Merger Arbitrage Mondays – SPAC IPOs Set A New Record

Merger activity increased last week with six new multi-billion dollar deals announced and four deals completed.

The total value of the 19 deals announced in February was over $66 billion. The month of February also saw a new record set for SPAC IPOs filed with 96 SPAC IPOs raising over $30 billion.

The largest deal announced in the month of February was the acquisition of PRA Health Sciences (PRAH) by ICON Public Limited Company (ICLR) for $12 billion. Headquartered in Raleigh, North Carolina, PRA Health Sciences is a contract research organization that operates through two segments – Clinical Research and Data Solutions. The company provides outsourced clinical development and data solution services to the biotechnology and pharmaceutical industries across the world. Headquartered in Dublin, ICON Public Limited Company is a clinical research organization. On February 24, 2021, ICLR announced that it is acquiring PRA Health Sciences in a cash plus stock deal at a premium of approximately 30% to PRA’s closing price as of February 23, 2021.

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

There were two new deals announced in the Deals in the Works section last week.

SPAC Arbitrage

There were 27 new SPAC IPOs and 12 new SPAC business combinations announced. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. Cyxtera Technologies and Starboard Value Acquisition (SVACannounced the signing of a definitive business combination agreement today.
  2. Fortress Value Acquisition Corp. II (FAII) and ATI Physical Therapy have entered into a definitive merger agreement.
  3. Apex Clearing Holdings LLC and Northern Star Investment Corp. II (NSTB), have entered into a definitive merger agreement.
  4. Enovix Corporation and Rodgers Silicon Valley Acquisition Corp. (RSVA) have entered into a definitive agreement and plan of merger for a business combination that will result in Enovix becoming a publicly listed company.
  5. Xos, Inc. and NextGen Acquisition Corp. (NGAC) have entered into a definitive business combination agreement that will result in Xos becoming a publicly listed company.
  6. Trident Acquisitions Corp. (TDAC) and AutoLotto have entered into a definitive agreement for a business combination that would result in Lottery.com becoming a publicly listed company.
  7. Lucid Motors and Churchill Capital Corp IV (CCIVhave entered into a definitive merger agreement. CCIV and Lucid are combining at a transaction equity value of $11.75 billion.
  8. Ardagh Group S.A. (ARD) and Gores Holdings V, Inc. (GRSVentered into a definitive business combination agreement under which Gores Holdings V will combine with Ardagh’s metal packaging business that will be held by Ardagh Metal Packaging S.A. to create an independent public company.
  9. Berkshire Grey, a developer of integrated artificial intelligence and robotic solutions for e-commerce, retail replenishment, and logistics, entered into a definitive agreement with Revolution Acceleration Acquisition Corp (RAAC), to create a leading publicly listed robotics and automation solutions company.
  10. Joby Aviation, a transportation company developing an all-electric, vertical take-off and landing aircraft that it intends to operate as a commercial passenger aircraft beginning in 2024, has entered into a definitive business combination agreement with Reinvent Technology Partners (RTP).
  11. ReNew Power Private Limited and RMG Acquisition Corporation II (RMGBannounced the execution of a definitive agreement for a business combination that would result in ReNew becoming a publicly listed company on the NASDAQ.
  12. Markforged, creator of an integrated metal and carbon fiber additive manufacturing platform, The Digital Forge entered into a definitive agreement to merge with one (AONE).

Weekly Spread Changes:

The table below shows weekly spread changes between February 19, 2021, and February 26, 2021.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
NEWA 3.5 Crouching Tiger Holding Limited (N/A) 4.29% -6.89% 11.18% All Cash
NEOS 0.8521 Aytu BioScience, Inc. (AYTU) 7.67 -2.07% -13.07% 11.00% All Stock
HPR 10.08 Bonanza Creek Energy, Inc. (BCEI) 31.93 -63.89% -72.06% 8.17% All Stock
FBSS 20.12 Virginia National Bankshares Corporation (VABK) 31.99 7.32% 2.27% 5.05% All Stock
CLGX 84.66 Stone Point Capital and Insight Partners (N/A) -5.50% -10.33% 4.83% All Cash
RUHN 3.43 RUNION Holding Limited (N/A) 0.00 2.04% 3.55% -1.51% All Cash
NMCI 6.78 Navios Maritime Partners L.P. (NMM) 17.2 -1.06% 0.64% -1.70% All Stock
BPFH 13.76 SVB Financial Group (SIVB) 505.36 -1.00% 0.85% -1.85% Cash Plus Stock
HCAP 8.2 Portman Ridge Finance Corporation (PTMN) 2.02 4.97% 7.09% -2.12% Cash Plus Stock
APHA 17.84 Tilray, Inc. (TLRY) 24.36 14.44% 20.89% -6.45% All Stock

Deal Statistics:

Total Number of Deals Closed in 2021 26
Total Number of Deals Not Completed in 2021 1
Total Number of Pending Deals
Cash Deals 53
Stock Deals 18
Stock & Cash Deals 12
Special Conditions 2
Total Number of Pending Deals 85
Aggregate Deal Consideration $501.38 billion

