Merger Arbitrage Mondays – Yet Another Deal Receives A Higher Bid

Merger activity increased last week with five new deals announced and three deals completed. Two of the five new deals announced last week were potential deals in the work. The acquisition of Slack Technologies (WORK) by salesforce.com (CRM) was announced as a successful deal just five days after the potential deal was announced.

The largest deal of the year was announced last Monday. IHS Markit (INFO), formerly know as Information Handling Services was founded in 1959 by Richard O’Brien as a provider of product catalog databases on microfilm for aerospace engineers. The company provides critical information, analytics, and solutions to customers ranging from governments and multinational companies to smaller businesses and technical professionals. On November 30, 2020, S&P Global (SPGI) and IHS Markit (INFO) agreed to merge in an all stock transaction valuing IHS Markit at $44 billion.

What is even more exciting is to see two deals that were deemed high risk and that had huge spreads appear to be close to the end zone with their spreads narrowing significantly in recent weeks. Google’s acquisition of Fitbit is expected to receive conditional EU approval and China Oceanwide’s acquisition of Genworth was reapproved by the National Development and Reform Commission (NDRC) in China.

Genworth Spread History 2016 - 2020

Genworth Spread History 2016 – 2020

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 November 30, 2020, and December 4, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
EV 65.59 Morgan Stanley (MS) 65 7.36% 1.48% 5.88% Cash Plus Stock
DOYU 11.98 HUYA Inc. (HUYA) 19 15.78% 12.30% 3.48% All Stock
GSUM 1.7 Gridsum Corporation (N/A) 17.65% 14.94% 2.71% All Cash
CCR 4 CONSOL Energy Inc. (CEIX) 5.73 4.57% 1.88% 2.69% All Stock
SOGO 8.65 Tencent Parties (N/A) 4.05% 1.58% 2.47% All Cash
LINX 6.99 StoneCo Ltd. (STNE) 73.75 -10.59% -7.68% -2.91% Special Conditions
EIDX 95.64 BridgeBio Pharma, Inc. (BBIO) 52.19 -23.40% -18.60% -4.80% Special Conditions
TAT 0.2796 TAT Holdco LLC and TAT Merger Sub LLC (N/A) -53.51% -47.19% -6.32% All Cash
ALSK 3.76 Macquarie Capital and GCM Grosvenor (N/A) -20.21% -4.46% -15.75% All Cash
GNW 4.76 China Oceanwide Holdings Group Co., Ltd. (N/A) 14.08% 30.84% -16.76% All Cash

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 37
Stock Deals 18
Stock & Cash Deals 4
Special Conditions 3
Total Number of Pending Deals 62
Aggregate Deal Consideration $887.81 billion

New Deals:

  1. The merger of IHS Markit (INFO) and S&P Global (SPGI) for $44 billion in an all stock deal. Under the terms of the merger agreement, each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock.
  2. The acquisition of Collectors Universe (CLCT) by D1 Capital Partners and Cohen Private Ventures for $675.04 million or $75.25 per share in cash.
  3. The acquisition of China Distance Education Holdings Limited (DL) by Champion Distance Education Investments Limited and China Distance Learning Investments Limited in a going-private transaction for $317.84 million or $9.80 per share in cash. We added DL as a potential deal to the Deals in the Works section on June 8, 2020, and the price after the news of the potential deal came out was $8.22.
  4. The acquisition of Slack Technologies (WORK) by salesforce.com (CRM) for $27.7 billion in a cash plus stock deal. Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share. We added WORK as a potential deal to the Deals in the Works section on November 25, 2020, and the price after the news of the potential deal came out was $40.70.
  5. The acquisition of Waddell & Reed Financial (WDR) by Macquarie Asset Management for $1.7 billion or $25.00 per share in cash.

Deal Updates:

  1. On December 1, 2020, National General Holdings (NGHC) announced that, if all insurance regulatory approvals are obtained by the end of December 2020, the parties anticipate the transaction will close on or about January 4, 2021. If such insurance regulatory approvals are not obtained by such date, the transaction is expected to close in early 2021.
  2. On December 3, 2020, Bridge Bancorp (BDGE) and Dime Community Bancshares (DCOM) jointly announced that at separate special meetings held today, each company’s shareholders approved the proposed merger of equals.
  3. December 3, 2020: According to Bloomberg, Google (GOOG) is set to win conditional European Union approval for its takeover of Fitbit (FIT) this month. The deal could be approved as soon as next week after national competition authorities give their opinion.
  4. On December 3, 2020, Parsley Energy (PE) announced that the special meeting of stockholders of Parsley Energy to approve the pending combination with Pioneer Natural Resources Company (PXD) is scheduled to take place on January 12, 2021.
  5. On December 3, 2020, Telenav (TNAV) announced the expiration of the 30-day “go-shop” period under the terms of the previously announced definitive merger agreement.
  6. On December 4, 2020, Alaska Communications Systems Group (ALSK) announced that the 30-day “go-shop” period set forth in the previously announced definitive agreement and plan of merger with affiliates of Macquarie Capital expired on December 3, 2020 and also announced that it has received two acquisition proposals: one from a third party at $3.15 per share, which the Board has determined constitutes a “Superior Proposal” as defined in the Macquarie/GCM Merger Agreement and one from a different third party and together with the Superior Proposal Bidder that the Board has determined would reasonably be expected to result in a Superior Proposal.

Closed Deals:

  1. The acquisition of MobileIron (MOBL) by Ivanti on December 1, 2020. It took 64 days for this deal to be completed.
  2. The acquisition of Hudson (HUD) by Dufry AG Group on December 1, 2020. It took 104 days for this deal to be completed.
  3. The acquisition of BioSpecifics Technologies (BSTC) by Endo International (ENDP) on December 2, 2020. It took 44 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
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.7 03/31/2021 17.65% 56.01%
DOYU 10/12/2020 HUYA Inc. (HUYA) $13.87 $11.98 06/30/2021 15.78% 27.95%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.76 12/31/2020 14.08% 205.50%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $166.77 $150.02 12/31/2021 11.17% 10.45%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $162.07 $147.91 12/31/2021 9.57% 8.96%
EV 10/08/2020 Morgan Stanley (MS) $70.41 $65.59 06/30/2021 7.36% 13.03%
FBSS 10/01/2020 Virginia National Bankshares Corporation (VABK) $18.87 $17.58 06/30/2021 7.32% 12.96%
WLTW 03/09/2020 Aon plc (AON) $228.53 $214.49 06/30/2021 6.54% 11.60%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.69 12/31/2020 5.67% 82.80%
MXIM 07/13/2020 Analog Devices, Inc. (ADI) $90.70 $86.41 06/30/2021 4.97% 8.80%

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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