Merger Arbitrage Mondays – Sanofi’s Second Purchase In Six Weeks

Merger activity increased last week with four new deals announced and three deals completed.

Incorporated in 2019 and headquartered in New York, Kadmon Holdings (KDMN) is a biopharmaceutical company that focuses on discovery, and development of transformative therapies for unmet medical needs. Rezurock (belumosudil), an oral, once-daily tablet, is approved by the FDA in the United States for the treatment of adult and pediatric patients 12 years and older with chronic graft-versus-host disease (cGVHD) after failure of at least two prior lines of systemic therapy. In just over a month after announcing the acquisition of Translate Bio (TBIO), French drugmaker, Sanofi entered into a definitive agreement to acquire Kadmon Holdings for $9.50 per share in cash, representing a premium of 79% over Kadmon’s closing price on September 7, 2021.

We have been writing about successful deals in the works in our past few posts. Another potential deal became successful last week. We added Columbia Property Trust to our list of potential deals on March 18, 2021, after Bloomberg reported that a group of CXP investors made an unsolicited proposal to acquire the company. CXP’s price after this announcement was $16.76. On September 7, 2021, Columbia Property Trust entered into an agreement to be acquired by PIMCO for $19.30 per share in cash.

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 5 SPAC IPOs filed and 3 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1.  Novus Capital Corporation II (NXU) and Energy Vault announced that they have entered into a definitive agreement for a business combination.
  2. Packable entered into a definitive agreement to merge with Highland Transcend Partners I Corp. (HTPA).
  3. Golden Path Acquisition Corporation (GPCO) and MC Hologram announced that they have entered into a definitive merger agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between September 3 and September 10, 2021.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
MX 17.3 South Dearborn Limited (N/A) 67.63% 61.74% 5.89% All Cash
JOBS 72.96 Garnet Faith Limited (N/A) 0.00 8.35% 2.66% 5.69% All Cash
XONE 23.76 Desktop Metal, Inc. (DM) 8.14 7.32% 2.70% 4.62% Special Conditions
SAFM 187.15 Cargill and Continental Grain Company (N/A) 8.47% 4.10% 4.37% All Cash
SJR 28.89 Rogers Communications Inc. (RCI) 47.79 12.15% 8.91% 3.24% Special Conditions
TRMT 5.69 RMR Mortgage Trust (RMRM) 10.88 1.65% 3.01% -1.36% Cash Plus Stock
ESXB 10.49 United Bankshares, Inc. (UBSI) 33.47 1.24% 2.79% -1.55% All Stock
SBBP 2.27 Xeris Pharmaceuticals, Inc. (XERS) 2.67 -7.79% -4.80% -2.99% All Stock
FVCB 19.72 Blue Ridge Bankshares, Inc. (BRBS) 17.28 0.70% 4.76% -4.06% All Stock
XLNX 155.06 Advanced Micro Devices, Inc. (AMD) 105.2 16.92% 21.46% -4.54% All Stock

Deal Statistics:

Total Number of Deals Closed in 2021 131
Total Number of Deals Not Completed in 2021 9
Total Number of Pending Deals
Cash Deals 50
Stock Deals 35
Stock & Cash Deals 9
Special Conditions 3
Total Number of Pending Deals 97
Aggregate Deal Consideration $879.2 billion

New Deals:

  1. The acquisition of Columbia Property Trust (CXP) by PIMCO for $3.9 billion or $19.30 per share in cash. We added CXP as a potential deal to the Deals in the Works section on March 18, 2021, and the price after the news of the potential deal came out was $16.76.
  2. The acquisition of Kadmon Holdings (KDMN) by Sanofi (SNY) for $1.64 billion or $9.50 per share in cash.
  3. The acquisition of JMP Group (JMP) by Citizens Financial Group (CFG) for $149 million or $7.50 per share in cash.
  4. The acquisition of Echo Global Logistics (ECHO) by The Jordan Company for $939.64 million or $48.25 per share in cash.

