Merger Arbitrage Mondays – UnitedHealth Group acquires Change Healthcare

  • January 11, 2021

The year 2021 is off to an active start. Merger activity increased significantly last week with eight new deals announced, four deals completed and two deals terminated. Two of the eight new deals announced last week were potential deals in the works.

The bidding war for Alaska Communications Systems Group (ALSK) finally came to an end after the company terminated its previous agreement with Macquarie Capital and agreed to be acquired by ATN International (ATNI).

In the ‘weekly spread changes’ table below, there has been a significant change in the weekly spread for Cardtronics (CATM). Cardtronics received an unsolicited proposal from a third party. According to The Wall Street Journal, the new bidder is NCR Corporation (NCR). Another deal that saw a significant change in its spread was Genworth Financial (GNW). The Dec 31, 2020 merger deadline was not extended this time and the stock dropped sharply last Monday. This has been the longest running active deal we have tracked going on more than 4 years at this point. For all intents and purposes the deal is dead but it has not been officially called off and hence remains on our table.

In case you missed it, you can read our 2020 report on U.S. mergers and acquisitions here.

SPAC Arbitrage

We mentioned in our previous post that we have started adding and updating SPACs in our new SPACs tool here. Out of the 29 SPACs announced in the first week of January, there were 13 SPAC IPOs announced on Friday alone raising over $3 billion. We wrote the following in our introduction to SPACs in the January 2021 premium newsletter:

My first exposure to Special Purpose Acquisition Companies (SPACs) came shortly after the dot com bubble burst. I was in Eugene, Oregon at the time and interviewed for a job at a local company that had resulted from a SPAC (called blank check companies back then) acquiring an operating business. The SPAC sponsors were from Chicago and had the right combination of sales and operations skills. They significantly grew the business they acquired in just a few short years, enriching both themselves and their investors in the process. For the ensuing 15 years, I heard off and on about blank check companies and SPACs including the ill fated acquisition attempt of the middling Indian travel company Yatra Online (YTRA) by a SPAC in July 2019.

If you are not familiar with SPACs, this 2018 Harvard Law School article provides a good primer on this asset class. In very simple terms, a SPAC raises money in an IPO and then looks for an existing operating business to acquire with that capital. The process provides a faster and simpler way for the operating business to go public without having to go through the longer and potentially more expensive IPO process.

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

There was new deal announced in the Deals in the Works section last week.

Weekly Spread Changes:

The table below shows weekly spread changes between January 1, 2020, and January 8, 2020.

Company Quote
Last Week
Spread Change
GNW3.12China Oceanwide Holdings Group Co., Ltd. (N/A)74.04%43.65%30.39%All Cash
APHA8.57Tilray, Inc. (TLRY)11.3110.61%0.04%10.57%All Stock
DOYU11.02HUYA Inc. (HUYA)21.0939.71%31.55%8.16%All Stock
EIDX120.96BridgeBio Pharma, Inc. (BBIO)65.51-39.43%-44.32%4.89%Special Conditions
HPR9.59Bonanza Creek Energy, Inc. (BCEI)23.62-71.92%-75.94%4.02%All Stock
GRUB82.44Just Eat N.V. (TKAYY)12.22-0.54%3.08%-3.62%All Stock
HCAP7.68Portman Ridge Finance Corporation (PTMN)1.874.10%7.92%-3.82%Cash Plus Stock
NEWA3.47Crouching Tiger Holding Limited (N/A)5.19%10.94%-5.75%All Cash
GSUM1.73Gridsum Corporation (N/A)15.61%24.22%-8.61%All Cash
CATM41.08Apollo Global Management (APO)46.96-14.80%-0.85%-13.95%All Cash

Deal Statistics:

Total Number of Deals Closed in 20214
Total Number of Deals Not Completed in 20211
Total Number of Pending Deals
Cash Deals46
Stock Deals21
Stock & Cash Deals8
Special Conditions5
Total Number of Pending Deals80
Aggregate Deal Consideration$408.39 billion

New Deals:

