Merger Arbitrage Mondays – Italy’s Ali Group Bids $3.3 Billion for Welbilt (WBT)

Merger activity increased last week with four new deals announced and five deals completed. There were 14 deals announced in the month of May with a total deal value of over $60 billion. This was a significant decline from April, which had 24 new deals with a total value of over $114 billion.

The number of SPAC IPOs and SPAC Business Combinations announced in May increased slightly when compared to the previous month.

The saga of bidding wars continued last week with Italy’s Ali Group bidding $3.3 billion for Welbilt (WBT) on Friday, representing a premium of 15.5% to Welbilt’s closing price on Thursday.

Founded in 1864 and headquartered in New Port Richey, Florida, Welbilt has built 12 brands in the foodservice industry in a span of over 85 years. The company provides ghost kitchen solutions.  On April 21, 2021, Welbilt had entered into an all stock definitive agreement to be acquired by The Middleby Corporation (MIDD). Carl Icahn, Welbilt’s largest shareholder with an 8.4% stake, had agreed to that deal. Ali Group’s bid trumps Middleby’s offer. Welbilt will have to pay a break-up fee of $110 million to Middleby if it decides to abandon it at the altar and tie the knot with Ali Group.

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 5 new SPAC IPOs and 7 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. The Canadian parent company of privately held Algoma Steel Inc. and Legato Merger Corp. (LEGO) announced that they have entered into a definitive merger agreement that will result in Algoma becoming a publicly listed company
  2. Valens and PTK Acquisition (PTK) have entered into a definitive business combination agreement.
  3. P3 Health Partners and Foresight Acquisition (FORE) have entered into a definitive agreement which would result in P3 becoming a publicly listed company.
  4. Tritium and Decarbonization Plus Acquisition Corporation II (DCRNannounced a definitive agreement for a business combination that would result in Tritium becoming a publicly listed company.
  5.  eFFECTOR Therapeutics and Locust Walk Acquisition (LWAC) have entered into a definitive merger agreement.
  6. Acorns Grow Incorporated has entered into a definitive business combination agreement with Pioneer Merger Corp. (PACX).
  7. Wejo Limited and Virtuoso Acquisition Corp. (VOSO) announced that they have entered into a definitive agreement for a business combination.

Weekly Spread Changes:

The table below shows weekly spread changes between May 21, and May 28, 2021.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
CCRC 5.96 Taiying Group Ltd. and Taiying International Inc. (N/A) 0.00 9.06% 5.35% 3.71% All Cash
TEDU 3.65 Kidedu Holdings Limited (N/A) 0.00 9.59% 6.38% 3.21% All Cash
XOG 49.12 Bonanza Creek Energy, Inc. (BCEI) 42.96 2.42% 0.49% 1.93% All Stock
MX 23.7 South Dearborn Limited (N/A) 22.36% 20.68% 1.68% All Cash
CORE 45.86 Performance Food Group Company (PFGC) 50.13 0.16% -1.34% 1.50% Cash Plus Stock
NEWA 3.38 Crouching Tiger Holding Limited (N/A) 7.99% 10.94% -2.95% All Cash
DSSI 10.69 International Seaways, Inc. (INSW) 20.04 3.81% 7.04% -3.23% All Stock
DOYU 7.9 HUYA Inc. (HUYA) 15.3 41.38% 46.60% -5.22% All Stock
GRUB 60.11 Just Eat Takeaway.com N.V. (TKWY.AS) 74.13 0.90% 21.01% -20.11% All Stock
WBT 24.71 The Middleby Corporation (MIDD) 164.28 -17.56% 3.75% -21.31% All Stock

Deal Statistics:

Total Number of Deals Closed in 2021 77
Total Number of Deals Not Completed in 2021 5
Total Number of Pending Deals
Cash Deals 41
Stock Deals 29
Stock & Cash Deals 16
Special Conditions 3
Total Number of Pending Deals 89
Aggregate Deal Consideration $734.45 billion

New Deals:

  1. The merger of Cimarex Energy (XEC) and Cabot Oil & Gas Corporation (COG) for $8.59 billion in an all-stock deal. Under the terms of the agreement, Cimarex shareholders will receive 4.0146 shares of Cabot common stock for each share of Cimarex common stock owned.
  2. The acquisition of Strongbridge Biopharma (SBBP) by Xeris Pharmaceuticals (XERS) for $267 million in an all stock deal. Under the terms of the agreement, Strongbridge Shareholders will receive a fixed exchange ratio of 0.7840 Xeris Biopharma Holdings Shares for each Strongbridge Share they own. Strongbridge Shareholders will also receive 1 non-tradeable CVR for each Strongbridge Share they own, worth up to an additional $1.00 payable in cash or Xeris Biopharma Holdings Shares at Xeris Biopharma Holdings’ election.
  3. The acquisition of MMA Capital Holdings (MMAC) by an affiliate of Fundamental Advisors for $161.7 million or $27.77 per share in cash.
  4. The acquisition of Bowl America Incorporated (BWL-A) by Bowlero Corp. for $42.58 million or $8.53 per share in cash. In addition, the merger agreement contemplates Bowl America declaring a special dividend in accordance with Maryland law following the liquidation of its securities portfolio of $0.60 per share.

