Merger Arbitrage Mondays – Tiffany Rises From The Dead

Merger activity decreased last week with four new deals announced and two active deals completed. The month of October ended with a total of 22 new deals announced and the total value of all the announced deals was $114 billion.

In a development that was apt for a week that ended in Halloween, the Tiffany deal came back from the dead. Tiffany (TIF) and LVMH modified certain terms of their initial agreement by reducing the purchase price from $135.00 to $131.50 in cash. The two companies also agreed to settle their pending litigation in the Delaware Chancery Court. When LVMH attempted to walk away from the deal in early September we decided to keep the deal active in our Merger Arbitrage Tool to see how Tiffany’s lawsuit against LVMH would play out. Just like the new deal for Front Yard Residential (RESI) we discussed last week, the gods smiled on arbitrageurs once again with this outcome for Tiffany.

One of the four new deals announced last week was a potential deal in the works. On October 8, 2020, according to The Wall Street Journal, Advanced Micro Devices (AMD) was in advanced talks to buy rival chip maker Xilinx (XLNX). This potential deal became successful on October 27, 2020 when the two companies announced that they had entered into a definitive agreement for AMD to acquire Xilinx in an all-stock transaction valued at $35 billion.

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 23, 2020, and October 30, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
TAT 0.2222 TAT Holdco LLC and TAT Merger Sub LLC (N/A) -41.49% -49.49% 8.00% All Cash
LINX 6.24 StoneCo Ltd. (STNE) 52.54 5.29% 1.86% 3.43% Special Conditions
EIDX 70.92 BridgeBio Pharma, Inc. (BBIO) 38.38 3.30% -0.04% 3.34% Special Conditions
CBMG 18.01 CBMG management (N/A) 9.66% 7.28% 2.38% All Cash
WLTW 182.48 Aon plc (AON) 184.01 8.91% 6.74% 2.17% All Stock
ATV 20.5 First Ostia Port Ltd. (N/A) 2.44% 3.96% -1.52% All Cash
GRUB 73.96 Just Eat Takeaway.com N.V. (TKAYY) 11.02 -0.02% 1.90% -1.92% All Stock
SUNW 2.82 The Peck Company Holdings, Inc. (PECK) 6.56 -56.92% -54.74% -2.18% All Stock
GNW 3.93 China Oceanwide Holdings Group Co., Ltd. (N/A) 38.17% 43.27% -5.10% All Cash
TIF 130.84 LVMH Moët Hennessy Louis Vuitton SE (LVMUY) 94.13 3.18% 9.28% -6.10% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 116
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 34
Stock Deals 17
Stock & Cash Deals 3
Special Conditions 3
Total Number of Pending Deals 57
Total Deal Size $773.07 billion

New Deals:

  1. The merger of Mid-Con Energy Partners (MCEP) and Contango Oil & Gas Company (MCF) in an all stock deal valued at $140.24 million. Under the terms of the merger agreement, Mid-Con unitholders will receive 1.75 shares of Contango common stock for each Mid-Con common unit owned.
  2. The acquisition of Xilinx (XLNX) by Advanced Micro Devices (AMD) in an all stock deal for $33.43 billion. Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold. We added XLNX as a potential deal to the Deals in the Works section on October 8, 2020, and the price after the news of the potential deal came out was $120.94.
  3. The acquisition of Inphi Corporation (IPHI) by Marvell Technology Group (MRVL) for $6.5 billion in a cash plus stock deal. Under the terms of the definitive agreement, the transaction consideration will consist of $66 in cash and 2.323 shares of stock of the combined company for each Inphi share.
  4. The acquisition of Dunkin’ Brands Group (DNKN) by Inspire Brands for $11.3 billion or $106.50 per share in cash.

Deal Updates:

  1. On October 26, 2020, Jernigan Capital (JCAP) announced that its shareholders approved the acquisition of Jernigan by affiliates of NexPoint Advisors at its special meeting of stockholders.
  2. On October 26, 2020, the European Commission granted clearance of the proposed acquisition of Tiffany & Co. (TIF) by LVMH Moët Hennessy-Louis Vuitton SE pursuant to the Agreement and Plan of Merger.
  3. On October 26, 2020, the “End Date” under the Agreement and Plan of Merger by and among Fitbit (FIT) and Google (GOOGwas extended to February 1, 2021.
  4. On October 29, 2020, StoneCo (STNE) announced that it is increasing its proposal by R$ 89,529,308.50 in the cash portion to be paid in exchange for the redemption of the New Shares STNE, which corresponds to an additional cash payment of R$ 0.50 per Linx (LINX) share, a total of R$ 32.06 per Linx share.
  5. On October 29, 2020, LVMH Moët Hennessy Louis Vuitton SE and Tiffany (TIF) announced that they have concluded an agreement modifying certain terms of their initial agreement to reflect a purchase price of $131.50 in cash and to reduce closing conditionality. Other key terms of the Merger Agreement remain unchanged. Tiffany and LVMH have also agreed to settle their pending litigation in the Delaware Chancery Court.
  6. On October 30, 2020, Bridge Bancorp (BDGE) and Dime Community Bancshares (DCOM) announced that they have received the required regulatory approval from the Board of Governors of the Federal Reserve System to merge Dime Community Bank with and into BNB Bank.

Closed Deals:

  1. The acquisition of Livongo Health (LVGO) by Teladoc Health (TDOC) on October 30, 2020. It took 86 days for this deal to be completed.
  2. The acquisition of Advanced Disposal Services (ADSW) by Waste Management (WM) on October 30, 2020. It took 564 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 $3.93 11/30/2020 38.17% 480.39%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.8 03/31/2021 11.11% 27.04%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.01 12/31/2020 9.66% 58.77%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $153.14 $139.76 12/31/2021 9.57% 8.22%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $129.75 $118.69 12/31/2021 9.32% 8.01%
WLTW 03/09/2020 Aon plc (AON) $198.73 $182.48 06/30/2021 8.91% 13.49%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $74.67 $69.65 06/30/2021 7.21% 10.92%
DOYU 10/12/2020 HUYA Inc. (HUYA) $16.35 $15.3 06/30/2021 6.88% 10.41%
DNKN 10/30/2020 Inspire Brands, Inc. (N/A) $106.50 $99.71 12/31/2020 6.81% 41.43%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $7.04 02/01/2021 4.40% 17.47%

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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