Merger Arbitrage Mondays – Two Building Material Companies Combine

Merger activity decreased last week with one new deal announced and one deal completed.

In spite of just a single deal announced last week, the month of August has been the most active month with respect to M&A activity this year.

Headquartered in Raliegh, North Carolina, BMC Stock Holdings (BMCH) has a comprehensive portfolio of products and solutions consisting of building materials. On August 27, the company agreed to combine with Builders FirstSource (BLDR) in an all stock deal worth $2.43 billion, creating one of the premier suppliers of building materials and services in the country. This deal comes at a time when lumber prices and home improvement retailers like Home Depot are at all time highs. Low interest rates and the need for space as more people work from home for extended periods of time is driving a surge in home buying and as a result higher demand for home building and remodeling products.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

There was one new deal announced in the Deals in the Works section last week.

Weekly Spread Changes:

The table below shows weekly spread changes between August 21, 2020, and August 28, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GNW 2.37 China Oceanwide Holdings Group Co., Ltd. (N/A) 129.11% 108.05% 21.06% All Cash
TAT 0.2347 TAT Holdco LLC and TAT Merger Sub LLC (N/A) 0.00 -44.61% -49.61% 5.00% All Cash
GILT 5.35 Comtech Telecommunications Corp. (CMTL) 17 60.98% 57.51% 3.47% Cash Plus Stock
GRUB 73 Just Eat Takeaway.com N.V. (TKAYY) 11.3 3.87% 1.62% 2.25% All Stock
TIF 123.88 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) 94.57 8.98% 7.13% 1.85% All Cash
ONDK 1.7 Enova International, Inc. (ENVA) 17.93 4.09% 6.71% -2.62% Cash Plus Stock
CXDC 1.18 Faith Dawn Limited and Faith Horizon (N/A) 1.69% 4.35% -2.66% All Cash
MVC 8.2 Barings BDC, Inc. (BBDC) 8.35 0.56% 3.38% -2.82% Cash Plus Stock
LINX 6.6 StoneCo Ltd. (STNE) 51.87 -5.00% -1.10% -3.90% Special Conditions
SUNW 0.7355 The Peck Company Holdings, Inc. (PECK) 3.21 -19.18% -11.43% -7.75% All Stock

Deal Statistics:

Total Number of Deals Closed in 2020 92
Total Number of Deals Not Completed in 2020 14
Total Number of Pending Deals
Cash Deals 28
Stock Deals 14
Stock & Cash Deals 4
Special Conditions 3
Total Number of Pending Deals 49
Aggregate Deal Consideration $634.86 billion

New Deals:

  1. The merger of BMC Stock Holdings (BMCH) and Builders FirstSource (BLDR) in an all stock deal for $2.43 billion. Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, BMC shareholders will receive a fixed exchange ratio of 1.3125 shares of Builders FirstSource common stock for each share of BMC common stock.

Deal Updates:

  1. On August 24, 2020, GlobalSCAPE (GSB) announced the expiration of the 35-day “go-shop” period provided for under the terms of the previously announced definitive merger agreement, pursuant to which HelpSystems will acquire all outstanding shares of GlobalSCAPE.
  2. On August 24, 2020, Analog Devices (ADI) voluntarily withdrew its pre-merger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended relating to ADI’s proposed acquisition of Maxim Integrated Products (MXIM), in order to provide the Federal Trade Commission with additional time to review the proposed acquisition.
  3. On August 24, 2020, LVMH Moët Hennessy Louis Vuitton and Tiffany (TIF) announced that they will give themselves another three months to complete their tie-up after the deal did not close on the August 24 date set out in the deal documents. Tiffany has extended the Outside Date to November 24, 2020.
  4. On August 25, 2020, Advanced Disposal Services (ADSW) announced that at a virtual special meeting of stockholders, the Company’s stockholders voted to adopt the amended merger agreement pursuant to which the Company would be acquired by an indirect, wholly-owned subsidiary of Waste Management (WM). The transaction is expected to close by the end of the third quarter of 2020.
  5. On August 26, 2020, Aon (AON) and Willis Towers Watson Public Limited Company (WLTW) announced that their respective shareholders approved all of the proposals necessary to complete the previously announced combination of Aon and Willis Towers Watson. The combination, which remains subject to customary regulatory and other closing conditions, is expected to close in the first half of 2021.

Closed Deals:

  1. The acquisition of GlobalSCAPE (GSB) by HelpSystems on August 28, 2020. It took 39 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 $4.42 09/30/2020 151.13% 1779.45%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $2.37 09/30/2020 129.11% 1520.21%
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.61 $5.35 10/31/2021 60.98% 52.12%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.43 12/31/2020 14.31% 42.46%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $4.16 10/27/2020 10.10% 63.54%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $123.88 12/31/2020 8.98% 26.64%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $75.34 $70.22 06/30/2021 7.28% 8.75%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.79 12/31/2020 5.11% 15.16%
WLTW 03/09/2020 Aon plc (AON) $216.12 $205.66 06/30/2021 5.09% 6.11%
INWK 07/16/2020 HH Global Group Limited (N/A) $3.00 $2.86 12/31/2020 4.90% 14.53%

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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