We live in very interesting times if you are an event-driven investor. On the one hand we had the partial implosion in SPACs that caused many of them to swing from trading at a premium to NAV to go the other way and trade at a discount to NAV. On the other hand, merger arbitrageurs have been delighted by not just one deal in the midst of a counteroffer scenario but three of them at the same time. To top it all off, we are in the midst of a blow up in a leveraged hedge fund that caused multiple large cap companies to lose more than 50% of their value in the span of a week and Nomura Holdings to flag a possible $2 billion loss tied to those trades.
After nine rounds of counteroffers that included three different parties competing for it, Coherent (COHR) terminated its agreement with Lumentum Holdings (LITE) and decided to tie the knot with II-VI Incorporated (IIVI), bringing to an end a bidding war that lasted almost two months. Oddly enough this new deal now trades at a spread of over 9% or 11.91% annualized assuming the deal closes by the end of the year.
Merger activity increased last week with five new deals announced and two deals completed. We have seen 18 new deals announced this March, which is well above the 10 deals that were announced in March 2020 as the COVID-19 outbreak was escalating globally. By the end of March 2020, there were 26 deals trading with spreads of over 10%. It is a little surprising that we still have 7 deals trading with spreads over 10% right now.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.
There were three new deals announced in the Deals in the Works section last week.