Merger Arbitrage Mondays – Veoneer Receives A Superior Bid From Qualcomm

Merger activity increased last week with six new deals announced and four deals completed. All six deals were multi-billion dollar deals. The largest deal announced last week was the acquisition of MGM Growth Properties (MGP) by VICI Properties (VICI).

MGM Growth Properties is one of the leading publicly traded real estate investment trusts which engages in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. The company entered into a definitive agreement to be acquired by VICI Properties last week for $17.2 billion, including about $5.7 billion in debt, in an all stock transaction. According to the press release, simultaneous with the closing of the transaction, VICI Properties will enter into an amended and restated triple-net master lease with MGM Resorts. The lease will have an initial total annual rent of $860 million, inclusive of MGP’s pending acquisition of MGM Springfield, and an initial term of 25 years, with three 10-year tenant renewal options.

Another highlight from last week was Qualcomm’s (QCOM) $4.6 billion bid for Veoneer (VNE). Based in Stockholm, Sweden, Veoneer spun off from long-time safety equipment supplier Autoliv (ALV) in 2018. The company designs, develops and manufactures software, hardware and systems for occupant protection, advanced driving assistance systems (ADAS), collaborative and automated driving. Veoneer entered into a definitive merger agreement to be acquired by Magna International (MGA) last month for $31.25 per share. Qualcomm’s offer at $37 per share, tops Magna’s offer by 18%. Veoneer’s board determined that the Qualcomm’s offer “would reasonably be expected to result in a ‘Superior Proposal,’ as defined under terms of Veoneer’s merger agreement with Magna,”

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

  1. FinAccel and VPC Impact Acquisition Holdings II (VPCBentered into a definitive agreement for a business combination that will result in FinAccel becoming a publicly traded company.
  2. Sky Harbour LLC entered into a business combination agreement with Yellowstone Acquisition Company (YSAC).
  3. Pico and FTAC Athena Acquisition Corp. (FTAAU) announced they have entered into a definitive agreement for a business combination that would result in Pico becoming a publicly listed company.
  4. Cepton Technologies, Inc. and Growth Capital Acquisition (GCACentered into a definitive business combination agreement.
  5. EQRx and CM Life Sciences III, Inc. (CMLTU) announced that they have entered into a definitive business combination agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between July 30, and August 6, 2021

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
TEDU 1.34 Kidedu Holdings Limited (N/A) 0.00 198.51% 102.02% 96.49% All Cash
MX 19.23 South Dearborn Limited (N/A) 50.81% 39.56% 11.25% All Cash
JOBS 69.35 Garnet Faith Limited (N/A) 0.00 13.99% 9.76% 4.23% All Cash
XLNX 150.19 Advanced Micro Devices, Inc. (AMD) 110.11 26.35% 22.14% 4.21% All Stock
OSN 4.4 New Ossen Group Limited (N/A) 15.91% 13.21% 2.70% All Cash
KSU 271.77 Canadian National Railway Company (CNI) 107.86 18.40% 20.48% -2.08% Cash Plus Stock
FVCB 19.85 Blue Ridge Bankshares, Inc. (BRBS) 17.53 1.49% 3.61% -2.12% All Stock
ENBL 8.14 Energy Transfer LP (ET) 9.27 -2.12% 1.37% -3.49% All Stock
SBBP 2.08 Xeris Pharmaceuticals, Inc. (XERS) 2.31 -12.93% 0.71% -13.64% All Stock
VNE 38.69 Magna International Inc. (MGA) 83.66 -19.23% -0.22% -19.01% All Cash

Deal Statistics:

Total Number of Deals Closed in 2021 115
Total Number of Deals Not Completed in 2021 8
Total Number of Pending Deals
Cash Deals 47
Stock Deals 35
Stock & Cash Deals 10
Special Conditions 2
Total Number of Pending Deals 94
Aggregate Deal Consideration $823.61 billion

New Deals:

  1. The acquisition of Translate Bio (TBIO) by Sanofi (SNY) for $1.94 billion or $38 per share in cash.
  2. The acquisition of MGM Growth Properties (MGP) by VICI Properties (VICI) for $17.2 billion in an all stock deal. Under the terms of the Master Transaction Agreement, MGP Class A shareholders will receive 1.366 shares of newly issued VICI stock in exchange for each Class A share of MGP.
  3. The acquisition of New Frontier Health Corporation (NFH) by Unicorn II Holdings Limited in a going private transaction for a closing value of $2.09 billion or $12.00 per share in cash.
  4. The acquisition of Score Media and Gaming (SCR) by Penn National Gaming (PENN) for $2 billion in a cash plus stock deal. Under the terms of the agreement, theScore shareholders will receive US$17.00 in cash and 0.2398 shares of Penn National common stock for each theScore share.
  5. The acquisition of Intersect ENT (XENT) by Medtronic (MDT) for $1.1 billion or $28.25 per share in cash.
  6. The acquisition of Cornerstone OnDemand (CSOD) by Clearlake Capital Group for $5.2 billion or $57.50 per share in cash.

