Merger Arbitrage Mondays – BAM Sweetens Its Bid For Brookfield Property Partners

Merger activity decreased last week with four new deals announced and eight deals completed.

There was a significant drop in SPAC activity last week with only two new SPAC IPOs filed and four SPAC business combinations announced.

We added Brookfield Property Partners (BPY) as a potential deal on January 4, 2021, when Brookfield Asset Management (BAM) offered to acquire BPY for $16.50 for each unit, at a premium of about 14%. On April 1, 2021, Brookfield Property Partners accepted the offer after Brookfield Asset Management (BAM) enhanced its offer price by 10% to acquire the company for $18.17 in cash or 0.3979 of a Brookfield class A limited voting share, or 0.7268 of a BPY preferred unit with a liquidation preference of $25.00 per unit.

Brookfield Property Partners has $77 billion in assets split between office properties ($32.3 billion), retail properties ($32.9 billion) and the rest in fund investments. The company become one of the largest operator of malls after it acquired Chicago-based mall operator GGP in 2018. I ended up with a position in Brookfield Property Partners in my portfolio as a result of that acquisition.

The February 2020 FT article titled Brookfield: inside the $500bn secretive investment firm provides a good overview of BAM and its structure.

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.

SPAC Arbitrage

There were 2 new SPAC IPOs and 4 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. Cazoo Holdings Limited and AJAX I (AJAXannounced the signing of a definitive business combination agreement.
  2. SomaLogic and CM Life Sciences II (CMIIU) announced that they have entered into a definitive business combination agreement.
  3. Lilium GmbH has entered into a definitive business combination agreement with Qell Acquisition (QELL)
  4. Union Acquisition Corp. II (LATN) announced execution of a definitive business combination agreement along with a fully committed PIPE financing agreement with Procaps Group.

Weekly Spread Changes:

The table below shows weekly spread changes between March 26, 2021, and April 2, 2021.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
CUB 74.6 Veritas and Evergreen Coast Capital Corporation (N/A) 0.54% -6.42% 6.96% All Cash
SOGO 7.7 Tencent Parties (N/A) 15.58% 10.56% 5.02% All Cash
CHNG 22.39 UnitedHealth Group Incorporated (UNH) 367.07 15.01% 13.74% 1.27% All Cash
COHR 258.53 II-VI Incorporated (IIVI) 71.4 10.23% 9.07% 1.16% Cash Plus Stock
CKH 40.57 American Industrial Partners (N/A) 2.29% 1.22% 1.07% All Cash
APHA 18.12 Tilray, Inc. (TLRY) 22.34 3.33% 6.78% -3.45% All Stock
CXDC 1.11 Faith Dawn Limited and Faith Horizon (N/A) 8.11% 12.15% -4.04% All Cash
TPCO 18.03 Alden Global Capital (N/A) -4.33% -0.06% -4.27% All Cash
DOYU 10.56 HUYA Inc. (HUYA) 19.54 35.08% 42.75% -7.67% All Stock
NEWA 3.41 Crouching Tiger Holding Limited (N/A) 7.04% 16.99% -9.95% All Cash

Deal Statistics:

Total Number of Deals Closed in 2021 47
Total Number of Deals Not Completed in 2021 2
Total Number of Pending Deals
Cash Deals 50
Stock Deals 19
Stock & Cash Deals 12
Special Conditions 4
Total Number of Pending Deals 85
Aggregate Deal Consideration $599.75 billion

New Deals:

  1. The acquisition of Fly Leasing Limited (FLY) by Carlyle Aviation Partners for $2.36 billion or $17.05 per share in cash.
  2. The acquisition of Premier Financial Bancorp (PFBI) by Peoples Bancorp (PEBO) for $292.3 million in an all stock deal. Under the terms of the agreement, shareholders of Premier will receive 0.58 shares of Peoples common stock for each share of Premier common stock.
  3. The merger of Diamond S Shipping (DSSI) with International Seaways (INSW) for $1.09 billion in an all stock deal. Under the terms of the agreement, Diamond S shareholders will receive 0.55375 shares of INSW common stock for each share of Diamond S common stock held.
  4. The acquisition of Brookfield Property Partners (BPY) by Brookfield Asset Management (BAM) for $6.5 billion. Under the terms of the agreement, BPY unitholders will have the ability to elect to receive, per BPY unit, $18.17 in cash, 0.3979 of a Brookfield class A limited voting share , or 0.7268 of a BPY preferred unit with a liquidation preference of $25.00 per unit. We added BPY as a potential deal to the Deals in the Works section on January 4, 2021, and the price after the news of the potential deal came out was $16.84.

