Merger activity remained steady last week with four new deals announced and three deals completed.
The Genworth Financial (GNW) deal was finally officially terminated last week after years of delays. We tracked all the ups and downs for well over 4 years and posted 47 updates on the deal, making this the longest tracked deal in our Merger Arbitrage Tool (MAT). In spite of clearing all the U.S. federal and state regulatory hurdles, Genworth and China Oceanwide had to extend the completion of the merger almost 17 times due to years of government regulatory reviews in both the United States and Canada. Genworth sold its Canadian subsidiary to avoid continued delays in approvals in Canada.
Earlier this year both companies announced that they had put the deal on an indefinite hold. Three months later, Genworth exercised its right to terminate the deal in order to pursue its revised strategic plan, which includes a potential partial initial public offering of its U.S. MI (mortgage insurance) business.
This is the other risk in risk arbitrage where your capital gets tied up for an extended period of time due to regulatory issues and explains why deals like United HealthGroup’s acquisition of Change Healthcare (CHNG) and Lockheed Martin’s acquisition of Aerojet Rocketdyne (AJRD) are trading at significant discounts to the deal price.
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 8 new SPAC IPOs and 6 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.
Weekly Spread Changes:
The table below shows weekly spread changes between April 2, 2021, and April 9, 2021.
Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
---|---|---|---|---|---|---|---|
CXDC | 1.04 | Faith Dawn Limited and Faith Horizon (N/A) | 15.38% | 8.11% | 7.27% | All Cash | |
HCAP | 8.74 | Portman Ridge Finance Corporation (PTMN) | 2.35 | 13.90% | 7.21% | 6.69% | Cash Plus Stock |
AEGN | 28.45 | New Mountain Capital, L.L.C. (N/A) | -5.10% | -7.53% | 2.43% | All Cash | |
XLNX | 129.72 | Advanced Micro Devices, Inc. (AMD) | 82.76 | 9.95% | 7.62% | 2.33% | All Stock |
PMBC | 8.97 | Banc of California (BANC) | 18.55 | 3.40% | 1.67% | 1.73% | All Stock |
MX | 25.83 | South Dearborn Limited (N/A) | 12.27% | 15.81% | -3.54% | All Cash | |
DOYU | 10.3 | HUYA Inc. (HUYA) | 18.43 | 30.62% | 35.08% | -4.46% | All Stock |
AT | 3.01 | I Squared Capital (N/A) | 0.66% | 5.94% | -5.28% | All Cash | |
DSSI | 10.9 | International Seaways, Inc. (INSW) | 19.15 | -2.71% | 2.88% | -5.59% | All Stock |
SOGO | 8.53 | Tencent Parties (N/A) | 4.34% | 15.58% | -11.24% | All Cash |
Deal Statistics:
Total Number of Deals Closed in 2021 | 50 |
Total Number of Deals Not Completed in 2021 | 3 |
Total Number of Pending Deals | |
Cash Deals | 49 |
Stock Deals | 19 |
Stock & Cash Deals | 12 |
Special Conditions | 4 |
Total Number of Pending Deals | 84 |
Aggregate Deal Consideration | $599.12 billion |
New Deals:
Deal Updates:
Closed Deals:
Terminated Deals:
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) | $13.45 | $10.3 | 06/30/2021 | 30.62% | 139.71% |
SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $32.40 | $26.8 | 06/30/2022 | 20.90% | 17.14% |
CXDC | 06/15/2020 | Faith Dawn Limited and Faith Horizon (N/A) | $1.20 | $1.04 | 05/10/2021 | 15.38% | 193.63% |
CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $22.51 | 12/31/2021 | 14.39% | 19.90% |
HCAP | 12/23/2020 | Portman Ridge Finance Corporation (PTMN) | $9.96 | $8.74 | 06/30/2021 | 13.90% | 63.43% |
MX | 03/26/2021 | South Dearborn Limited (N/A) | $29.00 | $25.83 | 12/31/2021 | 12.27% | 16.97% |
XLNX | 10/27/2020 | Advanced Micro Devices, Inc. (AMD) | $142.63 | $129.72 | 12/31/2021 | 9.95% | 13.76% |
COHR | 03/25/2021 | II-VI Incorporated (IIVI) | $289.35 | $265.56 | 12/31/2021 | 8.96% | 12.39% |
ALXN | 12/12/2020 | AstraZeneca (AZN) | $166.09 | $155.01 | 09/30/2021 | 7.15% | 15.17% |
ATH | 03/08/2021 | Apollo Global Management, Inc. (APO) | $54.04 | $50.45 | 01/31/2022 | 7.11% | 8.80% |
List of all pending deals:
Conclusion:
Easy and abundant access to capital is leading to bidding wars for all kinds of assets whether it is single family homes that sell for $1 million over the asking price in Berkeley, California or companies that see multiple rounds of competing bids. We wrote a couple of weeks ago that,
“We are likely to see more bidding wars in the near future as attractive assets become scarce and capital is left chasing deals in a highly competitive environment.”
The new offer for Tribune Publishing is the latest example of this phenomenon. Investors have started expecting these competing offers and that can be the only likely explanation for the Leaf Group (LEAF) deal trading at a negative spread of 5.45%. This is all the more striking considering Leaf reached out to 10 financial and strategic buyers and six signed a confidentiality agreement. They accepted the offer from Graham Holding after not receiving a competing offer from any of the 10 parties they contacted.
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.
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