Merger activity decreased last week with three new deals announced and two deals completed. Unlike the previous month, there were no banking-related mergers announced last week but we did see yet another deal receive a higher offer.
Holmdel-based Monmouth Real Estate Investment Corporation (MNR) is one of the oldest public equity REITs in the world. Founded in 1968, the company owns 120 properties totaling 24.5 million square feet in its portfolio and is under contract to purchase six properties totaling 1.8 million square feet.
We added MNR as a potential deal in the works on December 21, 2020, when Blackwells Capital, one of the largest owners of Monmouth Real Estate Investment Corporation offered to acquire Monmouth for $18 per share. The following month, on January 14, 2021, the company announced that its Board of Directors had determined that Blackwell’s offer was not in the best interest of the Company and that it was exploring strategic alternatives to maximize stockholder value, including a potential sale or merger of the company. As a result of this consideration, the Board suspended the Company’s Dividend Reinvestment and Stock Purchase Plan and stated that stockholders would receive dividends in cash effective with the dividend that was scheduled to be paid on March 15, 2021. Stockholders that remained enrolled at reinstatement would automatically resume participation in the Plan.
On May 4, 2021, Equity Commonwealth (EQC), a Chicago-based office REIT, and Monmouth entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4 billion, including the assumption of debt. The merger agreement also includes one remaining dividend of 18 cents per share.
At announcement, the deal with EQC was worth $19.44 per share but following a big drop in EQC’s stock price after the deal announcement, the deal is currently only worth $18.72 per share, not significantly above Blackwells’ offer. What is even more interesting is that with MNR trading at $19.49, the deal has a negative spread of 3.96% indicating arbitrageurs are expecting another bidding war.
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 3 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.
Weekly Spread Changes:
The table below shows weekly spread changes between April 30, 2021, and May 7, 2021.
Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
---|---|---|---|---|---|---|---|
DSSI | 10.76 | International Seaways, Inc. (INSW) | 20.45 | 5.24% | -0.61% | 5.85% | All Stock |
GRUB | 65.41 | Just Eat Takeaway.com N.V. (TKAYY) | 10.465 | 7.35% | 2.76% | 4.59% | All Stock |
HCAP | 8.79 | Portman Ridge Finance Corporation (PTMN) | 2.4 | 15.58% | 11.48% | 4.10% | Cash Plus Stock |
LEAF | 8.5 | Graham Holdings Company (GHC) | 658.58 | 0.00% | -4.06% | 4.06% | All Cash |
MX | 24.21 | South Dearborn Limited (N/A) | 19.79% | 15.95% | 3.84% | All Cash | |
DOYU | 8.57 | HUYA Inc. (HUYA) | 16.37 | 39.44% | 41.19% | -1.75% | All Stock |
LINX | 7.2 | StoneCo Ltd. (STNE) | 62.49 | -13.19% | -11.10% | -2.09% | Special Conditions |
BPFH | 15.39 | SVB Financial Group (SIVB) | 587.98 | 0.75% | 2.84% | -2.09% | Cash Plus Stock |
TRMT | 5.97 | RMR Mortgage Trust (RMRM) | 12.06 | 5.05% | 7.24% | -2.19% | All Stock |
SJR | 29.57 | Rogers Communications Inc. (RCI) | 50.76 | 9.57% | 11.99% | -2.42% | Special Conditions |
Deal Statistics:
Total Number of Deals Closed in 2021 | 68 |
Total Number of Deals Not Completed in 2021 | 3 |
Total Number of Pending Deals | |
Cash Deals | 45 |
Stock Deals | 25 |
Stock & Cash Deals | 16 |
Special Conditions | 3 |
Total Number of Pending Deals | 89 |
Aggregate Deal Consideration | $710.29 billion |
New Deals:
Deal Updates:
Closed 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) | $11.95 | $8.57 | 06/30/2021 | 39.44% | 276.85% |
MX | 03/26/2021 | South Dearborn Limited (N/A) | $29.00 | $24.21 | 12/31/2021 | 19.79% | 30.60% |
CHMA | 05/05/2021 | Amryt Pharma (AMYT) | $4.74 | $4.0300 | 09/30/2021 | 17.62% | 44.66% |
HCAP | 12/23/2020 | Portman Ridge Finance Corporation (PTMN) | $10.16 | $8.79 | 06/30/2021 | 15.58% | 109.34% |
CXDC | 06/15/2020 | Faith Dawn Limited and Faith Horizon (N/A) | $1.20 | $1.06 | 05/10/2021 | 13.21% | 4820.75% |
CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $22.89 | 12/31/2021 | 12.49% | 19.32% |
SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $32.40 | $29.57 | 06/30/2022 | 9.57% | 8.38% |
XLNX | 10/27/2020 | Advanced Micro Devices, Inc. (AMD) | $135.82 | $124.43 | 12/31/2021 | 9.15% | 14.16% |
OSN | 12/17/2020 | New Ossen Group Limited (N/A) | $5.10 | $4.68 | 06/30/2021 | 8.97% | 62.99% |
AJRD | 12/20/2020 | Lockheed Martin Corporation (LMT) | $51.00 | $47 | 12/31/2021 | 8.51% | 13.16% |
List of all pending deals:
Conclusion:
With just three new deals announced last week, merger activity has declined at the start of the month of May. There was no significant change in SPAC activity as it continues to be steady like the previous month. A number of active deals received shareholder and other regulatory approvals last week.
Disclaimer: I have long positions in Nuance Communications (NUAN), 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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