Merger Arbitrage Mondays – Simon and Taubman Settle Their Differences

Merger activity declined last week with two new deals announced, two active deals completed, one deal terminated and one deal brought back to life.

For the third time this year, a deal that was dead or left for dead came back to life. Last month we reported on Front Yard Residential striking a new merger agreement with Ares Management for $13/share in cash that was sweeter than the doomed $12.50/share deal it had struck with Amherst Residential. We also reported earlier this month that Tiffany (TIF) and LVMH modified certain terms of their initial agreement by reducing the purchase price from $135.00 to $131.50 in cash. And now the mall REITs Simon Property Group (SPG) and Taubman Centers (TCO) have decided to settle their differences with a modified deal that is priced at $43/share in cash.

Considering the original deal was priced at $52.50, Taubman shareholders and arbitraguers have taken the deepest cut to deal terms compared to how Tiffany or Front Yard Residential shareholders fared. However, when you look at the entire retail REIT space, Taubman has held up better than most of its peers. Taubman started the year at $29.86 and shareholders who bought before the original deal was announced are still up 27% before this adjustment. With this adjustment, they are ahead 44% this year. This compares with Simon Property Group shares seeing half their value wiped out and The Macerich Company (MAC) shares losing two-thirds of their value.

SPG, TCO and MAC YTD Performance

SPG, TCO and MAC YTD Performance (source: Yahoo Finance)

On October 20, 2020, HighPoint Resources Corporation had announced a 1-for-50 reverse stock split of its common stock in order to satisfy the $1.00 minimum bid price requirement for continued listing on the NYSE. A couple of weeks later, the company received notice from the New York Stock Exchange (NYSE) that it was no longer in compliance with the NYSE continued listing standards. On November 9, 2020, Bonanza Creek Energy (BCEI) and HighPoint Resources Corporation (HPR) entered into an agreement to acquire a restructured HighPoint Resources, which provides for HighPoint shareholders to receive 0.114 shares of Bonanza Creek common stock even though current HighPoint common shareholders will only own 1.6% of the combined company.

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 November 6, 2020, and November 13, 2020.

Symbol Quote Acquiring
Company Quote
Last Week
Spread Change
LINX 6.54 StoneCo Ltd. (STNE) 64.44 -4.43% -9.55% 5.12% Special Conditions
DOYU 14.21 HUYA Inc. (HUYA) 21.52 10.55% 7.71% 2.84% All Stock
CCR 3.16 CONSOL Energy Inc. (CEIX) 4.49 3.72% 1.35% 2.37% All Stock
IPHI 148.57 Marvell Technology Group Ltd. (MRVL) 43.26 12.06% 10.45% 1.61% Cash Plus Stock
CIT 34.35 First Citizens BancShares, Inc. (FCNCA) 542.57 -2.07% -3.56% 1.49% All Stock
FIT 7.15 Google LLC (GOOG) 1777.02 2.80% 4.40% -1.60% All Cash
NEWA 3.5 Crouching Tiger Holding Limited (N/A) 4.29% 6.73% -2.44% All Cash
FBSS 15.88 Virginia National Bankshares Corporation (VABK) 23.85 1.38% 4.48% -3.10% All Stock
GNW 4.5 China Oceanwide Holdings Group Co., Ltd. (N/A) 20.67% 28.37% -7.70% All Cash
EIDX 79.57 BridgeBio Pharma, Inc. (BBIO) 43.52 -7.93% 0.76% -8.69% Special Conditions

Deal Statistics:

Total Number of Deals Closed in 2020 120
Total Number of Deals Not Completed in 2020 17
Total Number of Pending Deals
Cash Deals 36
Stock Deals 16
Stock & Cash Deals 3
Special Conditions 3
Total Number of Pending Deals 58
Aggregate Deal Consideration $786.02 billion

New Deals:

  1. The acquisition of Urovant Sciences (UROV) by Sumitovant Biopharma for $681 million or $16.25 per share in cash.
  2. The acquisition of HighPoint Resources Corporation (HPR) by Bonanza Creek Energy (BCEI) for $376 million in an all stock deal. Under the terms of the merger agreement, the transaction implies an exchange ratio of 0.114 shares of Bonanza Creek common stock for each share of HighPoint common stock.

Deal Updates:

  1. On November 10, 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 Eaton Vance (EV) by Morgan Stanley (MS).
  2. On November 15, 2020, Simon Property Group (SPG) and Taubman Centers (TCO) announced that they have reached a definitive agreement modifying certain terms of the original merger agreement, including a modified purchase price of $43.00 per share in cash and other provisions to reduce closing conditionality. The merger is expected to close in late 2020 or early 2021.

Closed Deals:

  1. The acquisition of Wright Medical Group (WMGI) by Stryker Corporation (SYK) on November 12, 2020. It took 374 days for this deal to be completed.
  2. The acquisition of Montage Resources Corporation (MR) by Southwestern Energy Company (SWN) on November 13, 2020. It took 93 days for this deal to be completed.

Terminated Deals:

  1. On November 12, 2020, Sunworks (SUNW) announced that the proposed merger with the Peck Company Holdings failed to secure stockholder approval. Following the special meeting of stockholders, Sunworks notified the Peck Company of its decision to terminate the merger agreement.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.5 11/30/2020 20.67% 502.89%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.75 03/31/2021 14.29% 38.34%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $17.37 12/31/2020 13.70% 108.72%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $166.49 $148.57 12/31/2021 12.06% 10.71%
DOYU 10/12/2020 HUYA Inc. (HUYA) $15.71 $14.21 06/30/2021 10.55% 16.97%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $140.34 $127.65 12/31/2021 9.94% 8.83%
WLTW 03/09/2020 Aon plc (AON) $220.80 $206.81 06/30/2021 6.76% 10.87%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $85.85 $81.18 06/30/2021 5.75% 9.25%
NEWA 10/02/2020 Crouching Tiger Holding Limited (N/A) $3.65 $3.5 06/30/2021 4.29% 6.89%
MVC 08/11/2020 Barings BDC, Inc. (BBDC) $8.27 $7.97 12/31/2020 3.82% 30.28%

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 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.

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