Deal Updates:

  1. On March 30, 2021, shareholders of Watford Holdings (WTREapproved the company’s merger with Arch Capital Group (ACGL) at a special meeting of shareholders.
  2. On March 31, 2021, Cubic Corporation (CUB) announced that it has accepted a proposal from Veritas Capital and Evergreen Coast Capital Corporation to increase the price per share of their pending acquisition of Cubic to $75.00 per share in cash.
  3. On March 31, 2021, SMTC Corporation (SMTX) announced that its stockholders voted to adopt the previously announced definitive merger agreement, pursuant to which an affiliate of H.I.G. Capital would complete its investment in SMTC.
  4. On March 31, 2021, shareholders of Magellan Health (MGLNapproved the company’s merger with Centene Corporation (CNC) at a special meeting of shareholders.
  5. On March 31, 2021, Cantel Medical (CMD) and STERIS (STEannounced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for STERIS’s tender offer for Cantel Medical.
  6. On April 1, 2021, American Industrial Partners announced the final extension of its tender offer for shares of SEACOR Holdings (CKH) April 5, 2021, which is the End Date under the Merger Agreement.
  7. On April 1, 2021, Thoma Bravo and Talend (TLNDannounced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for Thoma Bravo’s tender offer for Talend.
  8. On April 2, 2021, MTS Systems Corporation (MTSCreceived all regulatory approvals required to complete the previously announced merger with Amphenol Corporation (APH). The Company expects to close the merger on April 7, 2021.

Closed Deals:

  1. The acquisition of Urovant Sciences (UROV) by Sumitovant Biopharma on March 29, 2021. It took 136 days for this deal to be completed.
  2. The acquisition of Otelco (OTEL) by Oak Hill Capital on March 31, 2021. It took 247 days for this deal to be completed.
  3. The acquisition of Navios Maritime Containers (NMCI) by Navios Maritime Partners (NMM) on March 31, 2021. It took 86 days for this deal to be completed.
  4. The acquisition of Fauquier Bankshares (FBSS) by Virginia National Bankshares Corporation (VABK) on April 1, 2021. It took 182 days for this deal to be completed.
  5. The acquisition of HighPoint Resources Corporation (HPR) by Bonanza Creek Energy (BCEI) on April 1, 2021. It took 143 days for this deal to be completed.
  6. The acquisition of HMS Holdings (HMSY) by Gainwell Technologies on April 1, 2021. It took 101 days for this deal to be completed.
  7. The acquisition of Synacor (SYNC) by Centre Lane Partners on April 1, 2021. It took 49 days for this deal to be completed.
  8. The acquisition of Pandion Therapeutics (PAND) by Merck (MRK) on April 2, 2021. It took 35 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) $14.26 $10.56 06/30/2021 35.08% 147.16%
SJR 03/15/2021 Rogers Communications Inc. (RCI) $32.40 $26.45 06/30/2022 22.50% 18.17%
MX 03/26/2021 South Dearborn Limited (N/A) $29.00 $25.04 12/31/2021 15.81% 21.30%
SOGO 09/29/2020 Tencent Parties (N/A) $8.95 $7.7 07/31/2021 15.58% 48.21%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $22.39 12/31/2021 15.01% 20.21%
COHR 03/25/2021 II-VI Incorporated (IIVI) $284.97 $258.53 12/31/2021 10.23% 13.78%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.11 05/10/2021 8.11% 82.21%
AJRD 12/20/2020 Lockheed Martin Corporation (LMT) $51.00 $47.19 12/31/2021 8.07% 10.87%
ATH 03/08/2021 Apollo Global Management, Inc. (APO) $55.16 $51.13 01/31/2022 7.89% 9.53%
ALXN 12/12/2020 AstraZeneca (AZN) $165.22 $153.21 09/30/2021 7.84% 15.98%

List of all pending deals:

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

Conclusion:

Multiple active deals were completed successfully last week as we came to the end of the first quarter of 2021. Having received necessary approvals, a few more are expected to be completed this month.

Disclaimer: I have long positions in Change Healthcare (CHNG) and Brookfield Property Partners (BPY). 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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