Merger Arbitrage Mondays – Two More Blockbuster Deals Announced

Merger activity increased last week with seven new deals announced. None of the active deals were completed.

The month of December has started off with a surge of new deals being announced and two of the largest deals of the year announced in the first two weeks. Three of the new deals announced last week were potential deals in the works.

In one of the largest drug deals announced this year, AstraZeneca, the company that has developed a coronavirus vaccine with Oxford University entered into a $39 billion deal to buy Boston-based Alexion Pharmaceuticals. On May 12, 2020, Hedge fund Elliott Management had publicly called on Alexion Pharmaceuticals to sell itself. With this acquisition, Astra Zeneca looks forward to adding treatments for uncommon blood and immunological disorders to its portfolio.

On December 13, 2020, Huntington Bancshares Incorporated (HBAN) and TCF Financial Corporation (TCF) entered into a definitive agreement under which the companies will combine in an all-stock merger with a total market value of approximately $22 billion. We have not yet added this deal to our database because the terms of the agreement have not been specified.

Another highlight from last week was Alaska Communications Systems Group (ALSK) and GCM Grosvenor announcing an amendment to their merger agreement by increasing their per share consideration from $3.00 to $3.20.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

There were two new deals announced in the Deals in the Works section last week.

Weekly Spread Changes:

The table below shows weekly spread changes between December 4, 2020, and December 11, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
CXDC 1.03 Faith Dawn Limited and Faith Horizon (N/A) 16.50% 0.84% 15.66% All Cash
GNW 4.32 China Oceanwide Holdings Group Co., Ltd. (N/A) 25.69% 14.08% 11.61% All Cash
DOYU 11.71 HUYA Inc. (HUYA) 20.35 26.86% 15.78% 11.08% All Stock
ALSK 3.63 Macquarie Capital and GCM Grosvenor (N/A) -11.85% -20.21% 8.36% All Cash
SOGO 8.17 Tencent Parties (N/A) 10.16% 4.05% 6.11% All Cash
CCR 4.64 CONSOL Energy Inc. (CEIX) 6.51 2.42% 4.57% -2.15% All Stock
LINX 7.28 StoneCo Ltd. (STNE) 75.11 -14.15% -10.59% -3.56% Special Conditions
SG 12.3 Third Point Reinsurance Ltd. (TPRE) 9.6 -22.76% -19.15% -3.61% Special Conditions
HPR 12.1 Bonanza Creek Energy, Inc. (BCEI) 23.35 -78.00% -74.13% -3.87% All Stock
EIDX 113.8 BridgeBio Pharma, Inc. (BBIO) 61.35 -35.62% -23.40% -12.22% Special Conditions

Deal Statistics:

Total Number of Deals Closed in 2020 127
Total Number of Deals Not Completed in 2020 16
Total Number of Pending Deals
Cash Deals 40
Stock Deals 19
Stock & Cash Deals 6
Special Conditions 4
Total Number of Pending Deals 69
Aggregate Deal Consideration $931.25 billion

New Deals:

  1. The merger of Anworth Mortgage Asset Corporation (ANH) and Ready Capital Corporation (RC) for $291.75 million in a cash plus stock deal. Under the terms of the merger agreement, each share of Anworth common stock will be converted into 0.1688 shares of Ready Capital common stock and $0.61 of cash consideration.
  2. The acquisition of Seacor Holdings (CKH) by an affiliate of American Industrial Partners for $1 billion or $41.50 per share in cash.
  3. The acquisition of CounterPath Corporation (CPAH) by Alianza for $25.7 million or $3.49 per share in cash.
  4. The acquisition of MTS Systems Corporation (MTSC) by Amphenol Corporation (APH) for $1.7 billion or $58.50 per share in cash.
  5. The merger of Neos Therapeutics (NEOS) and Aytu BioScience (AYTU) for $79 million in an all stock deal. Under the terms of the agreement, Neos stockholders will be entitled to receive 0.1088 shares of common stock of Aytu for each share of Neos common stock held.
  6. The acquisition of ZAGG Inc (ZAGG) by a buyer group led by Evercel for $244.68 million. Upon completion of the merger, ZAGG shareholders will receive $4.20 per share in cash upon closing and will be entitled to receive an additional contingent amount of up to $0.25 per share, to be paid if the Company’s Paycheck Protection Program Loan is forgiven and any audit related thereto is satisfactorily completed. We added ZAGG as a potential deal to the Deals in the Works section on August 6, 2019, and the price after the news of the potential deal came out was $6.94.
  7. The acquisition of Alexion Pharmaceuticals (ALXN) by AstraZeneca (AZN) for $39 billion in a cash plus stock deal. Under the terms of the agreement, Alexion shareholders will receive $60 in cash and 2.1243 new AstraZeneca ADSs listed on the Nasdaq exchange for each of their Alexion shares. We added ALXN as a potential deal to the Deals in the Works section on May 12, 2020, and the price after the news of the potential deal came out was $101.65.

Deal Updates:

  1. On December 8, 2020, Perceptron (PRCP) announced that at its annual meeting of shareholders held today, Perceptron shareholders approved the previously announced Agreement and Plan of Merger with Atlas Copco.
  2. On December 8, 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 HD Supply Holdings (HDS) by The Home Depot (HD).
  3. On December 8, 2020, Front Yard Residential Corporation (RESI) announced that the special meeting of stockholders will be held via live webcast on January 6, 2021.
  4. On December 10, 2020, Alaska Communications Systems Group (ALSK) and GCM Grosvenor announced that they have agreed to an amendment and restatement of their previously announced definitive agreement and plan of merger to increase the per-share consideration payable to Alaska Communications’ stockholders to $3.20 per share in cash from $3.00 per share in cash. The transaction is now valued at approximately $320 million, including debt.
  5. December 12, 2020, According to Bloomberg, Eidos Therapeutics (EIDX) which has agreed to an offer from BridgeBio Pharma, received a competing approach from GlaxoSmithKline.

Top 10 deals with largest spreads:

Symbol Announced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
Profit Annualized
Profit
ALXN 12/12/2020 AstraZeneca (AZN) $175.29 $120.98 09/30/2021 44.89% 56.30%
DOYU 10/12/2020 HUYA Inc. (HUYA) $14.86 $11.71 06/30/2021 26.86% 49.27%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.32 12/31/2020 25.69% 521.03%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.68 03/31/2021 19.05% 64.37%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.03 12/31/2020 16.50% 334.68%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $165.75 $149.11 12/31/2021 11.16% 10.63%
SOGO 09/29/2020 Tencent Parties (N/A) $9.00 $8.17 12/31/2020 10.16% 206.00%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $157.95 $143.83 12/31/2021 9.82% 9.36%
WLTW 03/09/2020 Aon plc (AON) $220.44 $204.4 06/30/2021 7.85% 14.39%
FBSS 10/01/2020 Virginia National Bankshares Corporation (VABK) $18.56 $17.33 06/30/2021 7.11% 13.04%

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

Leave A Comment

You must be logged in to post a comment.