Merger Arbitrage Mondays – Five New Multi-Billion Dollar Deals

M&A momentum continued to build as we reach the end of an eventful year with seven new deals announced and two deals completed.

On Sunday, December 20, 2020, Lockheed Martin Corporation (LMT) announced that it is acquiring Aerojet Rocketdyne Holdings (AJRD), a world-known leader in aerospace and defense that provides propulsion systems to the space, missile defense and strategic systems. According to Reuters, ‘The deal is Lockheed’s biggest acquisition since Jim Taiclet took over as chief executive in June. He is seeking to beef up the company’s propulsion capabilities amid competition from new entrants such as SpaceX and Blue Origin, for space contracts with the U.S. government.’

After amending its deal in the previous week, Alaska Communications Systems Group (ALSK) received another proposal from a third party last week, which was considered as a ‘Superior Proposal’ by the Company’s Board of Directors.

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 11, 2020, and December 18, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GSUM 1.63 Gridsum Corporation (N/A) 22.70% 19.05% 3.65% All Cash
SINA 42.53 New Wave Holdings Limited (N/A) 2.05% -0.78% 2.83% All Cash
ANH 2.6 Ready Capital Corporation (RC) 12.54 4.88% 2.31% 2.57% Cash Plus Stock
GNW 4.25 China Oceanwide Holdings Group Co., Ltd. (N/A) 27.76% 25.69% 2.07% All Cash
CBMG 18.16 CBMG management (N/A) 8.76% 6.76% 2.00% All Cash
ACIA 71.17 Cisco Systems, Inc. (CSCO) 45.44 -1.64% -0.34% -1.30% All Cash
IPHI 160.98 Marvell Technology Group Ltd. (MRVL) 47.51 9.56% 11.16% -1.60% Cash Plus Stock
EIDX 119.74 BridgeBio Pharma, Inc. (BBIO) 64.89 -38.82% -35.62% -3.20% Special Conditions
SOGO 8.42 Tencent Parties (N/A) 5.70% 10.16% -4.46% All Cash
CXDC 1.09 Faith Dawn Limited and Faith Horizon (N/A) 10.09% 16.50% -6.41% All Cash

Deal Statistics:

Total Number of Deals Closed in 2020 129
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 44
Stock Deals 21
Stock & Cash Deals 6
Special Conditions 5
Total Number of Pending Deals 76
Aggregate Deal Consideration $957.29 billion

New Deals:

  1. The acquisition of Cardtronics (CATM) by affiliates of Apollo Global Management for $2.3 billion or $35.00 per share in cash.
  2. The acquisition of TC PipeLines (TCP) by TC Energy Corporation (TRP) for $4.29 billion in an all stock deal. Under the terms of the agreement, TCP common unitholders would receive 0.70 common shares of TC Energy for each issued and outstanding publicly-held TCP common unit.
  3. The acquisition of Prevail Therapeutics (PRVL) by Eli Lilly and Company (LLY) for $895.39 million. Upon completion of the merger, shareholders of Prevail Therapeutics will receive. $22.50 per share in cash payable at closing plus one non-tradable contingent value right worth up to $4.00 per share in cash, for a total consideration of up to $26.50 per share in cash or $895.39 million.
  4. The merger of Aphria (APHA) and Tilray (TLRY) for $1.49 billion in an all stock deal. Under the terms of the agreement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the Arrangement, Aphria Shareholders will own approximately 62 percent of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse merger of Tilray into Aphria.
  5. The acquisition of Ossen Innovation (OSN) by New Ossen Group Limited in a going-private transaction for $84.96 million or $5.10 per share in cash.
  6. The acquisition of BioTelemetry (BEAT) by Philips (PHG) for $2.8 billion or $72.00 per share in cash.
  7. The acquisition of Aerojet Rocketdyne Holdings (AJRD) by Lockheed Martin Corporation (LMT) for $3.79 billion or $56.00 per share in cash. As part of the transaction, Aerojet Rocketdyne declared a $5.00 per share pre-closing special dividend to holders of its common shares and convertible senior notes, on an as-converted basis. The special dividend will be paid on March 24, 2021, to holders of record as of March 10, 2021. The payment of this special dividend, unless revoked, will adjust the consideration to be paid by Lockheed Martin to $51.00 per share at closing.

Deal Updates:

  1. On December 14, 2020, Marvell Technology Group (MRVL) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with its previously announced proposed acquisition of Inphi Corporation (IPHI), expired on December 14, 2020.
  2. On December 15, 2020, Alaska Communications Systems Group (ALSK) announced that it has received an acquisition proposal from a third party  at $3.25 per share, which the Company’s Board of Directors has determined constitutes a “Superior Proposal”.
  3. On December 17, 2020, Tiffany (TIF) announced that holders of a majority in aggregate principal amount of its outstanding senior notes have delivered valid consents. The Merger is expected to be completed early in the calendar year 2021.
  4. On December 17, 2020, The Federal Trade Commission (FTC) has granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of The Goldfield Corporation (GV) by First Reserve.
  5. On December 17, 2020, Alphabet’s Google (GOOGreceived conditional approval from the European Union for its $2.1 billion takeover of Fitbit (FIT).

Closed Deals:

  1. The acquisition of Dunkin’ Brands Group (DNKN) by Inspire Brands on December 15, 2020. It took 46 days for this deal to be completed.
  2. The acquisition of GCI Liberty (GLIBA) by Liberty Broadband Corporation (LBRDK) on December 18, 2020. It took 134 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
AJRD 12/20/2020 Lockheed Martin Corporation (LMT) $56.00 $42.04 12/31/2021 33.21% 32.32%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.25 12/31/2020 27.76% 1013.41%
DOYU 10/12/2020 HUYA Inc. (HUYA) $15.40 $12.22 06/30/2021 25.99% 49.66%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.63 03/31/2021 22.70% 82.85%
PRVL 12/15/2020 Eli Lilly and Company (LLY) $26.50 $23.08 03/31/2021 14.82% 54.09%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $165.31 $149.19 12/31/2021 10.80% 10.52%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.09 12/31/2020 10.09% 368.35%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $176.37 $160.98 12/31/2021 9.56% 9.30%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.16 12/31/2020 8.76% 319.58%
WLTW 03/09/2020 Aon plc (AON) $221.93 $204.89 06/30/2021 8.32% 15.89%

List of all pending deals:

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

Conclusion: 

With shareholders approvals and regulatory approvals, consents and early termination of the HSR Act coming through, we can see a lot of deals moving towards successful completion. There are also instances of deals amending their terms and higher offers being received. For a year that had weeks of almost no deals announced, it is good to see multi billion dollar deals being announced as the year comes to a close. The aggregate deal consideration which was just a little over $500 billion by the end of the second quarter this year, has increased significantly to $957.29 billion.

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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