.90% 2355.08%
QES 05/04/2020 KLX Energy Services Holdings, Inc. (KLXE) $1.06 $0.95 12/31/2020 11.67% 22.89%
GRUB 06/10/2020 Just Eat Takeaway.com N.V. (TKAYF) $76.97 $69.05 03/31/2021 11.47% 15.17%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $15.33 12/31/2020 7.63% 14.98%

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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