Merger Arbitrage Mondays – Q3 2020 Ends With A Big Bang

The third quarter of 2020 ended with a big bang with 5 new deals announced worth $10.5 billion. Merger activity increased significantly last week with ten new deals announced and nine active deals completed. We were tracking four of the new deals announced as potential deals in the works.

We also saw a significant amount of active deals being completed last week including the acquisition of E*TRADE Financial Corporation (ETFC) by Morgan Stanley (MS) and the acquisition of Principia Biopharma (PRNB) by Sanofi (SNY).

Genworth Financial (GNW) continues to stay at the top of our list of active deals after announcing a 16th waiver with China Oceanwide Holdings Group to extend the previous deadline of September 30, 2020 to no later than November 30, 2020. It is astounding that this deal is still active nearly four years after it was announced in October 2016. We add updates to deals as they progress from announcement to culmination and in the case of Genworth we have added 43 updates over a nearly four year period.

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

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 September 25, 2020, and October 2, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GILT 5.21 Comtech Telecommunications Corp. (CMTL) 13.97 60.40% 47.28% 13.12% Cash Plus Stock
SUNW 2.35 The Peck Company Holdings, Inc. (PECK) 7.02 -44.69% -54.46% 9.77% All Stock
MVC 8 Barings BDC, Inc. (BBDC) 8.26 2.02% 0.40% 1.62% Cash Plus Stock
GRUB 73.43 Just Eat Takeaway.com N.V. (TKAYY) 11.3304 3.54% 2.26% 1.28% All Stock
ACIA 67.04 Cisco Systems, Inc. (CSCO) 38.27 4.42% 3.34% 1.08% All Cash
VRTU 49.25 Baring Private Equity Asia (N/A) 0.00 4.26% 5.88% -1.62% All Cash
CXDC 1.165 Faith Dawn Limited and Faith Horizon (N/A) 3.00% 6.19% -3.19% All Cash
TAT 0.251 TAT Holdco LLC and TAT Merger Sub LLC (N/A) 0.00 -48.21% -42.20% -6.01% All Cash
FIT 6.92 Google LLC (GOOG) 1458.42 6.21% 12.56% -6.35% All Cash
GNW 3.41 China Oceanwide Holdings Group Co., Ltd. (N/A) 59.24% 76.30% -17.06% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 105
Total Number of Deals Not Completed in 2020 15
Total Number of Pending Deals
Cash Deals 33
Stock Deals 13
Stock & Cash Deals 4
Special Conditions 2
Total Number of Pending Deals 52
Aggregate Deal Consideration $673.57 billion

New Deals:

  1. The acquisition of SINA Corporation (SINA) by New Wave Holdings Limited for $1.79 billion or $43.40 per share in cash. We added SINA as a potential deal to the Deals in the Works section on July 7, 2020, and the price after the news of the potential deal came out was $40.54.
  2. The acquisition of MobileIron (MOBL) by Ivanti for $872 million or $7.05 per share in cash. We added MOBL as a potential deal to the Deals in the Works section on August 20, 2020, and the price after the news of the potential deal came out was $6.82.
  3. The acquisition of Perceptron (PRCP) by Atlas Copco for $37 million or $7.00 per share in cash.
  4. The merger of WPX Energy (WPX) and Devon Energy Corporation (DVN) in an all stock deal. The combined entity is expected to have an enterprise value of $12 billion. Under the terms of the agreement, WPX shareholders will receive a fixed exchange ratio of 0.5165 shares of Devon common stock for each share of WPX common stock owned. We added WPX as a potential deal to the Deals in the Works section on September 27, 2020, and the price after the news of the potential deal came out was $4.44.
  5. The acquisition of Sogou (SOGO) by Tencent Parties in a going private transaction for $2.19 billion or $9.00 per share in cash. We added SOGO as a potential deal to the Deals in the Works section on July 27, 2020, and the price after the news of the potential deal came out was $8.50.
  6. The acquisition of Gridsum Holding (GSUM) by Gridsum Corporation in a going private transaction for $75.5 million or $2.00 per share in cash.
  7. The acquisition of American Renal Associates Holdings (ARA) by Innovative Renal Care for $853 million or $11.50 per share in cash.
  8. The acquisition of AMAG Pharmaceuticals (AMAG) by Covis Group S.à r.l. for $647 million or $13.75 per share in cash
  9. The acquisition of Newater Technology (NEWA) by Crouching Tiger Holding Limited in a going private transaction for $48.85 million or $3.65 per share in cash.
  10. The merger of Fauquier Bankshares (FBSS) and Virginia National Bankshares Corporation (VABK) in an all stock deal for $63.41 million. Under the terms of the agreement, Fauquier shareholders will receive 0.6750 shares of Virginia National common stock for each share of Fauquier common stock held.

