Merger Arbitrage Mondays – Kansas City Reconsiders Offer From Canadian Pacific

  • September 6, 2021

Merger activity decreased last week with two new deals announced, six deals completed and one deal terminated.

Another potential deal in the works materialized last week. We added Hill-Rom Holdings (HRC) as a potential on August 29, 2021, when The Wall Street Journal reported that Baxter International (BAX) was in advanced talks to acquire HRC. The price of Hill-Rom Holdings after this announcement came out was $145.78, representing a 9.69% premium to HRC’s price of $132.90 on August 27, 2021 before rumors about a potential deal emerged.

Founded in 1915, Hill-Rom Holdings has been a leading medical device innovator for over 100 years. Hillrom has acquired Allen Medical, Liko, Mortara, Trumpf Medical, Voalte, Welch Allyn, Breathe Technologies and Excel Medical in the past years to improve and integrate its innovations. Four days after the announcement of the potential deal, HRC entered into a definitive agreement to be acquired by Baxter International (BAX) for $156 per share in cash, representing a 26% premium to Hillrom’s closing stock price on July 27, 2021.

The bidding war for Kansas City Southern continued last week, after the Surface Transportation Board (STB), a U.S. federal agency that is charged with the economic regulation of various modes of surface transportation including freight rail, rejected the use of a voting trust between Canadian National Railway (CNI) and Kansas City Southern (KSU).

Canadian National Railway had set up the voting trust structure to get KSU shareholders on board by having the voting trust temporarily own KSU and allowing KSU shareholders to get $200 in cash and 1.129 shares of CN common stock even if STB rejected the deal. Rival Canadian Pacific (CP) stepped in and reaffirmed its approximately $300 cash and stock offer for KSU, which the board of directors of KSU said could reasonably be a superior proposal.

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 7 SPAC IPOs filed and 1 new SPAC business combination announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. Revelation Biosciences and Petra Acquisition (PAICentered into a definitive merger agreement for a business combination that will result in Revelation becoming a publicly traded company.

Weekly Spread Changes:

The table below shows weekly spread changes between August 27 and September 3, 2021.

Company Quote
Last Week
Spread Change
MX17.93South Dearborn Limited (N/A)61.74%52.07%9.67%All Cash
KSU291.63Canadian National Railway Company (CNI)127.2217.83%10.23%7.60%Cash Plus Stock
TRMT5.66RMR Mortgage Trust (RMRM)10.973.01%-0.08%3.09%Cash Plus Stock
NNA4.01Navios Maritime Partners L.P. (NMM)31.43-0.07%-2.80%2.73%All Stock
FVCB19.68Blue Ridge Bankshares, Inc. (BRBS)17.944.76%3.21%1.55%All Stock
SBBP2.24Xeris Pharmaceuticals, Inc. (XERS)2.72-4.80%-1.83%-2.97%All Stock
CLDB27.2Farmers National Banc Corp. (FMNB)15.42-0.79%2.74%-3.53%All Stock
OSN5.11New Ossen Group Limited (N/A)-0.20%3.45%-3.65%All Cash
AJRD43.46Lockheed Martin Corporation (LMT)35617.35%23.07%-5.72%All Cash
FIVN170.19Zoom Video Communications, Inc. (ZM)298.29-3.02%2.91%-5.93%All Stock

Deal Statistics:

Total Number of Deals Closed in 2021128
Total Number of Deals Not Completed in 20219
Total Number of Pending Deals
Cash Deals49
Stock Deals35
Stock & Cash Deals9
Special Conditions3
Total Number of Pending Deals96
Total Deal Size$872.57 billion

New Deals:

  1. The acquisition of DSP Group (DSPG) by Synaptics Incorporated (SYNA) for $339.78 million or $22.00 per share in cash.
  2. The acquisition of Hill-Rom Holdings (HRC) by Baxter International (BAX) for $12.4 billion or $156 per share in cash. We added HRC as a potential deal to the Deals in the Works section on August 29, 2021, and the price after the news of the potential deal came out was $145.78.

