Merger Arbitrage Mondays – The Bidding War For Tetraphase Pharmaceuticals Comes To An End

Merger activity ground to a halt last week with no new deals announced, three deals closing and one deal called off. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

This is the third week in the month of May with no new deals announced. There were however, two potential deals announced last week. The COVID-19 pandemic caused another deal to bite the dust last week. Texas Capital Bancshares (TCBI) and Independent Bank Group (IBTX) mutually agreed to terminate their merger agreement.

The bidding war for Tetraphase Pharmaceuticals (TTPH) finally came to an end last week after the company entered into a second amendment with AcelRx Pharmaceuticals (ACRX).

With respect to deal updates and approvals, Fidelity National Financial (FNF) and FGL Holdings (FG) are on track to close their deal today after receiving all regulatory approvals and clearances. Kearny Financial (KRNY) and MSB Financial (MSBF) also received all the shareholder and regulatory approvals and expect to close the deal early in the third quarter of 2020.

There were two new deals announced in the Deals in the Works section last week.

Weekly Spread Changes:

The table below shows weekly spread changes between May 22, 2020, and May 29, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
TTPH 2.16 AcelRx Pharmaceuticals, Inc. (ACRX) 1.39 -27.91% -63.71% 35.80% Cash Plus Stock
FG 8.34 Fidelity National Financial, Inc. (FNF) 31.9 29.32% -2.30% 31.62% Cash Plus Stock
GNW 3.05 China Oceanwide Holdings Group Co., Ltd. (N/A) 78.03% 71.29% 6.74% All Cash
TIVO 6.09 Xperi Corporation (XPER) 13.75 2.73% -0.26% 2.99% All Stock
ADSW 31.18 Waste Management, Inc. (WM) 106.75 6.32% 3.79% 2.53% All Cash
LACQ 10.9 GTWY Holdings Limited (N/A) 5.50% 10.36% -4.86% Special Conditions
TCO 41.34 Simon Property Group, Inc. (SPG) 57.7 27.00% 33.59% -6.59% All Cash
YTRA 1.15 Ebix, Inc. (EBIX) 22.41 94.87% 103.86% -8.99% All Stock
SDI 12.84 Turning Point Brands, Inc. (TPB) 23.99 -2.84% 10.63% -13.47% All Stock
CDOR 4.75 NexPoint Hospitality Trust (N/A) 133.68% 250.16% -116.48% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 62
Total Number of Deals Not Completed in 2020 7
Total Number of Pending Deals
Cash Deals 23
Stock Deals 19
Stock & Cash Deals 5
Special Conditions 3
Total Number of Pending Deals 50
Aggregate Deal Consideration $528.04 billion

Deal Updates:

