Merger Arbitrage Mondays – Sunrun acquires Vivint Solar

Merger activity increased last week with two new deals announced and one deal closing. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

After receiving necessary approvals, Caesars Entertainment Corporation (CZR) and Standard Diversified (SDI) are on track to closing their deals in the near future. For a brief moment of time, on March 18, 2020, the Caesars Entertainment Corporation deal traded at an astounding spread of 156.77% before narrowing back to pre-crisis levels.

Public disputes between The Gilat Satellite Networks (GILT) and Comtech Telecommunications have put the deal in trouble after Comtech filed a complaint stating that Gilat has suffered a “Material Adverse Effect”.

Late Sunday night, the Wall Street Journal reported that Analog Devices (ADI) is in talks to buy rival Maxim Integrated Products (MXIM) for roughly $20 billion in what would be one of the largest merger deals of the year.

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 July 3, 2020, and July 10, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GILT 5.11 Comtech Telecommunications Corp. (CMTL) 15.26 65.67% 35.42% 30.25% Cash Plus Stock
GNW 2.09 China Oceanwide Holdings Group Co., Ltd. (N/A) 159.81% 138.16% 21.65% All Cash
CDOR 3.92 NexPoint Hospitality Trust (N/A) 183.16% 170.07% 13.09% All Cash
SDI 13.5 Turning Point Brands, Inc. (TPB) 26.17 0.28% -4.22% 4.50% All Stock
BREW 15.15 Anheuser-Busch (N/A) 8.91% 5.57% 3.34% All Cash
QES 0.88 KLX Energy Services Holdings, Inc. (KLXE) 1.81 -0.37% 1.70% -2.07% All Stock
CETV 3.84 PPF Group N.V. (N/A) 19.27% 22.46% -3.19% All Cash
QGEN 45.31 Thermo Fisher Scientific Inc. (TMO) 382.57 -4.35% 1.95% -6.30% All Cash
FIT 6.81 Google LLC (GOOG) 1541.74 7.93% 16.85% -8.92% All Cash
FSCT 24.79 Advent International (N/A) 33.12% 52.99% -19.87% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 78
Total Number of Deals Not Completed in 2020 12
Total Number of Pending Deals
Cash Deals 23
Stock Deals 11
Stock & Cash Deals 3
Special Conditions 2
Total Number of Pending Deals 39
Aggregate Deal Consideration $543.64 billion

New Deals:

  1. The acquisition of Vivint Solar (VSLR) by Sunrun (RUN) for $3.2 billion in an all stock deal. Under the terms of the definitive transaction agreement, each share of Vivint Solar common stock issued and outstanding immediately prior to the effective time of the merger will be converted automatically into the right to receive 0.55 shares of Sunrun common stock. Considering the small 10% premium paid for the deal, it is possible that the market is expecting another suitor and hence the spread on the deal is negative.
  2. The acquisition of National General Holdings (NGHC) by The Allstate Corporation (ALL) for $4 billion. Under the terms of the agreement, shareholders of National General Holdings will receive $32.00 per share in cash from Allstate, plus closing dividends expected to be $2.50 per share, providing $34.50 in total value per share.

Deal Updates:

  1. On July 3, 2020, the Australian Foreign Investment Review Board issued a notification indicating that it has no objection to the merger of Tiffany (TIF) and LVMH Moët Hennessy Louis Vuitton.
  2. On July 7, 2020, The Federal Trade Commission (FTC) granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of Grubhub (GRUB) by Just Eat Takeaway.com (TKAYF).
  3. On July 8, 2020, Gilat Satellite Networks (GILT) announced that it was advised that a complaint was filed by Comtech Telecommunications and by its subsidiary, Convoy, against Gilat in the Court of Chancery in the State of Delaware, on a confidential basis, allegedly seeking a declaratory judgment that (i) any unilateral actions taken by Gilat relating to the disposition or restructuring of its subsidiary in Russia or (ii) any unilateral action taken by Gilat concerning Comtech’s pending application to the Russian regulatory authorities, constitute violations of the Merger Agreement between Gilat and Comtech.
  4. On July 8, 2020, Nevada’s Gaming Control Board and its Gaming Commission granted approval for the merger of Eldorado Resorts (ERI) and Caesars Entertainment (CZR).
  5. On July 9, 2020, Eldorado Resorts (ERI) and Caesars Entertainment Corporation (CZR) announced that, in connection with the previously announced merger of Caesars with a subsidiary of Eldorado, the deadline for Caesars stockholders to elect the form of merger consideration they wish to receive in the transaction has been set for July 16, 2020.
  6. July 9, 2020: According to Reuters, Google (GOOGmay be able to stave off a full-scale EU antitrust investigation into its planned bid for Fitbit (FIT) by pledging not to use Fitbit’s health data to help it target ads.
  7. On July 10, 2020, Eldorado Resorts (ERI) announced that the Company received approval from the Indiana Gaming Commission in connection with its pending acquisition of Caesars Entertainment Corporation (CZR).
  8. On July 10, 2020, shareholders of Standard Diversified (SDIapproved the company’s merger with Turning Point Brands (TPB) at a special meeting of shareholders.
  9. On July 12, 2020, Gilat Satellite Networks (GILT) announced that an amended complaint was filed by Comtech Telecommunications seeking an additional declaratory judgment that Gilat has suffered a “Material Adverse Effect” as defined in the Merger Agreement, as a result of the Covid-19 pandemic and, as a consequence, Comtech is not required to consummate the merger because certain closing conditions of the Merger Agreement cannot be satisfied. Gilat strongly rejects all such allegations.

Closed Deals:

  1. The acquisition of MSB Financial (MSBF) by Kearny Financial (KRNY) on July 10, 2020. It took 205 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 $3.92 09/30/2020 183.16% 835.68%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.09 09/30/2020 159.81% 729.13%
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.47 $5.11 10/31/2021 65.67% 50.35%
FSCT 02/06/2020 Advent International (N/A) $33.00 $24.79 07/31/2020 33.12% 636.22%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $3.84 09/30/2020 19.27% 87.92%
GRUB 06/10/2020 Just Eat Takeaway.com N.V. (TKAYF) $81.11 $71.87 03/31/2021 12.86% 17.91%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $121.3 07/31/2020 11.29% 216.97%
BREW 11/12/2019 Anheuser-Busch (N/A) $16.50 $15.15 12/31/2020 8.91% 18.91%
LACQ 12/30/2019 GTWY Holdings Limited (N/A) $11.50 $10.6 12/31/2020 8.49% 18.02%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.81 09/30/2020 7.93% 36.18%

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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