Deal Updates:

  1. On August 27, 2021, following informal discussions with the staff of the FTC, Sanofi (SNYvoluntarily withdrew and refiled the Premerger Notification and Report Form under the HSR Act relating to the Purchaser’s proposed acquisition of Translate Bio (TBIO), in order to provide the FTC with additional time to review the proposed acquisition and information recently provided to them. As a result, the waiting period will expire on September 13, 2021.
  2. On August 30, 2021, Magnachip Semiconductor (MX) said that the Committee on Foreign Investment in the U.S. (CFIUS) has identified national security risks with the sale to Wise Road and the deal is expected be referred to the President Biden for his decision.
  3. On August 30, 2021, Five9’s (FIVN) deal with Zoom Video Communications (ZM) widened after the Federal Communications Commission said it won’t allow a “streamlined” review of the transaction.
  4. On August 30, 2021, Cadence Bancorporation (CADE) announced that the Bank entered into separate settlements with the U.S. Department of Justice (“DOJ”) and the Office of the Comptroller of the Currency (“OCC”) to resolve historical allegations that it violated fair lending laws in Houston, Texas.
  5. On August 31, 2021, The Surface Transportation Board rejected a voting trust structure that would have allowed Canadian National Railway (CNI) to proceed with its proposed acquisition of Kansas City Southern (KSU).
  6. On August 31, 2021, Altabancorp (ALTA) announced that its stockholders, voted to adopt the previously announced merger agreement for the acquisition of the Company by Glacier Bancorp (GBCI).
  7. On August 31, 2021, Canadian Pacific Railway Limited (CP) submitted a letter to the board of directors of Kansas City Southern (KSUreaffirming CP’s offer to acquire all outstanding shares of KCS common stock for 2.884 CP common shares and $90 in cash for each share of KCS common stock.
  8. On September 2, 2021, CAI International (CAI) announced that its stockholders, voted to adopt the previously announced merger agreement for the acquisition of the Company by Mitsubishi HC Capital.
  9. On September 3, 2021, Kansas City Southern (KSU) announced that it has adjourned the Special Meeting of Stockholders for KCS stockholders to vote on the previously announced definitive merger agreement with CN (CNI) and other proposals September 24, 2021.
  10. On September 4, 2021, Kansas City Southern (KSU) announced that its Board of Directors has unanimously determined, after consultation with the Company’s outside legal and financial advisors, that the unsolicited proposal received from Canadian Pacific Railway Limited (CP) on August 31, 2021, to acquire KCS in a cash and stock transaction valued by CP at $300 per KCS share could reasonably be expected to lead to a “Company Superior Proposal” as defined in KCS’s merger agreement with CN (CNI).

Closed Deals:

  1. The acquisition of Proofpoint (PFPT) by Thoma Bravo on August 31, 2021. It took 127 days for this deal to be completed.
  2. The acquisition of QTS Realty Trust (QTS) by Blackstone (BX) on August 31, 2021. It took 85 days for this deal to be completed.
  3. The acquisition of ORBCOMM (ORBC) by GI Partners on September 1, 2021. It took 146 days for this deal to be completed.
  4. The acquisition of SharpSpring (SHSP) by Clearlake Capital Group on September 1, 2021. It took 71 days for this deal to be completed.
  5. The acquisition of Core-Mark Holding Company (CORE) by Performance Food Group Company (PFGC) on September 1, 2021. It took 106 days for this deal to be completed.
  6. The acquisition of Mackinac Financial Corporation (MFNC) by Nicolet Bankshares (NCBS) on September 3, 2021. It took 143 days for this deal to be completed.

Terminated Deals:

  1. On August 31, 2021, Equity Commonwealth (EQC) terminated the Merger Agreement because Monmouth’s (MNR) common shareholders failed to approve the merger of Monmouth with EQC.