  1. On May 15, 2020, Turning Point Brands (TPBmentioned the following in an S4 proxy statement, “The Stock Merger Consideration will consist of a total number of shares of TPB Common Stock equal to 97% of the total number of shares of TPB Common Stock owned by (SDI) as of the effective time, as described in more detail in “The Merger—Merger Consideration.” As of the date of this proxy statement/prospectus, SDI owns 9,978,918 shares of TPB Common Stock. However, there can be no assurance that SDI will continue to own such number of shares of TPB Common Stock. In order to raise the capital needed, along with its existing cash on hand, to retire substantially all of its liabilities prior to the closing of the merger as required by the merger agreement, including $25.0 million of indebtedness under a term loan agreement, SDI may consider a variety of transactions, including a sale of a portion of its shares of TPB Common Stock. SDI estimates that it will have net liabilities at the effective time, assuming the merger closes on June 30, 2020, of approximately $23.8 million. If SDI chooses to sell a portion of its shares of TPB Common Stock to satisfy this condition of the merger agreement, then SDI would need to sell approximately 1.1 million shares of TPB Common Stock, assuming a sale price of $21.81, the closing price of TPB Common Stock on May 13, 2020. Assuming such sale occurs and further assuming that there will be 16.6 million shares of SDI Common Stock outstanding as of immediately prior to the closing of the merger, each share of SDI Common Stock will be exchanged for 0.5173 shares of TPB Common Stock.”
  2. On May 22, 2020, RBF Capital sent a letter to the Board of Directors of Asta Funding (ASFI), proposing to acquire all of the outstanding shares of the Issuer not currently held by the Reporting Person for a price of $13.00 per share in cash, representing a 13% premium to the Stern Group’s proposed purchase price.
  3. On May 26, 2020, Fidelity National Financial (FNF) and FGL Holdings (FG) announced that FNF has received all regulatory approvals and clearances necessary to close the transaction under the previously announced merger agreement pursuant to which FNF will acquire F&G. The anticipated closing date for the transaction is June 1, 2020, assuming that F&G shareholders approve the merger and related proposals at the F&G extraordinary general meeting scheduled to be held virtually on May 29, 2020.
  4. On May 27, 2020, Tetraphase Pharmaceuticals (TTPH) announced that it has entered into an amendment to the Agreement and Plan of Merger with AcelRx Pharmaceuticals (ACRX). Under the amended Merger Agreement, Tetraphase stockholders will receive, for each share of Tetraphase common stock, (1) $0.2434 in cash and 0.7217 of a share of AcelRx common stock, representing approximately $1.43 in upfront per share value, based on the closing price of AcelRx’s common stock as of the close of trading on May 26, 2020, in each case subject to downward adjustment in the event that the Company’s closing net cash is less than $5.0 million, and (2) one contingent value right (“CVR”), which would entitle the holders to receive potential aggregate payments of up to $14.5 million in cash upon the achievement of certain future XERAVA™ net sales milestones starting in 2021.
  5. On May 27, 2020, Tetraphase Pharmaceuticals (TTPH) announced that its Board of Directors has received a revised proposal from Melinta Therapeutics amending its prior proposal to acquire the Company, and has determined that the Amended Melinta Proposal is a “Superior Offer”. Under the Amended Melinta Proposal, Melinta has offered to acquire Tetraphase for $34.0 million in cash, plus an additional $16.0 million in cash potentially payable under contingent value rights (“CVR”) to be issued in the proposed acquisition. Under the Amended Melinta Proposal, the upfront cash consideration would be as follows: (i) $1.52 per share of Tetraphase common stock, (ii) $2.21 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2019, and (iii) $2.21 per share of Tetraphase common stock underlying the common stock warrants issued by the Company in 2020.
  6. On May 28, 2020, Kearny Financial (KRNY) and MSB Financial (MSBF) jointly announced that the parties have received all the shareholder and regulatory approvals or waivers necessary to complete the merger of MSB into Kearny. The parties expect to close the merger early in the third calendar quarter of 2020, subject to the satisfaction of customary closing conditions.
  7. On May 29, 2020, Tetraphase Pharmaceuticals (TTPH) announced that it has entered into a second amendment to the Agreement and Plan of Merger with AcelRx Pharmaceuticals. Under the amended Merger Agreement, Tetraphase stockholders will receive, for each share of Tetraphase common stock, (1) $0.5872 in cash and 0.7409 of a share of AcelRx common stock, representing approximately $1.70 in upfront per share value, based on the closing price of AcelRx’s common stock as of the close of trading on May 28, 2020, in each case subject to downward adjustment in the event that the Company’s closing net cash is less than $5.0 million, and (2) one contingent value right (“CVR”), which would entitle the holders to receive potential aggregate payments of up to $16.0 million in cash upon the achievement of certain future XERAVA™ net sales milestones starting in 2021. The special meeting of Tetraphase’s stockholders to approve the pending transaction is scheduled for June 8, 2020. The transaction is expected to close in June 2020.

Closed Deals:

  1. The acquisition of Correvio Pharma (CORV) by ADVANZ PHARMA on May 27, 2020. It took 72 days for this deal to be completed.
  2. The acquisition of Wellesley Bancorp (WEBK) by Cambridge Bancorp (CATC) on May 29, 2020. It took 176 days for this deal to be completed.
  3. The acquisition of WABCO Holdings (WBC) by ZF Friedrichshafen AG on May 29, 2020. It took 428 days for this deal to be completed.

Terminated Deals:

  1. On May 26, 2020, Texas Capital Bancshares (TCBI) announced that Texas Capital Bancshares and Independent Bank Group (IBTX) have mutually agreed to terminate their merger agreement. The termination was approved by both companies’ boards of directors after careful consideration and given the significant impact of the COVID-19 pandemic on global markets and on the companies’ ability to fully realize the benefits they expected to achieve through the 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 $4.75 06/30/2020 133.68% 1626.49%
YTRA 07/17/2019 Ebix, Inc. (EBIX) $2.24 $1.15 06/30/2020 94.87% 1154.25%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.05 06/30/2020 78.03% 949.40%
FSCT 02/06/2020 Advent International (N/A) $33.00 $23.59 06/30/2020 39.89% 485.33%
FG 02/07/2020 Fidelity National Financial, Inc. (FNF) $10.79 $8.34 09/30/2020 29.32% 87.73%
TCO 02/10/2020 Simon Property Group, Inc. (SPG) $52.50 $41.34 06/30/2020 27.00% 328.45%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.34 06/30/2020 15.93% 193.82%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $4 06/30/2020 14.50% 176.42%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $15.11 06/30/2020 9.20% 111.92%
DLPH 01/28/2020 BorgWarner Inc. (BWA) $13.85 $12.88 12/31/2020 7.51% 12.81%

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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter@asifsuria

Leave A Comment

You must be logged in to post a comment.