Merger Arbitrage Mondays – Deal Making in 2020 Ends With a Bang

Merger activity remained steady last week with seven new deals announced and three deals completed. These seven deals helped make December the most active month this year for deal activity and also helped it surpass the 20 deals announced in December 2019.  Four of the seven new deals announced last week were multi-billion dollar deals.

Founded in 1998, RealPage (RP) provides software and data analytics to the real estate industry. On December 21, the company entered into a definitive merger agreement to be acquired by Thoma Bravo for $10.2 billion at a premium of over 30%.

The bidding war for Alaska Communications Systems Group (ALSK) continued last week. The company received another bid, which the board determined as a ‘Superior Proposal’ after amending the terms of the previous agreement.

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 December 18, 2020, and December 25, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
FIT 6.84 Google LLC (GOOG) 1738.85 7.46% 1.38% 6.08% All Cash
NEWA 3.35 Crouching Tiger Holding Limited (N/A) 8.96% 5.19% 3.77% All Cash
APHA 7.13 Tilray, Inc. (TLRY) 8.59 0.97% -2.61% 3.58% All Stock
SOGO 8.17 Tencent Parties (N/A) 8.94% 5.70% 3.24% All Cash
LINX 7.14 StoneCo Ltd. (STNE) 85.17 -12.46% -15.08% 2.62% Special Conditions
GNW 4.36 China Oceanwide Holdings Group Co., Ltd. (N/A) 24.54% 27.76% -3.22% All Cash
ANH 2.72 Ready Capital Corporation (RC) 12.76 1.61% 4.88% -3.27% Cash Plus Stock
DOYU 11.26 HUYA Inc. (HUYA) 18.91 22.60% 25.99% -3.39% All Stock
EIDX 127.7 BridgeBio Pharma, Inc. (BBIO) 69.5 -42.63% -38.82% -3.81% Special Conditions
EV 67.7 Morgan Stanley (MS) 68.09 0.39% 7.12% -6.73% Cash Plus Stock

Deal Statistics:

Total Number of Deals Closed in 2020 133
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 45
Stock Deals 23
Stock & Cash Deals 6
Special Conditions 5
Total Number of Pending Deals 79
Aggregate Deal Consideration $974.25 billion

New Deals:

  1. The acquisition of RigNet (RNET) by Viasat (VSAT) for $222 million in an all stock deal. Under the terms of the agreement, RigNet’s stockholders will receive a fixed exchange ratio of 0.1845 shares of Viasat stock for each RigNet share owned.
  2. The acquisition of QEP Resources (QEP) by Diamondback Energy (FANG) for $2.2 billion in an all stock deal. Under the terms of the definitive merger agreement, stockholders of QEP will receive 0.05 shares of Diamondback common stock in exchange for each share of QEP common stock.
  3. The acquisition of RealPage (RP) by Thoma Bravo for $10.2 billion or $88.75 per share in cash.
  4. The acquisition of HMS Holdings (HMSY) by Gainwell Technologies for $3.4 billion or $37.00 per share in cash.
  5. The acquisition of Sportsman’s Warehouse Holdings (SPWH) by The Great American Outdoors Group for $1.5 billion or $18.00 per share in cash.
  6. The acquisition of PRGX Global (PRGX) by Ardian for $195 million or $7.71 per share in cash.
  7. The merger of Harvest Capital Credit (HCAP) and Portman Ridge Finance Corporation (PTMN) for $139.52 million. Under the terms of the agreement, shareholders of Harvest Capital Credit will receive approximately 4.083 shares of PTMN and an additional cash payment of $0.36 from Sierra Crest. Using PTMN’s closing price of $1.80 on December 22, 2020, the merger transaction (including the Sierra Crest additional cash payment) currently values HCAP shares at approximately $7.71 per share.

Deal Updates:

  1. On December 21, 2020, Aon (AON) confirmed that the European Commission (EC) has initiated a Phase II review in connection with its combination with Willis Towers Watson Public Limited Company (WLTW).
  2. On December 21, 2020, Virtusa Corporation (VRTUreceived written notice from the Committee on Foreign Investment in the United States (“CFIUS”) that it had concluded its review of the previously announced merger of Austin BidCo with and into the Company. CFIUS determined that there are no unresolved national security concerns with respect to the Merger.
  3. On December 22, 2020, Australia’s antitrust regulator rejected a behavioural undertaking offered by Google (GOOG) that sought to address competition concerns over its planned $2.1 billion acquisition of Fitbit (FIT).
  4. On December 22, 2020, Alaska Communications Systems Group (ALSK) together with Macquarie Capital announced that they agreed to an amendment of their previously announced definitive amended and restated agreement and plan of merger to increase the per-share consideration payable to Alaska Communications’ stockholders to $3.26 per share in cash from $3.20 per share in cash.
  5. On December 22, 2020, shareholders of BMC Stock Holdings (BMCHapproved the company’s merger with Builders FirstSource (BLDR) at a special meeting of shareholders.
  6. On December 22, 2020, Bridge Bancorp (BDGE) and Dime Community Bancshares (DCOM) jointly announced that the parties have received approval from New York State Department of Financial Services to merge Dime Community Bank with and into BNB Bank. The merger is expected to close on February 1, 2021.
  7. On December 23, 2020, SINA Corporation (SINA) announced that the Company’s shareholders voted in favor of the proposal to authorize and approve the previously announced agreement and plan of merger with New Wave Holdings Limited.
  8. On December 24, 2020, Alaska Communications Systems Group (ALSK) announced that it has received an acquisition proposal from a third party at $3.40 per share, which the Company’s Board of Directors has determined constitutes a “Superior Proposal”.

Closed Deals:

  1. The acquisition of Perceptron (PRCP) by Atlas Copco on December 21, 2020. It took 84 days for this deal to be completed.
  2. The acquisition of MVC Capital (MVC) by Barings BDC (BBDC) on December 23, 2020. It took 134 days for this deal to be completed.
  3. The acquisition of HD Supply Holdings (HDS) by The Home Depot (HD) on December 24, 2020. It took 38 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 $4.36 12/31/2020 24.54% 2239.39%
DOYU 10/12/2020 HUYA Inc. (HUYA) $13.80 $11.26 06/30/2021 22.60% 44.58%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.6722 03/31/2021 19.60% 76.12%
PRVL 12/15/2020 Eli Lilly and Company (LLY) $26.50 $23.08 03/31/2021 14.82% 57.54%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.07 12/31/2020 12.15% 1108.64%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $158.23 $141.99 12/31/2021 11.43% 11.31%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $175.30 $160.5 12/31/2021 9.22% 9.12%
NEWA 10/02/2020 Crouching Tiger Holding Limited (N/A) $3.65 $3.35 06/30/2021 8.96% 17.67%
SOGO 09/29/2020 Tencent Parties (N/A) $8.95 $8.17 12/31/2020 8.94% 815.33%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.16 12/31/2020 8.76% 798.94%

List of all pending deals:

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

Conclusion:

We have finally arrived at our last post for the year 2020. M&A activity surged in the second half of the year after a bleak start that was significantly induced by the coronavirus pandemic. The aggregate deal consideration increased to $974.25 billion last week. With a couple of days still left till the year ends, we are hoping to see more active deals moving towards successful completion.

Disclaimer: I have long positions in Otelco (OTEL) and Zagg (ZAGG). 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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