Top 10 deals with largest spreads:

TEDU04/30/2021Kidedu Holdings Limited (N/A)$4.00$1.5109/30/2021164.90%2407.55%
MX03/26/2021South Dearborn Limited (N/A)$29.00$17.9312/31/202161.74%192.61%
XLNX10/27/2020Advanced Micro Devices, Inc. (AMD)$189.44$155.9612/31/202121.46%66.96%
KSU05/21/2021Canadian National Railway Company (CNI)$343.63$291.6312/31/202217.83%13.50%
AJRD12/20/2020Lockheed Martin Corporation (LMT)$51.00$43.4612/31/202117.35%54.12%
CHNG01/06/2021UnitedHealth Group Incorporated (UNH)$25.75$22.1212/31/202116.41%51.20%
COHR03/25/2021II-VI Incorporated (IIVI)$275.96$252.3112/31/20219.37%29.24%
SJR03/15/2021Rogers Communications Inc. (RCI)$32.40$29.7506/30/20228.91%10.91%
MSON07/29/2021Bioventus Inc. (BVS)$28.00$25.8712/31/20218.23%25.69%
SOLY05/10/2021Allergan Aesthetics (N/A)$22.60$21.1809/30/20216.70%97.88%

List of all pending deals:

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

Target VolumeEstimated
Closing Date
+TEDU4/30/21Kidedu Holdings Limited (N/A)All Cash$230.6 M$4.00$1.51710,1279/30/21164.90%2507.86%
+MX3/26/21South Dearborn Limited (N/A)All Cash$1.4 B$29.00$17.93320,98812/31/2161.74%194.27%
+XLNX10/27/20Advanced Micro Devices, Inc. (AMD)All Stock$33.43 B$189.44$155.96990,49412/31/2121.46%67.54%
+KSU5/21/21Canadian National Railway Company (CNI)Cash Plus Stock$33.6 B$343.63$291.631,199,97312/31/2217.83%13.53%
+AJRD12/20/20Lockheed Martin Corporation (LMT)All Cash$3.79 B$51.00$43.46329,19812/31/2117.35%54.59%
+CHNG1/06/21UnitedHealth Group Incorporated (UNH)All Cash$13.28 B$25.75$22.12903,17112/31/2116.41%51.64%
+COHR3/25/21II-VI Incorporated (IIVI)Cash Plus Stock$6.84 B$275.96$252.3197,58112/31/219.37%29.49%
+SJR3/15/21Rogers Communications Inc. (RCI)Special Conditions$26 B$32.40$29.7570,9626/30/228.91%10.95%
+MSON7/29/21Bioventus Inc. (BVS)Special Conditions$518 million$28.00$25.8768,46012/31/218.23%25.91%
+SOLY5/10/21Allergan Aesthetics (N/A)All Cash$550 M$22.60$21.1864,6269/30/216.70%101.96%
+NFH8/04/21Unicorn II Holdings Limited (N/A)All Cash$2.09 billion$12.00$11.27175,53612/31/216.48%20.38%
+TRIL8/23/21Pfizer Inc. (PFE)All Cash$1.2 B$18.50$17.382,202,80912/31/216.44%20.28%
+MRLN4/19/21HPS Investment Partners LLC (N/A)All Cash$109.4 M$23.50$22.299,3263/31/225.43%9.62%
+INFO11/30/20S&P Global (SPGI)All Stock$44 B$128.30$122.241,309,66612/31/214.96%15.60%
+FVCB7/14/21Blue Ridge Bankshares, Inc. (BRBS)All Stock$113.36 M$20.62$19.687,8561/31/224.76%11.82%
+FOE5/11/21Prince International Corporation (N/A)All Cash$2.1 B$22.00$21.13343,7213/31/224.12%7.30%
+SAFM8/09/21Cargill and Continental Grain Company (N/A)All Cash$4.49 B$203.00$195246,0761/31/224.10%10.19%
+HBMD7/13/21F.N.B. Corporation (FNB)All Stock$418 M$20.43$19.6890,2741/31/223.81%9.46%