Deal Updates:

  1. On May 24, 2021, the proposed acquisition of Alexion (ALXN) by AstraZeneca (AZNachieved competition clearance in Japan.
  2. On May 24, 2021, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), expired in connection with the previously announced proposed merger between DiaSorin S.p.A.and Luminex Corporation (LMNX).
  3. On May 25, 2021, Huntington Bancshares Incorporated (HBAN) and TCF Financial Corporation (TCF) announced that the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, with input from the United States Department of Justice’s Antitrust Division, have approved the proposed merger of Huntington and TCF and of The Huntington National Bank and TCF National Bank.
  4. On May 26, 2021, PNM Resources (PNM) and AVANGRID (AGRreceived approval from the sixth regulatory entity, the Nuclear Regulatory Commission (NRC), for their proposed merger.
  5. On May 26, 2021, M&T Bank Corporation (MTB) and People’s United Financial (PBCT) announced that they each received the necessary shareholder approvals for the consummation of the merger of People’s United into M&T.
  6. On May 26, 2021, International Seaways (INSW) and Diamond S Shipping (DSSI) announced that the required waiting period has expired under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) in connection with the proposed stock-for-stock merger transaction between INSW and Diamond S.
  7. On May 26, 2021, Advanced Micro Devices (AMDfiled its planned acquisition of Xilinx (XLNX) with the European Union for review.
  8. On May 26, 2021, Outside legal counsel of Magnachip Semiconductor Corporation (MX) and South Dearborn Limited received an e-mail from the U.S. Department of Treasury on behalf of the Staff Chairperson of the Committee on Foreign Investment in the United States. In the e-mail, the CFIUS Staff Chairperson requested that the parties file a notice concerning the Merger and thereby undergo formal CFIUS review of the Merger.
  9. On May 27, 2021, Brookfield Property Partners (BPY) announced that the record date for its upcoming special meeting of unitholders to consider Brookfield Asset Management’s (BAM) acquisition of all of the limited partnership units of BPY will be June 8, 2021. The special meeting is expected to take place on July 16, 2021.
  10. May 28, 2021: According to The Wall Street Journal, Italy’s Ali Group made an all-cash offer to buy Welbilt (WBT) for $23 a share.

Closed Deals:

  1. The acquisition of Cubic Corporation (CUB) by Veritas and Evergreen Coast Capital Corporation on May 25, 2021. It took 106 days for this deal to be completed.
  2. The acquisition of Tribune Publishing Company (TPCO) by Alden Global Capital on May 25, 2021. It took 98 days for this deal to be completed.
  3. The acquisition of General Finance Corporation (GFN) by United Rentals (URI) on May 26, 2021. It took 40 days for this deal to be completed.
  4. The acquisition of FBL Financial Group (FFG) by Farm Bureau Property & Casualty Insurance Company on May 26, 2021. It took 135 days for this deal to be completed.
  5. The acquisition of Standard AVB Financial (STND) by Dollar Mutual Bancorp on May 28, 2021. It took 245 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) $11.17 $7.9 06/30/2021 41.38% 487.21%
MX 03/26/2021 South Dearborn Limited (N/A) $29.00 $23.70 12/31/2021 22.36% 37.96%
OSN 12/17/2020 New Ossen Group Limited (N/A) $5.10 $4.601 06/30/2021 10.85% 127.70%
CHMA 05/05/2021 Amryt Pharma (AMYT) $4.65 $4.23 09/30/2021 10.00% 29.67%
KSU 05/21/2021 Canadian National Railway Company (CNI) $327.09 $297.68 12/31/2021 9.88% 16.77%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $23.44 12/31/2021 9.85% 16.73%
TEDU 04/30/2021 Kidedu Holdings Limited (N/A) $4.00 $3.65 09/30/2021 9.59% 28.46%
CCRC 03/12/2021 Taiying Group Ltd. and Taiying International Inc. (N/A) $6.50 $5.96 06/30/2021 9.06% 106.68%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $138.01 $127 12/31/2021 8.67% 14.72%
SJR 03/15/2021 Rogers Communications Inc. (RCI) $32.40 $29.89 06/30/2022 8.40% 7.74%

List of all pending deals:

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

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.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria

Leave A Comment

You must be logged in to post a comment.