Merger Arbitrage Mondays – Two Potential Deals Come To Fruition

Merger activity moderated again last week with three new deals announced and three active deals completed. We had been tracking two of the three new deals announced as “potential deals in the works”.

On August 18, 2020, Acorn International (ATV) announced that it had received a preliminary non-bidding proposal from the Executive Chairman of the company. This “potential deal” became successful on October 12, 2020, when First Ostia Port announced the acquisition of Acorn in a going private transaction. The deal was at a premium of over 42% of the closing price on August 18, 2020, when the potential deal was announced.

Similarly, DouYu International (DOYU) had announced the receipt of a preliminary non bidding proposal on August 10, 2020. This potential deal also came to fruition last week when DouYu and HUYA (HUYA) announced their stock-for-stock merger.

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 October 9, 2020, and October 16, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
TAT 0.2498 TAT Holdco LLC and TAT Merger Sub LLC (N/A) 0.00 -47.96% -55.62% 7.66% All Cash
GSUM 1.8 Gridsum Corporation (N/A) 0.00 11.11% 9.89% 1.22% All Cash
WPX 4.57 Devon Energy Corporation (DVN) 8.95 1.15% 0.02% 1.13% All Stock
PRCP 6.9 Atlas Copco (N/A) 0.00 1.45% 0.57% 0.88% All Cash
YIN 7.19 Yinke Holdings Ltd (N/A) 1.53% 0.97% 0.56% All Cash
EIDX 76.18 BridgeBio Pharma, Inc. (BBIO) 40.97 -3.83% -0.72% -3.11% Special Conditions
FIT 7.08 Google LLC (GOOG) 1573.01 3.81% 7.14% -3.33% All Cash
NEWA 3.57 Crouching Tiger Holding Limited (N/A) 0.00 2.24% 5.80% -3.56% All Cash
GNW 3.51 China Oceanwide Holdings Group Co., Ltd. (N/A) 54.70% 58.31% -3.61% All Cash
TIF 122.72 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) 101.88 10.01% 14.01% -4.00% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 113
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 32
Stock Deals 12
Stock & Cash Deals 3
Special Conditions 3
Total Number of Pending Deals 50
Aggregate Deal Consideration $701.75 billion

New Deals:

  1. The acquisition of Acorn International (ATV) by First Ostia Port in a going private deal for $29 million or $21.00 per share in cash. We added ATV as a potential deal to the Deals in the Works section on August 18, 2020, and the price after the news of the potential deal came out was $14.75.
  2. The merger of DouYu International Holdings Limited (DOYU) and HUYA Inc. (HUYA) for $3.95 billion in an all stock deal. Under the terms of the agreement, shareholders of DouYu International Holdings will receive 0.730 American depositary shares of Huya, each representing one Huya Class A Share. We added DOYU as a potential deal to the Deals in the Works section on August 10, 2020, and the price after the news of the potential deal came out was $14.67.
  3. The merger of CIT Group (CIT) and First Citizens BancShares (FCNCA) for $2.42 billion in an all stock deal. Under the terms of the agreement, CIT stockholders will receive 0.0620 shares of First Citizens class A common stock for each share of CIT common stock they own.

Deal Updates:

  1. On October 14, 2020, Gilead Sciences (GILD) announced that the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) with respect to Gilead’s cash tender offer for Immunomedics (IMMU) expired on October 13, 2020.
  2. On October 15, 2020, Varian (VAR) announced that its stockholders have voted to approve the previously announced pending combination with Siemens Healthineers AG at a special meeting.
  3. On October 16, 2020,  in consultation with BMC Stock Holdings (BMCH), Builders FirstSource (BLDR) voluntarily withdrew its HSR Notification on October 13, 2020, and re-filed its HSR Notification on October 15, 2020. The waiting period under the HSR Act with respect to the Refiled Notification currently is scheduled to expire on November 16, 2020.
  4. October 16, 2020: According to Reuters, EU antitrust regulators have extended their investigation into Google’s (GOOG) $2.1 billion purchase of Fitbit (FIT) to January 8, 2021 from December 23, 2020.

Closed Deals:

  1. The acquisition of Akcea Therapeutics (AKCA) by Ionis Pharmaceuticals (IONS) on October 12, 2020. It took 42 days for this deal to be completed.
  2. The acquisition of On Deck Capital (ONDK) by Enova International (ENVA) on October 13, 2020. It took 77 days for this deal to be completed.
  3. The acquisition of Central European Media Enterprises (CETV) by PPF Group on October 13, 2020. It took 352 days for this deal to be completed.
  4. The acquisition of Aimmune Therapeutics (AIMT) by Sociétés des Produits Nestlé, S.A. on October 13, 2020. It took 43 days for this deal to be completed.
  5. The acquisition of Rosetta Stone (RST) by Cambium Learning Group on October 16, 2020. It took 46 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
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.51 11/30/2020 54.70% 464.32%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.8 03/31/2021 11.11% 24.73%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) $135.00 $122.72 12/31/2020 10.01% 49.36%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.37 12/31/2020 7.51% 37.05%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $77.89 $73.09 06/30/2021 6.57% 9.41%
WLTW 03/09/2020 Aon plc (AON) $229.91 $216.76 06/30/2021 6.07% 8.68%
DOYU 10/12/2020 HUYA Inc. (HUYA) $16.20 $15.28 06/30/2021 6.01% 8.61%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $7.08 01/31/2021 3.81% 13.26%
ACIA 07/08/2019 Cisco Systems, Inc. (CSCO) $70.00 $67.49 12/31/2020 3.72% 18.34%
VAR 08/02/2020 Siemens Healthineers AG (N/A) $177.50 $171.96 06/30/2021 3.22% 4.61%

List of all pending deals:

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

Disclaimer: I have long positions in Immunomedics (IMMU) and Otelco (OTEL). 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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