+SCR8/05/21Penn National Gaming, Inc. (PENN)Cash Plus Stock$2 B$36.58$35.49394,7073/31/223.07%5.44%
+TRMT4/26/21RMR Mortgage Trust (RMRM)Cash Plus Stock$252.33 M$5.83$5.6677,3119/30/213.01%45.82%
+HRC9/02/21Baxter International Inc. (BAX)All Cash$12.4 B$156.00$151.682,596,9323/31/222.85%5.05%
+ESXB6/03/21United Bankshares, Inc. (UBSI)All Stock$303.3 M$11.38$11.0735,07312/31/212.79%8.77%
+ATH3/08/21Apollo Global Management, Inc. (APO)All Stock$6.01 B$71.02$69.11643,4911/31/222.76%6.86%
+XONE8/11/21Desktop Metal, Inc. (DM)Special Conditions$418.26 M$25.50$24.83251,97612/31/212.70%8.49%
+SLCT6/01/21First Bancorp (FBNC)All Stock$314.3 M$16.95$16.5118,32312/31/212.68%8.43%
+JOBS6/21/21Garnet Faith Limited (N/A)All Cash$3.63 B$79.05$77363,17612/31/212.66%8.38%
+XENT8/06/21Medtronic plc (MDT)All Cash$1.1 billion$28.25$27.53502,5583/31/222.62%4.63%
+ACBI7/23/21SouthState Corporation (SSB)All Stock$542 M$24.84$24.2258,6053/31/222.57%4.56%
+RBNC7/15/21United Community Banks, Inc. (UCBI)All Stock$517 M$29.57$28.917,1123/31/222.30%4.08%
+FCCY7/12/21Lakeland Bancorp, Inc. (LBAI)All Stock$244.4 M$22.74$22.263,1461/31/222.16%5.37%
+STFC7/12/21Liberty Mutual Holding Company Inc. (N/A)All Cash$2.48 B$52.00$50.96140,7893/31/222.04%3.62%
+WBT7/14/21Ali Holding S.r.l. (N/A)All Cash$4.8 B$24.00$23.55555,1531/31/221.91%4.74%
+BOCH6/24/21Columbia Banking System, Inc. (COLB)All Stock$266 M$14.24$13.9718,86912/31/211.90%5.99%
+ATC7/01/21MKS Instruments, Inc. (MKSI)Cash Plus Stock$6.5 B$24.40$23.96118,00312/31/211.83%5.75%
+PPD4/15/21Thermo Fisher Scientific Inc. (TMO)All Cash$20.9 B$47.50$46.72388,69812/31/211.67%5.25%
+TBIO8/03/21Sanofi (SNY)All Cash$1.94 B$38.00$37.38895,7429/30/211.66%25.23%
+ENBL2/17/21Energy Transfer LP (ET)All Stock$7.2 B$8.29$8.16269,34412/31/211.64%5.17%
+PMBC3/23/21Banc of California (BANC)All Stock$235 M$8.88$8.7414,2939/30/211.60%24.36%
+RIVE7/01/21Mid Penn Bancorp, Inc. (MPB)All Stock$124.7 M$12.69$12.546712/31/211.53%4.82%
+MGP8/04/21VICI Properties Inc. (VICI)All Stock$17.2 billion$43.75$43.11,137,2496/30/221.52%1.86%
+NUAN4/12/21Microsoft Corp (MSFT)All Cash$19.7 B$56.00$55.211,946,88112/31/211.43%4.50%
+STL4/19/21Webster Financial Corporation (WBS)All Stock$5.12 B$23.02$22.71,058,47612/31/211.41%4.44%
+ISBC7/28/21Citizens Financial Group, Inc. (CFG)Cash Plus Stock$3.5 B$14.25$14.061,085,0336/30/221.36%1.68%
+PNM10/21/20Avangrid, Inc. (AGR)All Cash$8.05 B$50.30$49.64379,36412/31/211.33%4.18%
+ALTA5/18/21Glacier Bancorp, Inc. (GBCI)All Stock$933.5 M$41.83$41.2922,93312/31/211.31%4.13%
+FRTA2/22/21Quikrete Holdings, Inc. (N/A)All Cash$2.74 B$24.00$23.6982,66412/31/211.31%4.12%
+SPWH12/21/20The Great American Outdoors Group (N/A)All Cash$1.5 B$18.00$17.77798,41012/31/211.29%4.07%
+FBC4/26/21New York Community Bancorp, Inc. (NYCB)All Stock$2.6 B$50.19$49.6207,85712/31/211.19%3.73%
