Merger Arbitrage Mondays – A Large Acquisition Ends The Energy Sector Deal Drought

Merger activity remained steady last week with three new deals announced and two deals closing.

There has not been any significant M&A activity this year in the energy sector with oil prices collapsing due to the COVID-19 pandemic. After choosing to walk away from a bidding war with Occidental (OXY) over Anadarko more than a year back, Chevron (CVX) has now announced an agreement to acquire oil and natural gas producer Noble Energy (NBL) in an all stock deal worth $13 billion.

Before the deal was announced, Noble Energy was down more than 50% over the last year compared to a drop of more than 30% in Chevron. At one point during the March 2020 lows, Noble Energy’s stock had lost more than 80% of its value since the start of the year. As is usually the case, the bottoming process for a sector involves both bankruptcies and mergers.

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 July 17, 2020, and July 24, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
CDOR 3.68 NexPoint Hospitality Trust (N/A) 201.63% 189.82% 11.81% All Cash
QES 1.1 KLX Energy Services Holdings, Inc. (KLXE) 2.34 3.05% -8.55% 11.60% All Stock
GILT 5.17 Comtech Telecommunications Corp. (CMTL) 16.21 65.29% 55.56% 9.73% Cash Plus Stock
TTPH 2.38 La Jolla Pharmaceutical Company (LJPC) 4.03 -15.97% -21.57% 5.60% Special Conditions
INWK 2.73 HH Global Group Limited (N/A) 0.00 9.89% 6.01% 3.88% All Cash
QGEN 48.66 Thermo Fisher Scientific Inc. (TMO) 406.38 1.03% 2.14% -1.11% All Cash
EE 68.05 J.P. Morgan Investment Management Inc. (N/A) 0.29% 1.41% -1.12% All Cash
GNW 2.19 China Oceanwide Holdings Group Co., Ltd. (N/A) 147.95% 149.08% -1.13% All Cash
NBL 10.89 Chevron Corporation (CVX) 90.13 -1.43% 0.00% -1.43% All Stock
GRUB 68.85 Just Eat Takeaway.com N.V. (TKAYF) 106.7 3.99% 16.61% -12.62% All Stock

Deal Statistics:

Total Number of Deals Closed in 2020 81
Total Number of Deals Not Completed in 2020 13
Total Number of Pending Deals
Cash Deals 26
Stock Deals 12
Stock & Cash Deals 2
Special Conditions 1
Total Number of Pending Deals 41
Aggregate Deal Consideration $577.78 billion

New Deals:

  1. The acquisition of Noble Energy (NBL) by Chevron Corporation (CVX) for $13 billion in an all stock deal. Under the terms of the agreement, Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share.
  2. The acquisition of GlobalSCAPE (GSB) by HelpSystems for $217 million or $9.50 per share in cash.
  3. The acquisition of Majesco (MJCO) by Thoma Bravo for $594 million or $13.10 per share in cash.

Deal Updates:

  1. On July 20, 2020, Genworth Financial (GNW) announced that Genworth has reached an agreement with AXA to settle the dispute between them relating to liability for payment protection insurance mis-selling losses. Genworth and AXA agreed to the settlement following the High Court’s liability judgment dated December 6, 2019 and prior to the High Court issuing its judgment on damages. Tom McInerney, Genworth president and CEO said “These alternatives include a potential debt offering, as well as the ability to prepare for a 19.9% IPO of our U.S. Mortgage Insurance business, subject to market conditions, should our pending transaction with China Oceanwide not close.”
  2. On July 22, 2020, Cisco Systems (CSCO) and Acacia Communications (ACIAissued a joint statement on the status of the ongoing regulatory review for the pending acquisition of Acacia by Cisco that is being conducted by the State Administration for Market Regulation of the People’s Republic of China (“SAMR”). In accordance with the previously announced Agreement and Plan of Merger, closing is expected to take place no later than the third business day following the satisfaction or waiver of  the closing conditions.
  3. July 24, 2020: According to Reuters, seven senators have urged the Justice Department to be cautious in reviewing Google’s (GOOG) planned purchase of Fitbit  (FIT), saying the tech giant had already cemented its dominance in some areas through acquisitions.

Closed Deals:

  1. The acquisition of Caesars Entertainment Corporation (CZR) by Eldorado Resorts (ERI) on July 20, 2020. It took 392 days for this deal to be completed.
  2. The acquisition of Finjan Holdings (FNJN) by Fortress Investment Group on July 24, 2020. It took 44 days for this deal to be completed.

Deals Terminated:

  1. On July 16, 2020, Leisure Acquisition (LACQelected to terminate the Agreement and Plan of Merger with GTWY Holdings Limited. Pursuant to its terms, the Company had the ability to terminate the Merger Agreement to the extent the business combination had not been completed by July 15, 2020. As previously disclosed, the Company’s stockholders approved an extension to the date by which the Company must complete a business combination to December 1, 2020.

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 09/30/2020 201.63% 1115.08%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.19 09/30/2020 147.95% 818.18%
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.55 $5.17 10/31/2021 65.29% 51.58%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $3.86 09/30/2020 18.65% 103.16%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $14.62 12/31/2020 12.86% 29.71%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $121.41 07/31/2020 11.19% 817.12%
INWK 07/16/2020 HH Global Group Limited (N/A) $3.00 $2.73 12/31/2020 9.89% 22.85%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.80 09/30/2020 8.09% 44.73%
WLTW 03/09/2020 Aon plc (AON) $223.74 $211.52 06/30/2021 5.78% 6.22%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $70.69 $67.13 06/30/2021 5.31% 5.71%

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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