Merger Arbitrage Mondays – Microsoft’s Acquisition Of Nuance Offers A 5% Spread

  • April 19, 2021

I am frequently reminded that the biggest mistakes I make when it comes to investing is not holding positions for long periods of time. I wrote about one such situation in an article where I described missing out on 22,000% gains on a position I sold too soon. The recent acquisition of Nuance Communications (NUAN) by Microsoft (MSFT) was another reminder.

I had invested in Nuance several years ago when it was trading in the teens and the stock remained range bound for a number of years on account of lackluster performance by the company. I eventually gave up and sold the position for a small gain if memory serves correctly. By not holding tight, I gave up an opportunity to receive shares in Nuance’s spinoff of Cerence (CRNC) in October 2019 and more importantly gave up on a company that went on to nearly quadruple in price. Hindsight is always 20/20 and it is hard to predict how the future will unfold but holding on tight to a company, especially one that has formed a long base and that you have done the work on, is a lesson that has withstood the vagaries of time.

The day after the acquisition of Nuance was announced, the stock still offered an attractive 7.2% spread on the deal. While the spread has now narrowed to 5%, it is still more than one would expect for an all cash deal in a yield starved market.

Merger activity increased last week with six new deals announced and five deals completed. 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 5 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. Grab Holdings Inc. announced it intends to go public in the U.S. in partnership with Altimeter Growth Corp. (AGC).
  2. Tango Therapeutics and BCTG Acquisition Corp. (BCTG) announced they have entered into a definitive merger agreement.
  3. Reservoir Holdings and Roth CH Acquisition Co. II (ROCCannounced the signing of a definitive agreement for a business combination that will result in Reservoir becoming a public company.
  4. Surrozen, Inc. and Consonance-HFW Acquisition Corp. (CHFWentered into a definitive business combination agreement.
  5. Vicarious Surgical Inc. and D8 Holdings (DEHentered into a definitive business combination agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between April 9, 2021, and April 16, 2021.

Company Quote
Last Week
Spread Change
OSN4.67New Ossen Group Limited (N/A)0.009.21%5.59%3.62%All Cash
AEGN30.56New Mountain Capital, L.L.C. (N/A)-1.83%-5.10%3.27%All Cash
MX25.15South Dearborn Limited (N/A)15.31%12.27%3.04%All Cash
DSSI10.09International Seaways, Inc. (INSW)18.01-1.16%-2.71%1.55%All Stock
TLND63.96Thoma Bravo (N/A)3.19%2.01%1.18%All Cash
AJRD48.53Lockheed Martin Corporation (LMT)391.815.09%6.83%-1.74%All Cash
NEWA3.5Crouching Tiger Holding Limited (N/A)4.29%6.73%-2.44%All Cash
CXDC1.07Faith Dawn Limited and Faith Horizon (N/A)12.15%15.38%-3.23%All Cash
ALXN163.68AstraZeneca (AZN)50.742.51%7.15%-4.64%Cash Plus Stock
SJR27.98Rogers Communications Inc. (RCI)48.4215.80%20.90%-5.10%Special Conditions

Deal Statistics:

Total Number of Deals Closed in 202155
Total Number of Deals Not Completed in 20213
Total Number of Pending Deals
Cash Deals48
Stock Deals19
Stock & Cash Deals15
Special Conditions4
Total Number of Pending Deals86
Aggregate Deal Consideration$650.98 billion

New Deals:

  1. The merger of Cadence Bancorporation (CADE) and BancorpSouth Bank (BXS) in all stock deal for $2.7 billion. Under the terms of the agreement, Cadence shareholders will receive 0.70 shares of BXS for each share of CADE they own. Additionally, the agreement allows for a one-time special cash dividend to CADE shareholders of $1.25 per share in conjunction with the closing of the merger. We added CADE as a potential deal to the Deals in the Works section on February 17, 2021, and the price after the news of the potential deal came out was $20.24.
  2. The acquisition of Nuance Communications (NUAN) by Microsoft (MSFT) for $19.7 billion or $56.00 per share in cash.
  3. The acquisition of Mackinac Financial Corporation (MFNC) by Nicolet Bankshares (NCBS) for $248 million in a cash plus stock deal. Under the terms of the merger agreement, Mackinac shareholders will have the right to receive 0.22 shares of Nicolet’s common stock and $4.64 for each share of common stock of Mackinac Financial Corporation.
  4. The acquisition of PPD Inc. (PPD) by Thermo Fisher Scientific (TMO) for $20.9 billion or $47.50 per share in cash.
  5. The merger of Weingarten Realty Investors (WRI) and Kimco Realty Corporation (KIM) for $6.12 billion in a cash plus stock deal. Under the terms of the merger agreement, each Weingarten common share will be converted into 1.408 newly issued shares of Kimco common stock plus $2.89 in cash.
  6. The acquisition of General Finance Corporation (GFN) by United Rentals (URI) for $996 million or $19.00 per share in cash.

