Merger activity decreased last week with three new deals announced and one deal completed.
The bidding war for Kansas City Southern (KCS) came to an end last week after the company’s Board of Directors determined that the acquisition proposal KCS received from Canadian National Railway Company (CN) constituted a superior proposal. Following this determination, KCS terminated the Canadian Pacific Railway (CP) merger agreement and entered into a merger agreement with CN (CNI). KCS paid CP a breakup fee of $700 million, which will be reimbursed by CN.
The deal between Kansas City and Canadian National has come through despite Canadian Pacific consistently arguing that a tie-up between Kansas City and Canadian National would have trouble getting approved by antitrust regulators. CN and KCS, however, are confident that they will obtain all necessary regulatory approvals. CN has also proposed a “plain vanilla” voting trust, which states that “Upon KCS shareholder approval of the transaction, and satisfaction of customary closing conditions, CN will acquire KCS shares and place them into the voting trust. KCS shareholders will receive the merger consideration immediately upon the closing of CN’s voting trust, which is expected to be in the second half of 2021.”
In an interesting turn of events, The US Surface Transportation Board (STB) has rejected the voting trust plan proposed by Canadian National when it has earlier agreed to a similar plan by Canadian Pacific Railway.
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 7 new SPAC IPOs and 3 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 May 14, and May 21, 2021.
Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
---|---|---|---|---|---|---|---|
FBC | 45.61 | New York Community Bancorp, Inc. (NYCB) | 11.88 | 4.58% | 3.01% | 1.57% | All Stock |
DOYU | 7.36 | HUYA Inc. (HUYA) | 14.78 | 46.60% | 45.07% | 1.53% | All Stock |
CCRC | 6.17 | Taiying Group Ltd. and Taiying International Inc. (N/A) | 0.00 | 5.35% | 3.83% | 1.52% | All Cash |
UFS | 54.25 | Paper Excellence (N/A) | 2.30% | 0.95% | 1.35% | All Cash | |
WBT | 19.79 | The Middleby Corporation (MIDD) | 165.58 | 3.75% | 2.40% | 1.35% | All Stock |
SOGO | 8.42 | Tencent Parties (N/A) | 5.70% | 8.01% | -2.31% | All Cash | |
TRMT | 6.08 | RMR Mortgage Trust (RMRM) | 11.99 | 2.55% | 5.25% | -2.70% | All Stock |
MX | 24.03 | South Dearborn Limited (N/A) | 20.68% | 27.36% | -6.68% | All Cash | |
CHMA | 4.33 | Amryt Pharma (AMYT) | 12.06 | 10.29% | 18.20% | -7.91% | All Stock |
HCAP | 9.39 | Portman Ridge Finance Corporation (PTMN) | 2.34 | 5.58% | 13.61% | -8.03% | Cash Plus Stock |
Deal Statistics:
Total Number of Deals Closed in 2021 | 72 |
Total Number of Deals Not Completed in 2021 | 5 |
Total Number of Pending Deals | |
Cash Deals | 44 |
Stock Deals | 27 |
Stock & Cash Deals | 16 |
Special Conditions | 3 |
Total Number of Pending Deals | 90 |
Aggregate Deal Consideration | $725.39 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) | $10.79 | $7.36 | 06/30/2021 | 46.60% | 447.56% |
MX | 03/26/2021 | South Dearborn Limited (N/A) | $29.00 | $24.03 | 12/31/2021 | 20.68% | 34.00% |
CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $22.98 | 12/31/2021 | 12.05% | 19.82% |
OSN | 12/17/2020 | New Ossen Group Limited (N/A) | $5.10 | $4.59 | 06/30/2021 | 11.11% | 106.73% |
NEWA | 10/02/2020 | Crouching Tiger Holding Limited (N/A) | $3.65 | $3.29 | 06/30/2021 | 10.94% | 105.10% |
CHMA | 05/05/2021 | Amryt Pharma (AMYT) | $4.78 | $4.33 | 09/30/2021 | 10.29% | 28.90% |
SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $32.40 | $29.8 | 06/30/2022 | 8.72% | 7.90% |
XLNX | 10/27/2020 | Advanced Micro Devices, Inc. (AMD) | $132.99 | $122.81 | 12/31/2021 | 8.29% | 13.64% |
KSU | 05/21/2021 | Canadian National Railway Company (CNI) | $317.74 | $295.00 | 12/31/2021 | 7.71% | 12.68% |
COHR | 03/25/2021 | II-VI Incorporated (IIVI) | $280.37 | $260.83 | 12/31/2021 | 7.49% | 12.32% |
List of all pending deals:
Conclusion:
Merger Activity and SPAC business combination announcements declined slightly last week while SPAC IPOs ticked up. We expect to see the dual trends of consolidation in the regional banking industry and bidding wars continue to provide some interesting opportunities to arbitrageurs.
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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