Merger Arbitrage Mondays – Fitbit Closes And Acacia Receives A Better Deal

Merger activity decreased last week with six new deals announced and four deals completed. In addition to the six new deals, there were four potential deals in the works and four new SPAC business combinations announced last week.

Google finally completed the acquisition of Fitbit last week after facing multiple hurdles. According to Reuters, the U.S. Justice Department will continue to investigate the buyout as Google still awaits approval from the Australian government. This merger had a very wide spread at various times since its announcement on November 1, 2019 and the spread crested 20% a few times as you can see from the spread history below. I felt that the regulatory hurdles the acquisition would face worldwide would make it difficult for Google to consummate this deal but they prevailed. We have seen with several deals in the last year that were perceived as risky but managed to close.

Google - Fitbit Deal Spread History

Google – Fitbit Deal Spread History (source: Inside Arbitrage Database)

In one of the more unusual moves we have seen with mergers in the recent past, Acacia Communications (ACIA) terminated its merger agreement with Cisco Systems (CSCO) because the deal had not received approval from the Chinese government and Acacia did not have an obligation to close the merger before the arrival of the January 8, 2021 extended end date. Cisco Systems must have had its heart set on this acquisition because just 3 days after the previous all cash deal for $70/share was terminated, the two companies announced an amendment to the merger agreement where Cisco would acquire Acacia for $115 per share in cash, a whopping 64% premium to the previous deal price.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours. There were four new deals announced in the Deals in the Works section last week.

SPAC Arbitrage

The SPAC IPO frenzy continued with 24 new IPOs filed last week and 4 new SPAC business combinations announced. You can find the new SPAC IPO announcements in our new SPACs tool here.

  1. Bakkt Holdings and VPC Impact Acquisition Holdings (VIH) entered into a definitive agreement for a business combination that will result in Bakkt becoming a publicly traded company with an enterprise value of approximately $2.1 billion.
  2. Proterra and ArcLight Clean Transition (ACTCUentered into a definitive merger agreement that will result in Proterra becoming a publicly traded company with an enterprise value of $1.6 billion
  3. Talkspace and Hudson Executive Investment (HECCU) entered into a definitive merger agreement that will result in Talkspace becoming a publicly traded company with an enterprise value of $1.4 billion
  4. LiveVox entered into a merger agreement with Crescent Acquisition (CRSA) that will result in LiveVox becoming a publicly traded company in an $840 million transaction.

Weekly Spread Changes:

The table below shows weekly spread changes between January 8, 2020, and January 15, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
APHA 12.42 Tilray, Inc. (TLRY) 19.7 32.94% 10.61% 22.33% All Stock
NEOS 0.764 Aytu BioScience, Inc. (AYTU) 7.44 5.95% 0.59% 5.36% All Stock
GRUB 71.06 Just Eat Takeaway.com N.V. (TKAYY) 10.89 2.83% -0.54% 3.37% All Stock
SMTX 5.89 H.I.G. Capital (N/A) 2.55% 0.00% 2.55% All Cash
BPFH 12.7 SVB Financial Group (SIVB) 461.43 -0.63% -2.66% 2.03% Cash Plus Stock
EIDX 126.51 BridgeBio Pharma, Inc. (BBIO) 68.61 -42.09% -39.43% -2.66% Special Conditions
NEWA 3.59 Crouching Tiger Holding Limited (N/A) 1.67% 5.19% -3.52% All Cash
HPR 10.61 Bonanza Creek Energy, Inc. (BCEI) 22.35 -75.99% -71.92% -4.07% All Stock
CXDC 1.07 Faith Dawn Limited and Faith Horizon (N/A) 12.15% 18.81% -6.66% All Cash
DOYU 12.14 HUYA Inc. (HUYA) 21.96 32.05% 39.71% -7.66% All Stock

Deal Statistics:

Total Number of Deals Closed in 2021 8
Total Number of Pending Deals
Cash Deals 49
Stock Deals 19
Stock & Cash Deals 9
Special Conditions 5
Total Number of Pending Deals 82
Aggregate Deal Consideration $421.91 billion

New Deals:

  1. The acquisition of National Holdings Corporation (NHLD) by B. Riley Financial (RILY) for $32.78 million or $3.25 per share in cash.
  2. The acquisition of FBL Financial Group (FFG) by Farm Bureau Property & Casualty Insurance Company for $1.46 billion or $56.00 per share in cash.
  3. The acquisition of Cantel Medical (CMD) by STERIS (STE) for $4.6 billion in a cash plus stock deal. Under the terms of the agreement, Cantel common stockholders will receive approximately $16.93 in cash and 0.33787 of a STERIS ordinary share.
  4. The acquisition of Golar LNG Partners (GMLP) by New Fortress Energy (NFE) for $1.6 billion or $3.55 per share in cash.
  5. The acquisition of Atlantic Power Corporation (AT) by I Squared Capital for $961 million or $3.03 per share in cash.
  6. The acquisition of ProSight Global (PROS) by TowerBrook Capital Partners and Further Global Capital Management for $586 million or $12.85 per share in cash.

Deal Updates:

  1. On January 11, 2021, The Competition Commission of India (“CCI”) approved the previously announced merger of Austin BidCo with and into Virtusa Corporation (VRTU).
  2. On January 12, 2021, Xilinx (XLNX) announced that the Hart-Scott-Rodino waiting period on its acquisition by AMD has expired.
  3. On January 13, 2021, BridgeBio Pharma (BBIO) and Eidos Therapeutics (EIDXannounced that the acquisition of Eidos by BridgeBio is expected to close on or about January 26, 2021.

Closed Deals:

  1. The acquisition of Front Yard Residential Corporation (RESI) by Pretium and Ares Management on January 11, 2021. It took 84 days for this deal to be completed.
  2. The acquisition of Parsley Energy (PE) by Pioneer Natural Resources Company (PXD) on January 12, 2021. It took 84 days for this deal to be completed.
  3. The acquisition of Fitbit (FIT) by Google (GOOG) on January 14, 2021. It took 440 days for this deal to be completed.
  4. The acquisition of Concho Resources (CXO) by ConocoPhillips (COP) on January 15, 2021. It took 88 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 $3.11 01/31/2021 74.60% 1944.88%
APHA 12/16/2020 Tilray, Inc. (TLRY) $16.51 $12.42 06/30/2021 32.94% 73.30%
DOYU 10/12/2020 HUYA Inc. (HUYA) $16.03 $12.14 06/30/2021 32.05% 71.33%
PRVL 12/15/2020 Eli Lilly and Company (LLY) $26.50 $22.93 03/31/2021 15.57% 77.85%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.75 03/31/2021 14.29% 71.43%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.07 02/07/2021 12.15% 211.17%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $152.02 $136.6 12/31/2021 11.29% 11.84%
OSN 12/17/2020 New Ossen Group Limited (N/A) $5.10 $4.66 06/30/2021 9.44% 21.01%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.11 03/31/2021 9.06% 45.28%
WLTW 03/09/2020 Aon plc (AON) $224.56 $206.65 06/30/2021 8.67% 19.29%

List of all pending deals:

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

Conclusion:

M&A activity continues to pick up momentum as we move into the third week of the year. With six new deals announced in the past week, the aggregate deal consideration increased to $421.91 billion.

Disclaimer: I have long positions in Otelco (OTEL), Zagg (ZAGG), Prevail Therapeutics (PRVL) and B. Riley Financial (RILY). 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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