Deal Updates:

  1. On April 12, 2021, Talend (TLNDannounced the expiration of the 30-day “go-shop” period as of April 10, 2021 under the terms of the memorandum of understanding between Talend and Thoma Bravo.
  2. On April 12, 2021, the German Federal Cartel Office (Bundeskartellamt) (FCO) provided antitrust clearance for the merger between PRA Health Sciences (PRAH) and ICON Public Limited Company (ICLR).
  3. On April 13, 2021, Teledyne (TDY) and FLIR (FLIRscheduled special meetings for each company’s respective stockholders to approve matters related to the acquisition on May 13, 2021. Teledyne also announced that it received antitrust clearance for the pending acquisition from regulatory authorities in Poland and South Korea.
  4. On April 13, 2021, Europe’s antitrust regulator extended the deadline for its review of Aon’s (AON) planned purchase of Willis Towers (WLTW) until July 27.
  5. On April 14, 2021, Aegion Corporation (AEGN) announced that it has entered into a second amendment to the definitive merger agreement with affiliates of New Mountain Capital to increase the consideration payable to holders of outstanding shares of Aegion common stock to $30.00 per share in cash from $27.00 per share in cash.
  6. On April 14, 2021, Change Healthcare (CHNG) announced that during a special meeting its stockholders voted to approve the previously announced combination with OptumInsight, part of UnitedHealth Group (UNH).
  7. On April 14, 2021, The HSR Waiting Period applicable to the consummation of the Merger between PRA Health Sciences (PRAH) and ICON Public Limited Company (ICLR) expired.
  8. On April 15, 2021, Aphria (APHA) announced that its shareholders approved the previously announced arrangement with Tilray (TLRY).
  9. On April 15, 2021, FBL Financial Group (FFGreceived insurance regulatory clearance for proposed transaction with Farm Bureau Property & Casualty Insurance Company. FBL Financial Group also scheduled a Special Meeting of Shareholders to be held on April 29, 2021 to vote on the proposed transaction.
  10. On April 15, 2021, shareholders of Inphi Corporation (IPHIapproved the company’s merger with Marvell Technology Group (MRVL) at a special meeting of shareholders.
  11. On April 16, 2021, AstraZeneca’s (AZN) proposed acquisition of Alexion Pharmaceuticals (ALXNcleared US Federal Trade Commission review. This follows the conclusion of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Closed Deals:

  1. The acquisition of The Michaels Companies (MIK) by Apollo Global Management (APO) on April 15, 2021. It took 43 days for this deal to be completed.
  2. The acquisition of Varian Medical Systems (VAR) by Siemens Healthineers AG on April 15, 2021. It took 256 days for this deal to be completed.
  3. The acquisition of Five Prime Therapeutics (FPRX) by Amgen (AMGN) on April 16, 2021. It took 43 days for this deal to be completed.
  4. The acquisition of Golar LNG Partners (GMLP) by New Fortress Energy (NFE) on April 16, 2021. It took 93 days for this deal to be completed.
  5. The acquisition of Seacor Holdings (CKH) by American Industrial Partners on April 16, 2021. It took 130 days for this deal to be completed.

Top 10 deals with largest spreads:

DOYU10/12/2020HUYA Inc. (HUYA)$13.26$10.1606/30/202130.55%154.88%
SJR03/15/2021Rogers Communications Inc. (RCI)$32.40$27.9806/30/202215.80%13.19%
MX03/26/2021South Dearborn Limited (N/A)$29.00$25.1512/31/202115.31%21.83%
HCAP12/23/2020Portman Ridge Finance Corporation (PTMN)$10.12$8.9606/30/202112.93%65.54%
CHNG01/06/2021UnitedHealth Group Incorporated (UNH)$25.75$22.8112/31/202112.89%18.38%
CXDC06/15/2020Faith Dawn Limited and Faith Horizon (N/A)$1.20$1.0705/10/202112.15%211.17%
XLNX10/27/2020Advanced Micro Devices, Inc. (AMD)$141.58$128.6412/31/202110.06%14.34%
COHR03/25/2021II-VI Incorporated (IIVI)$294.09$268.0412/31/20219.72%13.86%
OSN12/17/2020New Ossen Group Limited (N/A)$5.10$4.6706/30/20219.21%46.68%
WLTW03/09/2020Aon plc (AON)$258.25$240.407/31/20217.42%26.31%

List of all pending deals:

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


We have been writing about an increase in M&A activity and bidding wars for several weeks but I was surprised to see $50 billion worth of deals announced in a single week last week. We are just in the fourth month of the year and aggregate merger consideration has crossed $650 billion for 2021. It is also nice to see for a change a couple of new all cash deals with decent spreads.

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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