Deal Updates:

  1. On September 3, 2021,  the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired in connection with the previously announced proposed merger between IEC Electronics (IEC) and Creation Technologies.
  2. On September 7, 2021, Medallia (MDLA) announced the expiration of the 40-day “go-shop” period under the terms of the previously announced merger agreement pursuant to which Thoma Bravo will acquire Medallia in an all-cash transaction.
  3. On September 7, 2021, Intersect ENT (XENT) announced that the special meeting of stockholders will be held virtually on October 8, 2021.
  4. On September 7, 2021, W. R. Grace & Co. (GRA) announced that it has received all required regulatory approvals to complete the merger with Standard Industries Holdings. Assuming receipt of the Company Stockholder Approval at the special meeting of stockholders to be held on September 17, 2021, closing of the Merger is expected to occur on September 22, 2021.
  5. On September 7, 2021, Nicolet Bankshares (NCBS) announced that is has received all regulatory approvals for the Merger with County Bancorp (ICBK). Completion of the Merger remains subject to approval by shareholders of both Nicolet and County, as well as other customary closing conditions. Assuming shareholder approval is received and other closing conditions are satisfied, Nicolet expects to complete the Merger on December 3, 2021.
  6. On September 8, 2021, Golden Nugget Online Gaming (GNOG) announced that its shareholders voted overwhelmingly to approve its acquisition by DraftKings (DKNG).
  7. On September 8, 2021, Strongbridge Biopharma (SBBP) announced that its shareholders have voted to approve the previously announced proposed acquisition of Strongbridge by Xeris Pharmaceuticals (XERS).
  8. On September 9, 2021, QAD Inc. (QADA) announced that the special meeting of stockholders will be held virtually on October 15, 2021.
  9. On September 9, 2021, Ferro Corporation (FOE) announced that its shareholders voted overwhelmingly to approve its acquisition by an affiliate of Prince International Corporation.
  10. On September 9, 2021, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired in connection with the previously announced proposed merger between Medallia (MDLA) and Thoma Bravo.
  11. On September 12, 2021, Kansas City Southern (KSU) announced that the KCS Board of Directors determined that CP’s (CP) revised proposal constitutes a “Company Superior Proposal” as defined in KCS’s merger agreement with Canadian National Railway Company (CNI). Under the terms of CP’s proposal, each share of KCS common stock would be exchanged for 2.884 CP common shares and $90 in cash.

Closed Deals:

  1. The acquisition of  Cincinnati Bell (CBB) by Macquarie Infrastructure Partners on September 7, 2021. It took 543 days for this deal to be completed.
  2. The acquisition of The New Home Company (NWHM) by Apollo Global Management on September 8, 2021. It took 47 days for this deal to be completed.
  3. The acquisition of Ossen Innovation (OSN) by New Ossen Group Limited on September 10, 2021. It took 267 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 $1.5 09/30/2021 166.67% 3379.63%
MX 03/26/2021 South Dearborn Limited (N/A) $29.00 $17.3 12/31/2021 67.63% 224.41%
AJRD 12/20/2020 Lockheed Martin Corporation (LMT) $51.00 $42.38 12/31/2021 20.34% 67.49%
KSU 05/21/2021 Canadian National Railway Company (CNI) $334.24 $280 12/31/2022 19.37% 14.88%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $21.77 12/31/2021 18.28% 60.66%
XLNX 10/27/2020 Advanced Micro Devices, Inc. (AMD) $181.30 $155.06 12/31/2021 16.92% 56.16%
SJR 03/15/2021 Rogers Communications Inc. (RCI) $32.40 $28.89 06/30/2022 12.15% 15.24%
COHR 03/25/2021 II-VI Incorporated (IIVI) $275.90 $251.97 12/31/2021 9.50% 31.52%
MSON 07/29/2021 Bioventus Inc. (BVS) $28.00 $25.63 12/31/2021 9.25% 30.68%
SAFM 08/09/2021 Cargill and Continental Grain Company (N/A) $203.00 $187.15 01/31/2022 8.47% 21.92%

List of all pending deals:

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

Conclusion:

We have added twenty three potential deals in the works since the beginning of the third quarter of 2021 and five of them have already been successful with four of them at significant premiums. Multiple deals received required regulatory and shareholder approvals last week. SPAC activity continued to grow last week with 5 new SPAC IPOs filed.

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.

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