Merger Arbitrage Mondays – Thoma Bravo Acquires At A Huge Premium

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, 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, 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 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, 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 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.

  1. Nextdoor and Khosla Ventures Acquisition Co. II (KVSBentered into a definitive agreement under which Nextdoor would become a publicly listed company.
  2. Satellogic and CF Acquisition Corp. V (CFV) announced that they have entered into a definitive merger agreement that will result in Satellogic becoming a publicly traded company.
  3. Planet Labs and dMY Technology Group, Inc. IV (DMYQentered into a definitive merger agreement under which Planet will become a publicly-traded company.
  4. Athena Technology Acquisition (ATHN) and Heliogen entered into a definitive agreement for a business combination.
  5. Alpha Tau Medical Limited and Healthcare Capital (HCCCentered into a definitive business combination agreement.
  6. Hyperfine announced their entry into a definitive business combination agreement with HealthCor Catalio Acquisition (HCAQ).
  7. Circle entered into a definitive business combination agreement with Concord Acquisition (CND).

Weekly Spread Changes:

The table below shows weekly spread changes between July 2, and July 9, 2021

Symbol Quote Acquiring
Company Quote
Last Week
Spread Change
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:

  1. The acquisition of (STMP) by Thoma Bravo for $6.6 billion or $330 per share in cash.

Deal Updates:

  1. On July 5, 2021, Ali Holding confirmed that it has submitted a definitive proposal and merger agreement to the Board of Directors of Welbilt (WBT) to acquire all outstanding shares of Welbilt common stock for $24 per share in cash. This is the second offer by Ali Holdings and the offer is well above the current all stock deal with The Middleby Corporation (MIDD).
  2. July 5, 2021: According to Reuters, China’s antitrust regulator is set to formally block Tencent Holdings’ plan to merge the country’s top two videogame streaming sites, Huya (HUYA) and DouYu (DOYU).
  3. On July 6, 2021, the EU gave the green light to AstraZeneca’s (AZN) takeover of rare disease specialist Alexion (ALXN).
  4. On July 8, 2021, Luminex Corporation (LMNX) and DiaSorin S.p.A. received approval from the Committee on Foreign Investment in the United States (“CFIUS”) with respect to the previously announced pending merger.
  5. On July 8, 2021, ORBCOMM (ORBC) announced that it has received shareholder approval to be acquired by GI Partners.
  6. On July 8, 2021, Domtar Corporation (UFS) announced that the special meeting of stockholders will be held on July 29, 2021.
  7. On July 9, 2021, Aon (AON) and Willis Towers Watson (WLTW) confirmed that the European Commission announced conditional approval for the proposed combination of Aon and Willis Towers Watson.
  8. On July 9, 2021, Ferro Corporation (FOE) announced that the special meeting of stockholders will be held on July 15, 2021.
  9. On July 10, 2021, China’s market regulator blocked Tencent Holdings’s plan to merge the country’s top two videogame streaming sites, Huya (HUYA) and DouYu (DOYU), on antitrust grounds.

Closed Deals:

  1. The acquisition of China Customer Relations Centers (CCRC) by Taiying Group and Taiying International on July 6, 2021. It took 116 days for this deal to be completed.
  2. The acquisition of MSG Networks (MSGN) by Madison Square Garden Entertainment (MSGE) on July 9, 2021. It took 105 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
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:

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


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.

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