Merger Arbitrage Mondays – The Battle For Navistar Draws To A Close

Merger activity remained steady last week with four new deals announced and two active deals completed.

Two of the four new deals announced were potential deals in the work. On September 28, 2020, Endurance International Group Holdings (EIGI) had announced that it was considering strategic options, including a possible sale. On November 2, 2020, the company agreed to be acquired by Clearlake Capital Group at a 79% premium over Endurance’s unaffected share price of $5.30, as of September 25, 2020, the last trading day prior to media speculation about a potential transaction.

On January 30, 2020, Navistar International Corporation (NAV) had confirmed that it had received an unsolicited proposal from TRATON SE regarding a potential transaction to acquire the company.  TRATON is Volkswagen’s truck manufacturing subsidiary. This potential deal became successful on November 7, 2020 after the two companies entered into a definitive merger agreement. I came across Navistar after a cluster of insider purchases by Carl Icahn and his protege Dr. Mark Rachesky in 2012. Over the last 8 years, they kept adding to their stakes and a number of other insiders exercised options without selling them. The final deal price came below what Carl Icahn was hoping for and also well below what Dr. Rachesky was purported to hold out for.

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 October 30, 2020, and November 6, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
WTRE 34.49 Arch Capital Group Ltd. (ACGL) 31.55 1.48% -13.61% 15.09% All Cash
NEWA 3.42 Crouching Tiger Holding Limited (N/A) 6.73% 0.27% 6.46% All Cash
CCR 2.91 CONSOL Energy Inc. (CEIX) 4.04 1.35% -3.26% 4.61% All Stock
CBMG 17.41 CBMG management (N/A) 13.44% 9.66% 3.78% All Cash
FBSS 15.66 Virginia National Bankshares Corporation (VABK) 24.24 4.48% 1.49% 2.99% All Stock
EIDX 72.71 BridgeBio Pharma, Inc. (BBIO) 39.375 0.76% 3.30% -2.54% Special Conditions
TIF 131.15 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) 103.74 0.27% 3.18% -2.91% All Cash
MCEP 2.11 Contango Oil & Gas Company (MCF) 1.2 -0.47% 2.70% -3.17% All Stock
GNW 4.23 China Oceanwide Holdings Group Co., Ltd. (N/A) 28.37% 38.17% -9.80% All Cash
LINX 6.91 StoneCo Ltd. (STNE) 62.22 -9.55% 5.29% -14.84% Special Conditions

Deal Statistics:

Total Number of Deals Closed in 2020 118
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 36
Stock Deals 17
Stock & Cash Deals 3
Special Conditions 3
Total Number of Pending Deals 59
Aggregate Deal Consideration $784.98 billion

New Deals:

  1. The acquisition of Endurance International Group Holdings (EIGI) by Clearlake Capital Group for $3 billion or $9.50 per share in cash. We added EIGI as a potential deal to the Deals in the Works section on September 28, 2020, and the price after the news of the potential deal came out was $6.25.
  2. The acquisition of Alaska Communications Systems Group (ALSK) by Macquarie Capital and GCM Grosvenor for $300 million or $3.00 per share in cash.
  3. The acquisition of Telenav (TNAV) by V99 for $241 million or $4.80 per share in cash.
  4. The acquisition of Navistar International Corporation (NAV) by Traton SE for $8.6 billion or $44.50 per share in cash. We added NAV as a potential deal to the Deals in the Works section on January 30, 2020, and the price after the news of the potential deal came out was $36.50.

Deal Updates:

  1. On November 2, 2020, Arch Capital Group (ACGL) and Watford Holdings (WTRE) announced a revised definitive agreement under which Arch will acquire all of the common shares of Watford for an increased price of $35.00 per share.
  2. On November 2, 2020, MobileIron (MOBL) announced that the HSR Waiting Period expired on November 2, 2020.
  3. On November 3, 2020, Bristol Myers Squibb (BMY) and MyoKardia (MYOK) announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
  4. November 3, 2020: According to Reuters, the Federal Trade Commission announced that medical device maker Stryker (SYK) has won U.S. antitrust approval to buy Wright Medical Group (WMGI) on condition it sell certain assets.
  5. On November 4, 2020, TransAtlantic Petroleum (TAT) announced that the special meeting of stockholders of TransAtlantic Petroleum will be held on December 17, 2020.
  6. On November 4, 2020, Genworth Financial (GNW) announced that the transaction with China Oceanwide Holdings Group has now received all U.S. regulatory approvals needed to close the transaction, subject to confirmation from the Delaware Department of Insurance that the acquisition of Genworth’s Delaware-domiciled insurer may proceed under the existing approval.
  7. On November 5, 2020, Montage Resources Corporation (MR) announced that its merger with Southwestern Energy Company (SWNexpected to close following Montage Resources shareholder vote on November 12, 2020.
  8. On November 5, 2020, shareholders of China XD Plastics Company Limited (CXDCapproved the company’s merger with Faith Dawn Limited and Faith Horizon at a special meeting of shareholders.

Closed Deals:

  1. The acquisition of Bitauto Holdings Limited (BITA) by Morespark Limited on November 6, 2020. It took 147 days for this deal to be completed.
  2. The acquisition of Jernigan Capital (JCAP) by NexPoint Advisors on November 6, 2020. It took 95 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 $4.2300 11/30/2020 28.37% 470.66%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.76 03/31/2021 13.64% 34.81%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $17.41 12/31/2020 13.44% 92.56%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $170.84 $154.67 12/31/2021 10.45% 9.13%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $148.01 $134.12 12/31/2021 10.35% 9.04%
DOYU 10/12/2020 HUYA Inc. (HUYA) $16.06 $14.91 06/30/2021 7.71% 12.03%
WLTW 03/09/2020 Aon plc (AON) $205.58 $192.17 06/30/2021 6.98% 10.88%
NEWA 10/02/2020 Crouching Tiger Holding Limited (N/A) $3.65 $3.42 06/30/2021 6.73% 10.49%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $84.11 $79.48 06/30/2021 5.82% 9.08%
FBSS 10/01/2020 Virginia National Bankshares Corporation (VABK) $16.36 $15.66 06/30/2021 4.48% 6.99%

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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter@asifsuria

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