Merger activity decreased last week with one new deal announced, two deals completed and one deal terminated.
Founded in 1996 and headquartered in El Segundo, California, Stamps.com was one of the first companies to receive approval from the United States Postal Services for introducing internet postage to the market. For a monthly subscription fee of $17.99, Stamps.com allows users to print official USPS stamps and shipping labels. PhotoStamps, a product offered by the Company enables users to upload personal photographs or logos that can be printed on real U.S. postage stamps.
Those who have followed Stamps.com for several years will recollect how volatile the stock has been and how it was a perennial favorite on the short seller list. An acquisition is often a big risk for short sellers and we have seen this unfold several times in the past including the acquisition of Keurig Green Mountain by JAB in December 2015. On Friday, July 9, 2021, Stamps.com entered into an agreement to be acquired by Thoma Bravo for $330 a share, representing a 67% premium to its closing price on Thursday. The deal also includes a 40-day “go-shop” agreement allowing Stamps.com to seek a higher offer.
Proofpoint (PFPT), QAD Inc. (QADA) and Talend (TLND) are other companies in our list of active deals that entered into a definitive agreement to be acquired by Thoma Bravo this year.
The proposed merger of Huya (HUYA) and DouYu (DOYU) was blocked by China’s market regulator. The merger was orchestrated by gaming giant Tencent. According to the regulator, this merger would strengthen Tencent’s dominant position in the video game live-streaming market leading to eliminating or restricting competition which not conducive to fair market competition. The spread on this deal was very wide for an extended period of time reflecting the regulatory risk the deal faced.
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 4 SPAC IPOs filed and 7 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 July 2, and July 9, 2021
Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
---|---|---|---|---|---|---|---|
KSU | 273.95 | Canadian National Railway Company (CNI) | 107.32 | 17.23% | 12.63% | 4.60% | Cash Plus Stock |
CHMA | 4.48 | Amryt Pharma (AMYT) | 11.94 | 5.54% | 2.57% | 2.97% | All Stock |
ESXB | 10.73 | United Bankshares, Inc. (UBSI) | 35.52 | 5.04% | 2.26% | 2.78% | All Stock |
XLNX | 135.59 | Advanced Micro Devices, Inc. (AMD) | 90.9 | 15.54% | 12.90% | 2.64% | All Stock |
BOCH | 13.72 | Columbia Banking System, Inc. (COLB) | 36.07 | 5.16% | 3.05% | 2.11% | All Stock |
XEC | 74.14 | Cabot Oil & Gas Corporation (COG) | 17.61 | -4.64% | -2.83% | -1.81% | All Stock |
WBT | 24.9 | The Middleby Corporation (MIDD) | 174.93 | -12.89% | -7.04% | -5.85% | All Stock |
SBBP | 3.06 | Xeris Pharmaceuticals, Inc. (XERS) | 3.97 | 1.72% | 8.18% | -6.46% | All Stock |
NEWA | 3.7594 | Crouching Tiger Holding Limited (N/A) | -2.91% | 5.80% | -8.71% | All Cash | |
TEDU | 2.87 | Kidedu Holdings Limited (N/A) | 0.00 | 39.37% | 49.25% | -9.88% | All Cash |
Deal Statistics:
Total Number of Deals Closed in 2021 | 97 |
Total Number of Deals Not Completed in 2021 | 6 |
Total Number of Pending Deals | |
Cash Deals | 45 |
Stock Deals | 33 |
Stock & Cash Deals | 12 |
Special Conditions | 2 |
Total Number of Pending Deals | 92 |
Aggregate Deal Consideration | $784.31 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 |
---|---|---|---|---|---|---|---|
TEDU | 04/30/2021 | Kidedu Holdings Limited (N/A) | $4.00 | $2.87 | 09/30/2021 | 39.37% | 177.42% |
MX | 03/26/2021 | South Dearborn Limited (N/A) | $29.00 | $23.74 | 12/31/2021 | 22.16% | 46.75% |
KSU | 05/21/2021 | Canadian National Railway Company (CNI) | $321.16 | $273.95 | 12/31/2022 | 17.23% | 11.69% |
XLNX | 10/27/2020 | Advanced Micro Devices, Inc. (AMD) | $156.66 | $135.59 | 12/31/2021 | 15.54% | 32.78% |
CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $22.53 | 12/31/2021 | 14.29% | 30.15% |
OSN | 12/17/2020 | New Ossen Group Limited (N/A) | $5.10 | $4.5001 | 06/30/2021 | 13.33% | -442.34% |
WLTW | 03/09/2020 | Aon plc (AON) | $255.21 | $228.21 | 07/31/2021 | 11.83% | 215.96% |
SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $32.40 | $29.09 | 06/30/2022 | 11.38% | 11.73% |
COHR | 03/25/2021 | II-VI Incorporated (IIVI) | $285.88 | $258.87 | 12/31/2021 | 10.44% | 22.02% |
AJRD | 12/20/2020 | Lockheed Martin Corporation (LMT) | $51.00 | $47.48 | 12/31/2021 | 7.41% | 15.64% |
List of all pending deals:
Conclusion:
The recent news of China blocking the Didi app from app stores, their decision to block the HUYA – DOYU deal and reports of a possibility of moving AMD’s acquisition of Xilinx (XLNX) to an in-depth phase 2 review points to Chinese regulators flexing their muscles and increasing the risks for deals that have to go through their approval. The Executive Order by President Biden last week specifically calling out antitrust regulation and increased competition implies regulatory risk stateside is also likely to increase. If markets don’t discount this risk and the risk of increased inflation, I would not be surprised to see arbitrage spreads start to widen in the coming months.
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.