Merger Arbitrage Mondays – Sonesta Acquires Red Lion Hotels

A tumultuous year finally came to an end with one new deal announced last week and two deals completed. The month of December was the most active of 2020 with 27 new deals announced for a total consideration of $114 billion.

In our first ‘Merger Arbitrage Mondays’ post for the year 2020 ‘Merger Arbitrage Mondays – A SPAC Finds A Home‘, we wrote about a Special Purpose Acquisition Company (SPAC) deal, which was the only deal announced that week. GTWY Holdings Limited and Leisure Acquisition (LACQ) had entered into a definitive agreement for a business combination. The combination was terminated on July 16, 2020. As we begin another year, we look forward to adding and updating SPACs in our new SPACs tool here.

A new SPAC deal was announced on December 30, 2020. Perella Weinberg Partners and FinTech Acquisition Corp. IV (FTIV) entered into a definitive business combination agreement. Upon closing of the transaction, the combined company will operate as Perella Weinberg Partners and will be listed on NASDAQ under the new symbol “PWP.” The transaction reflects an implied equity value for the company of approximately $975 million.

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

There were no new deals announced in the Deals in the Works section last week.

Weekly Spread Changes:

The table below shows weekly spread changes between December 25, 2020, and January 1, 2020.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
GNW 3.78 China Oceanwide Holdings Group Co., Ltd. (N/A) 43.65% 24.54% 19.11% All Cash
CXDC 0.99 Faith Dawn Limited and Faith Horizon (N/A) 21.21% 12.15% 9.06% All Cash
DOYU 11.06 HUYA Inc. (HUYA) 19.93 31.55% 22.60% 8.95% All Stock
HCAP 7.56 Portman Ridge Finance Corporation (PTMN) 1.91 7.92% 0.00% 7.92% Cash Plus Stock
NEOS 0.6247 Aytu BioScience, Inc. (AYTU) 5.98 4.15% -2.79% 6.94% All Stock
CBMG 18.38 CBMG management (N/A) 7.45% 8.76% -1.31% All Cash
ANH 2.71 Ready Capital Corporation (RC) 12.45 0.06% 1.61% -1.55% Cash Plus Stock
EIDX 131.58 BridgeBio Pharma, Inc. (BBIO) 71.11 -44.32% -42.63% -1.69% Special Conditions
MCEP 3.97 Contango Oil & Gas Company (MCF) 2.29 0.94% 2.94% -2.00% All Stock
TCP 29.45 TC Energy Corporation (TRP) 40.72 -3.21% 0.86% -4.07% All Stock

Deal Statistics:

Total Number of Pending Deals
Cash Deals 45
Stock Deals 22
Stock & Cash Deals 6
Special Conditions 5
Total Number of Pending Deals 78
Aggregate Deal Consideration $385.35 billion

New Deals:

  1. The acquisition of Red Lion Hotels Corporation (RLH) by Sonesta International Hotels Corporation for $63.56 million or $3.50 per share in cash.

Deal Updates:

  1. On December 28, 2020, SINA Corporation (SINA) announced that it will deliver authorization notice to all the shareholders who had validly objected to the previously announced “going private” merger prior to the vote being taken at the extraordinary general meeting of shareholders held on December 23, 2020. Shareholders representing 35.9% of the outstanding shares had objected to the acquisition.
  2. On December 29, 2020, shareholders of CONSOL Coal Resources (CCRapproved the company’s merger with CONSOL Energy (CEIX) at a special meeting of shareholders.
  3. On December 29, 2020, Cellular Biomedicine Group (CBMG) announced that the special meeting of stockholders will be held on February 8, 2021.
  4. On December 30, 2020, Tiffany (TIFshareholders approved the updated agreement for LVMH to acquire the company.
  5. On December 30, 2020, Devon Energy Corporation (DVN) and WPX Energy (WPX) announced that the shareholders of both companies voted in favor of all proposals necessary for the closing of the previously announced all-stock merger of equals between Devon and WPX. The merger is anticipated to close on January 7, 2021.

Closed Deals:

  1. The acquisition of Taubman Centers (TCO) by Simon Property Group (SPG) on December 29, 2020. It took 323 days for this deal to be completed.
  2. The acquisition of CONSOL Coal Resources (CCR) by CONSOL Energy (CEIX) on December 30, 2020. It took 68 days for this deal to be completed.

Top 10 deals with largest deals:

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 $3.7800 01/31/2021 43.65% 590.09%
DOYU 10/12/2020 HUYA Inc. (HUYA) $14.55 $11.06 06/30/2021 31.55% 65.05%
GSUM 10/01/2020 Gridsum Corporation (N/A) $2.00 $1.61 03/31/2021 24.22% 102.81%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $0.9900 02/07/2021 21.21% 227.72%
PRVL 12/15/2020 Eli Lilly and Company (LLY) $26.50 $23.07 03/31/2021 14.87% 63.10%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $158.05 $141.77 12/31/2021 11.49% 11.61%
NEWA 10/02/2020 Crouching Tiger Holding Limited (N/A) $3.65 $3.29 06/30/2021 10.94% 22.56%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $176.44 $160.47 12/31/2021 9.95% 10.06%
SOGO 09/29/2020 Tencent Parties (N/A) $8.95 $8.15 07/31/2021 9.20% 16.15%
OSN 12/17/2020 New Ossen Group Limited (N/A) $5.10 $4.69 06/30/2021 8.74% 18.03%

List of all pending deals:

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

Conclusion:

We begin the new year with 78 active deals and an aggregate deal consideration of $385.35 billion. Given low interest rates and a huge uptick in SPAC IPOs that are larger than what we have seen in the past, I would not be surprised if merger activity continued to accelerate. The key headwind at the moment appears to be valuations following a large market rally.

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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