Deal Updates:

  1. On July 30, 2021, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), expired in connection with the previously announced proposed merger between Kindred Biosciences (KIN) and Elanco Animal Health Incorporated (ELAN).
  2. On August 2, 2021, S&P Global (SPGI) and IHS Markit (INFOannounced an agreement to sell IHS Markit’s Oil Price Information Services (OPIS); Coal, Metals and Mining; and PetroChem Wire businesses to News Corp in a cash transaction valued at approximately $1.150 billion. The sale is expected to be completed at the close of the merger between S&P Global and IHS Markit. The agreement marks the culmination of S&P Global and IHS Markit’s previously announced decision to explore a divestiture of these businesses and represents an important milestone on the path to regulatory approval for the merger between S&P Global and IHS Markit.
  3. On August 3, 2021, Chiasma (CHMA) announced that it has received shareholder approval to be acquired by Amryt Pharma (AMYT).
  4. On August 4, 2021, New York Community Bancorp (NYCB) and Flagstar Bancorp (FBC) jointly announced that, at their respective special meetings of shareholders, they each received the necessary shareholder approval for the consummation of their planned merger.
  5. On August 5, 2021, Independent Bank (INDB) and Meridian Bancorp (EBSBreceived the necessary shareholder approvals for the consummation of the merger pursuant to which Independent will acquire Meridian.
  6. On August 5, 2021, Veoneer (VNE) confirmed that it has received a non-binding proposal from Qualcomm Incorporated (QCOM) to acquire all of the outstanding shares of Veoneer at a price of $37.00 per share in cash.
  7. Accoring to Reuters, The Canadian regulator looking into telecom company Rogers Communications’ (RCI)  planned purchase of Shaw Communications (SJR), has obtained court orders to advance its review.
  8. On August 6, 2021, Soliton (SOLY) and AbbVie each received a request for additional information and documentary material (the “Second Request”) from the FTC in connection with the FTC’s review of the transactions contemplated by the Merger Agreement. The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after the Company and AbbVie have certified substantial compliance with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the FTC.

Closed Deals:

  1. The acquisition of Fly Leasing (FLY) by Carlyle Aviation Partners on August 2, 2021. It took 126 days for this deal to be completed.
  2. The acquisition of ProSight Global (PROS) by TowerBrook Capital Partners and Further Global Capital Management on August 4, 2021. It took 201 days for this deal to be completed.
  3. The acquisition of Weingarten Realty Investors (WRI) by Kimco Realty Corporation (KIM) on August 4, 2021. It took 111 days for this deal to be completed.
  4. The acquisition of Iconix Brand Group (ICON) by Iconix Acquisition on August 4, 2021. It took 54 days for this deal to be completed.
  5. The acquisition of American River Bankshares (AMRB) by Bank of Marin Bancorp (BMRC) on August 6, 2021. It took 109 days for this deal to be completed.
  6. The acquisition of Chiasma (CHMA) by Amryt Pharma (AMYT) on August 6, 2021. It took 93 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
TEDU 04/30/2021 Kidedu Holdings Limited (N/A) $4.00 $1.34 09/30/2021 198.51% 1367.08%
MX 03/26/2021 South Dearborn Limited (N/A) $29.00 $19.23 12/31/2021 50.81% 127.89%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $189.76 $150.19 12/31/2021 26.35% 66.33%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $21.31 12/31/2021 20.84% 52.45%
KSU 05/21/2021 Canadian National Railway Company (CNI) $321.77 $271.77 12/31/2022 18.40% 13.17%
COHR 03/25/2021 II-VI Incorporated (IIVI) $282.21 $242.04 12/31/2021 16.60% 41.77%
OSN 12/17/2020 New Ossen Group Limited (N/A) $5.10 $4.4 09/30/2021 15.91% 109.56%
JOBS 06/21/2021 Garnet Faith Limited (N/A) $79.05 $69.35 12/31/2021 13.99% 35.21%
SJR 03/15/2021 Rogers Communications Inc. (RCI) $32.40 $28.75 06/30/2022 12.70% 14.21%
AJRD 12/20/2020 Lockheed Martin Corporation (LMT) $51.00 $46.4 12/31/2021 9.91% 24.96%

List of all pending deals:

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

Conclusion:

Six active deals were successfully completed last week, which included the acquisition of Weingarten Realty Investors (WRI) by Kimco Realty Corporation (KIM). According to The Wall Street Journal, potential deal in the works Sanderson Farms (SAFM) is in advanced talks with Cargill to sell itself for $203 per share. We added SAFM as a potential deal on June 21, 2021, when the company announced that it was exploring a sale.

Disclaimer: I have long positions Nuance Communications (NUAN) and Change Healthcare (CHNG). I also have put options in Change Healthcare. 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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