+SIC8/09/21Sun Capital Partners, Inc. (N/A)All Cash$411 M$14.50$14.33285,15310/31/211.19%7.87%
+CADE4/12/21BancorpSouth Bank (BXS)Cash Plus Stock$2.7 B$21.87$21.62946,49612/31/211.13%3.57%
+INOV8/19/21Nordic Capital (N/A)All Cash$7.3 B$41.00$40.59893,7141/31/221.01%2.51%
+ICBK6/22/21Nicolet Bankshares, Inc. (NCBS)All Stock$219 M$36.93$36.571,63712/31/210.99%3.11%
+FMBI6/01/21Old National Bancorp (ONB)All Stock$2.86 B$18.76$18.58345,4701/31/220.97%2.42%
+EBSB4/23/21Independent Bank Corp. (INDB)All Stock$1.15 B$20.65$20.4659,49012/31/210.93%2.92%
+VEI8/10/21Chesapeake Energy Corporation (CHK)Cash Plus Stock$2.2 B$15.87$15.73240,99912/31/210.92%2.90%
+SOGO9/29/20Tencent Parties (N/A)All Cash$2.19 B$8.95$8.82210,25112/31/210.91%2.85%
+GTS8/24/21GuideWell Mutual Holding Corporation (N/A)All Cash$665.93 M$36.00$35.68162,0236/30/220.90%1.10%
+CVA7/14/21EQT Infrastructure (N/A)All Cash$5.35 B$20.25$20.07783,94012/31/210.90%2.82%
+LMRK8/23/21Landmark Dividend LLC (N/A)All Cash$997.25 M$16.50$16.36254,56512/31/210.86%2.69%
+UFS5/11/21Paper Excellence (N/A)All Cash$3.02 B$55.50$55.03335,27012/31/210.85%2.69%
+GNOG8/09/21DraftKings Inc. (DKNG)All Stock$1.52 B$22.27$22.09469,4223/31/220.83%1.46%
+VER4/29/21Realty Income Corporation (O)All Stock$17.66 B$50.97$50.63864,45612/31/210.67%2.12%
+CSOD8/05/21Clearlake Capital Group, L.P. (N/A)All Cash$5.2 B$57.50$57.12789,86912/31/210.67%2.09%
+SC8/24/21Santander Holdings USA, Inc. (N/A)All Cash$12.7 B$41.50$41.23821,14112/31/210.65%2.06%
+PFBI3/29/21Peoples Bancorp Inc. (PEBO)All Stock$292.3 M$18.14$18.027,9079/30/210.65%9.84%
+SVBI3/03/21Shore Bancshares, Inc. (SHBI)Cash Plus Stock$146 M$12.58$12.55,6599/30/210.61%9.29%
+DSPG8/30/21Synaptics Incorporated (SYNA)All Cash$399.78 M$22.00$21.88896,52612/31/210.55%1.73%
+GPX7/15/21Learning Technologies Group (N/A)All Cash$394 M$20.85$20.7440,37812/31/210.53%1.67%
+CNBKA4/07/21Eastern Bankshares, Inc. (EBC)All Cash$642 M$115.28$114.726,66212/31/210.49%1.54%
+GRA4/26/21Standard Industries Holdings Inc. (N/A)All Cash$7 B$70.00$69.66232,45312/31/210.49%1.54%
+MDLA7/26/21Thoma Bravo (N/A)All Cash$6.4 B$34.00$33.856,897,93912/31/210.44%1.39%
+QADA6/28/21Thoma Bravo (N/A)All Cash$2 B$87.50$87.1258,62012/31/210.44%1.37%
+JAX7/02/21SPB Hospitality LLC (N/A)All Cash$220 M$14.00$13.9425,21011/15/210.43%2.24%
+PBCT2/22/21M&T Bank Corporation (MTB)All Stock$7.6 B$16.40$16.333,279,90612/31/210.41%1.30%
+STMP7/09/21Thoma Bravo (N/A)All Cash$6.6 B$330.00$328.8228,0009/30/210.36%5.55%
+MGLN1/04/21Centene Corporation (CNC)All Cash$2.2 B$95.00$94.67202,75212/31/210.35%1.10%
+SNR6/28/21Ventas, Inc. (VTR)All Stock$2.3 B$8.79$8.76721,07112/31/210.34%1.08%
+CLDR6/01/21Clayton, Dubilier & Rice and KKR (N/A)All Cash$5.3 B$16.00$15.957,870,03412/31/210.31%0.99%