  1. The acquisition of Alaska Communications Systems Group (ALSK) by ATN International (ATNI) for $332 million or $3.40 per share in cash.
  2. The acquisition of FLIR Systems (FLIR) by Teledyne Technologies Incorporated (TDY) for $8 billion in a cash plus stock deal. Under the terms of the agreement, FLIR stockholders will receive $28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share.
  3. The acquisition of Magellan Health (MGLN) by Centene Corporation (CNC) for $2.2 billion or $95.00 per share in cash.
  4. The acquisition of Navios Maritime Containers (NMCI) by Navios Maritime Partners (NMM) for $393.44 million in an all stock deal. Under the terms of the transaction, public unitholders of Navios Containers will receive 0.39 of a common unit of Navios Partners for each outstanding common unit of Navios Containers. We added NMCI as a potential deal to the Deals in the Works section on November 16, 2020, and the price after the news of the potential deal came out was $2.25.
  5. The acquisition of Boston Private Financial Holdings (BPFH) by SVB Financial Group (SIVB) for $900 million in a cash plus stock deal. Under the terms of the merger agreement, Boston Private shareholders will receive 0.0228 shares of SVB common stock and $2.10 of cash for each Boston Private share they own.
  6. The acquisition of Change Healthcare (CHNG) and UnitedHealth Group Incorporated (UNH) for $27.6 billion or $25.75 per share in cash.
  7. The acquisition of Oxford Immunotec Global (OXFD) by PerkinElmer (PKI) for $591 million or $22.00 per share in cash. We added OXFD as a potential deal to the Deals in the Works section on September 23, 2020, and the price after the news of the potential deal came out was $16.33.
  8. The acquisition of SMTC Corporation (SMTX) by an affiliate of H.I.G. Capital for $258.52 million or $6.044 per share in cash.

Deal Updates:

  1. On December 31, 2020, Cardtronics (CATMreceived an unsolicited proposal from a third party to acquire all of the ordinary shares of Cardtronics for $39.00 per share in cash.
  2. On January 6, 2021, shareholders of Front Yard Residential Corporation (RESIapproved the company’s merger with Pretium and Ares Management at a special meeting of shareholders.

Closed Deals:

  1. The acquisition of BMC Stock Holdings (BMCH) by Builders FirstSource (BLDR) on January 4, 2021. It took 130 days for this deal to be completed.
  2. The acquisition of National General Holdings (NGHC) by The Allstate Corporation (ALL) on January 4, 2021. It took 130 days for this deal to be completed.
  3. The acquisition of WPX Energy (WPX) by Devon Energy Corporation (DVN) on January 7, 2021. It took 101 days for this deal to be completed.
  4. The acquisition of Tiffany (TIF) by LVMH Moët Hennessy Louis Vuitton SE (LVMUY) on January 7, 2021. It took 409 days for this deal to be completed.

Terminated Deals:

  1. On December 31, 2020, Alaska Communications Systems Group (ALSKterminated its merger agreement with Macquarie Capital after agreeing to be acquired by ATN International (ATNI) for $3.40 per share in cash.
  2. On January 8, 2021, Acacia Communications (ACIAterminated its merger agreement with Cisco Systems (CSCO). Because approval of the Chinese government’s State Administration for Market Regulation was not received within the timeframe contemplated by the merger agreement, Acacia did not have an obligation to close the merger before the arrival of the January 8, 2021 extended end date. As such, Acacia exercised its right to terminate the proposed transaction in accordance with the terms of the merger agreement.

Top 10 deals with largest spreads:

GNW10/23/2016China Oceanwide Holdings Group Co., Ltd. (N/A)$5.43$3.1201/31/202174.04%1286.86%
DOYU10/12/2020HUYA Inc. (HUYA)$15.40$11.0206/30/202139.71%84.75%
CXDC06/15/2020Faith Dawn Limited and Faith Horizon (N/A)$1.20$1.0102/07/202118.81%245.23%
GSUM10/01/2020Gridsum Corporation (N/A)$2.00$1.7303/31/202115.61%71.21%
PRVL12/15/2020Eli Lilly and Company (LLY)$26.50$23.203/31/202114.22%64.90%
APHA12/16/2020Tilray, Inc. (TLRY)$9.48$8.5706/30/202110.61%22.64%
XLNX10/27/2020Advanced Micro Devices, Inc. (AMD)$163.00$147.9912/31/202110.14%10.43%
WLTW03/09/2020Aon plc (AON)$221.64$203.6406/30/20218.84%18.86%
OSN12/17/2020New Ossen Group Limited (N/A)$5.10$4.6906/30/20218.74%18.66%
CBMG08/12/2020CBMG management (N/A)$19.75$18.1803/31/20218.64%39.40%

List of all pending deals:

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


The decision of the NYSE to delist three Chinese companies including China Mobile based on guidance from the Treasury Department will create challenges for deals that have a Chinese acquirer (like the Genworth deal) or that require approval by Chinese authorities (like the Acacia Communications deal). Arbitrageurs will have to keep this new risk in mind as they analyze the probability of deals closing while keeping an eye out for any regulatory changes with domestic deals on account of shifts in the political sands.

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

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