New Deals:

  1. The acquisition of GasLog (GLOG) by BlackRock’s Global Energy & Power Infrastructure team for $5.91 billion or $5.80 per share in cash.
  2. The acquisition of People’s United Financial (PBCT) by M&T Bank Corporation (MTB) for $7.6 billion in an all stock deal. Under the terms of the agreement, People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own.
  3. The acquisition of Cooper Tire & Rubber Company (CTB) by The Goodyear Tire & Rubber Company (GT) for $2.5 billion in a cash plus stock deal. Under the terms of the transaction, which has been approved by the Boards of Directors of both companies, Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share.
  4. The acquisition of Forterra (FRTA) by Quikrete Holdings for $2.74 billion or $24 per share in cash.
  5. The acquisition of PRA Health Sciences (PRAH) by ICON Public Limited Company (ICLR) for $12 billion in a cash plus stock deal. Under the terms of the transaction, PRA shareholders will receive per share, $80 in cash and 0.4125 shares of ICON stock.
  6. The acquisition of Pandion Therapeutics (PAND) by Merck (MRK) for $1.15 billion or $60 per share in cash.

Deal Updates:

  1. On February 22, 2021, shareholders of Gridsum Holding (GSUMapproved the company’s merger with Gridsum Corporation at a special meeting of shareholders.
  2. On February 25, 2021, The European Union’s antitrust authority set a deadline of March 31 for its phase 1 review of Analog Devices’ (ADI)) planned acquisition of Maxim Integrated (MXIM).
  3. On February 25, 2021, the HSR Waiting Period applicable to the consummation of the Merger between SMTC Corporation (SMTX) and H.I.G. Capital expired on February 25, 2021.
  4. On February 26, 2021, Shareholders of China Distance Education Holdings Limited (DLapproved the company’s merger with Champion Distance Education Investments Limited and China Distance Learning Investments Limited at a special meeting of shareholders.
  5. On February 26, 2021, shareholders of TC PipeLines (TCPapproved the company’s merger with TC Energy Corporation (TRP) at a special meeting of shareholders.
  6. February 26, 2021: According to Reuters, CoreLogic (CLGX) has asked peer CoStar Group (CSGP) for more assurances that it can complete their combination should it attract antitrust scrutiny.

Closed Deals:

  1. The acquisition of ZAGG (ZAGG) by Evercel on February 22, 2021. It took 73 days for this deal to be completed.
  2. The acquisition of National Holdings Corporation (NHLD) by B. Riley Financial (RILY) on February 25, 2021. It took 45 days for this deal to be completed.
  3. The acquisition of Sirius International Insurance Group (SG) by Third Point Reinsurance (TPRE) on February 26, 2021. It took 203 days for this deal to be completed.
  4. The acquisition of CounterPath Corporation (CPAH) by Alianza on February 26, 2021. It took 81 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
DOYU 10/12/2020 HUYA Inc. (HUYA) $19.24 $14.34 06/30/2021 34.14% 102.98%
APHA 12/16/2020 Tilray, Inc. (TLRY) $20.42 $17.84 06/30/2021 14.44% 43.56%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $22.87 12/31/2021 12.59% 15.07%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $145.64 $130.3 12/31/2021 11.78% 14.09%
WLTW 03/09/2020 Aon plc (AON) $245.93 $220.64 06/30/2021 11.46% 34.57%
AJRD 12/20/2020 Lockheed Martin Corporation (LMT) $56.00 $51.27 12/31/2021 9.23% 11.04%
IPHI 10/29/2020 Marvell Technology Group Ltd. (MRVL) $178.15 $164.59 12/31/2021 8.24% 9.86%
SOGO 09/29/2020 Tencent Parties (N/A) $8.95 $8.26 07/31/2021 7.75% 18.61%
FBSS 10/01/2020 Virginia National Bankshares Corporation (VABK) $21.59 $20.12 06/30/2021 7.32% 22.09%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.12 05/10/2021 7.14% 37.24%

List of all pending deals:

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

Conclusion:

There have been a total of 34 new deals announced this year, with a total value of over $116 billion. The SPAC frenzy accelerated with 96 new SPAC IPOs and 42 SPAC Business Combinations announced in the month of February. There have been reports of signs showing cracks in the SPAC bubble. We can only wait and watch in the next few weeks and see whether the SPAC mania continues or fizzles out.

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

2 Comments

  1. Mark Rathman
    March 5, 2021 at 9:58 am

    CHNG spread has increased on an almost daily basis since Feb 12 following CHNG notification that UNH was withdrawing their HSR notification with the intent to re-file by Feb 22. However, I haven’t seen any indication that they have actually re-filed.

  2. Asif Suria
    March 5, 2021 at 12:14 pm

    Yes the filing on Feb 16th indicated that they will refile on or before Feb 22. I haven’t seen any confirmation that they did either. If they did, the 30 day clock should run out on March 23rd.

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