+CIT10/16/20First Citizens BancShares, Inc. (FCNCA)All Stock$2.42 B$55.12$55.02316,1489/30/210.18%2.69%
+IEC8/12/21Creation Technologies Inc. (N/A)All Cash$242.3 M$15.35$15.3377,58210/31/210.13%0.87%
+CBB3/13/20Macquarie Infrastructure Partners (N/A)All Cash$2.9 B$15.50$15.482,243,3849/07/210.13%47.16%
+NWHM7/23/21Apollo Global Management (N/A)All Cash$338 M$9.00$8.9952,56612/31/210.11%0.35%
+LDL6/21/21Unifrax (N/A)All Cash$1.3 B$62.10$62.04111,50212/31/210.10%0.30%
+NNA8/26/21Navios Maritime Partners L.P. (NMM)All Stock$1.93 B$4.01$4.01529,60312/31/21-0.07%-0.21%
+XEC5/24/21Cabot Oil & Gas Corporation (COG)All Stock$8.59 B$71.50$71.551,148,99412/31/21-0.07%-0.22%
+CAI6/17/21Mitsubishi HC Capital Inc. (N/A)All Cash$2.9 B$56.00$56.09324,67712/31/21-0.16%-0.50%
+OSN12/17/20New Ossen Group Limited (N/A)All Cash$84.96 M$5.10$5.11782,7179/30/21-0.20%-2.98%
+BMTC3/10/21WSFS Financial Corporation (WSFS)All Stock$976.4 M$40.26$40.4324,23612/31/21-0.43%-1.35%
+RAVN6/21/21CNH Industrial N.V (CNHI)All Cash$2.1 B$58.00$58.35134,03412/31/21-0.60%-1.89%
+XOG5/10/21Bonanza Creek Energy, Inc. (BCEI)All Stock$2.6 B$48.37$48.6849,6809/30/21-0.64%-9.80%
+CLDB6/23/21Farmers National Banc Corp. (FMNB)All Stock$124 M$26.99$27.223012/31/21-0.79%-2.49%
+ANAT8/09/21Brookfield Asset Management Reinsurance Partners Ltd. (BAMR)All Cash$5.1 B$190.00$191.6109,2486/30/22-0.84%-1.03%
+FIVN7/18/21Zoom Video Communications, Inc. (ZM)All Stock$14.7 B$165.04$170.192,636,2366/30/22-3.02%-3.72%
+RPAI7/16/21Kite Realty Group Trust (KRG)All Stock$4.96 B$12.95$13.46986,89612/31/21-3.82%-12.02%
+SBBP5/24/21Xeris Pharmaceuticals, Inc. (XERS)All Stock$267 M$2.13$2.24271,38711/15/21-4.80%-25.03%
+VNE7/22/21Magna International Inc. (MGA)All Cash$3.3 B$31.25$35.51,142,56812/31/21-11.97%-37.67%


We have been mentioning multiple deals receiving approvals including shareholder approvals in the past. In a change of events and a rare scenario, Monmouth Real Estate Investment Corporation (MNR) did not obtain the necessary stockholder votes to approve the previously announced merger with Equity Commonwealth (EQC). MNR was in the midst of a bidding war between Starwood Real Estate Income Trust and Equity Commonwealth. We have also noticed regulators stepping in more frequently to challenge deals or asking companies to refile to give them more time to review them. It is not surprising to see a big divergence of spreads where deals with heightened regulatory risk are trading at large spreads while most other deals are trading at tiny spreads, reflecting the low interest rate environment.

Disclaimer: I have long positions in Nuance Communications (NUAN), Change Healthcare (CHNG) and Trillium Therapeutics (TRIL). 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.