Deal Updates:

  1. September 28, 2020: According to Reuters, LVMH countersued Tiffany (TIF), arguing the latter’s financial mismanagement in the COVID-19 pandemic permits the French luxury goods giant to walk away from its $16 billion acquisition.
  2. On September 29, 2020, the Taiwan Fair Trade Commission determined to waive its jurisdiction over the Merger, effectively granting clearance of the Merger between Tiffany (TIF) and Louis Vuitton.
  3. On September 30, 2020, China XD Plastics Company Limited (CXDC) announced that it has called a special meeting of its stockholders, to be held on November 5, 2020.
  4. On September 30, 2020, shareholders of National General Holdings (NGHCapproved the company’s merger with The Allstate Corporation (ALL) at a special meeting of shareholders.
  5. On October 1, 2020, Morgan Stanley (MS) received Federal Reserve approval for its acquisition of discount brokerage E*Trade Financial (ETFC).
  6. On September 30, 2020, TD Ameritrade Holding Corporation (AMTD) announced that The Toronto-Dominion Bank notified The Charles Schwab Corporation (SCHW) that it has received regulatory approval from the Board of Governors of the Federal Reserve System in connection with Schwab’s proposed acquisition of TD Ameritrade.
  7. On October 1, 2020, Genworth Financial (GNW) and China Oceanwide Holdings Group announced that they have agreed to a 16th waiver and agreement of each party’s right to terminate their previously announced merger agreement. The 16th waiver extends the previous deadline of September 30, 2020 to no later than November 30, 2020.
  8. On October 1, 2020, shareholders of Vivint Solar (VSLRapproved the company’s merger with Sunrun (RUN) at a virtual special meeting of shareholders.
  9. On October 2, 2020, Noble Energy (NBL) announced that shareholders of the Company approved the pending merger with Chevron Corporation (CVX).

Closed Deals:

  1. The acquisition of CNX Midstream Partners (CNXM) by CNX Resources Corporation (CNX) on September 28, 2020. It took 63 days for this deal to be completed.
  2. The acquisition of Principia Biopharma (PRNB) by Sanofi (SNY) on September 28, 2020. It took 42 days for this deal to be completed.
  3. The acquisition of Asta Funding (ASFI) by Stern Group on September 29, 2020. It took 173 days for this deal to be completed.
  4. The acquisition of Craft Brew Alliance (BREW) by Anheuser-Busch on September 30, 2020. It took 323 days for this deal to be completed.
  5. The acquisition of Momenta Pharmaceuticals (MNTA) by Johnson & Johnson (JNJ) on October 1, 2020. It took 43 days for this deal to be completed.
  6. The acquisition of Pfenex (PFNX) by Ligand Pharmaceuticals Incorporated (LGND) on October 1, 2020. It took 51 days for this deal to be completed.
  7. The acquisition of InnerWorkings (INWK) by HH Global Group Limited on October 1, 2020. It took 77 days for this deal to be completed.
  8. The acquisition of Delphi Technologies (DLPH) by BorgWarner (BWA) on October 2, 2010. It took 248 days for this deal to be completed.
  9. The acquisition of E*TRADE Financial Corporation (ETFC) by Morgan Stanley (MS) on October 2, 2020. It took 225 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
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.36 $5.21 10/31/2021 60.40% 56.24%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.4100 11/30/2020 59.24% 379.33%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $116.11 12/31/2020 16.27% 67.48%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $4.21 10/27/2020 8.79% 139.47%
NEWA 10/02/2020 Crouching Tiger Holding Limited (N/A) $3.65 $3.37 06/30/2021 8.31% 11.27%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $71.83 $66.38 06/30/2021 8.20% 11.13%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.85 03/31/2021 8.11% 16.63%
FBSS 10/01/2020 Virginia National Bankshares Corporation (VABK) $16.71 $15.54 06/30/2021 7.50% 10.18%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.38 12/31/2020 7.45% 30.92%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.92 12/31/2020 6.21% 25.77%

List of all pending deals:

The list of all pending deals is only available to InsideArbitrage Premium members.

Disclaimer: I have a long position in Immunomedics (IMMU). 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

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