The third quarter of 2021 was an active one for M&A with 52 new deals announced amounting to over $207 billion. Third quarter M&A activity however did not eclipse what we saw in the prior quarter with 59 new deals announced in Q2 2021 with a total value of a little over $214 billion. The highlight of the third quarter, however, was the number of potential deals in the works announced. We added 34 potential deals to our list of deals in the works and seven of them were successful within the same quarter.
One of the seven successful potential deals was the acquisition of Acceleron Pharma (XLRN) by Merck (MRK) for $10.8 billion. We added Acceleron Pharma to our list of potential deals on September 27, 2021, when Bloomberg reported that the company was in advanced discussions to be acquired by a large pharmaceutical company. Bristol-Myers Squibb (BMY) which owns over 10% of company stock was expected to be a strong competing candidate. The price of XLRN went up to $178.87 from $167.75 after the announcement. Three days later, on September 30, 2021 XLRN and MRK entered into a definitive agreement, under which Merck, through a subsidiary, will acquire Acceleron for $180 per share in cash.
Acceleron was founded in June 2003, by a group of scientists in Cambridge, Massachusetts. The company was formed to discover and develop drugs based on transforming growth factors (TGF)-beta superfamily of proteins in metabolic disorders like obesity, diabetes, osteoporosis, and muscle-wasting conditions.
Acceleron has four drugs in clinical trials.
With the acquisition of Acceleron, Merck also expects to strengthen its cardiovascular pipeline with a specific focus on pulmonary arterial hypertension (PAH), a progressive and life-threatening blood vessel disorder. The market appears to be a little less worried about this deal going through as the spread on the deal is 3.37% or almost 14% annualized if the deal closes by year end. In comparison, the spread on Pfizer’s acquisition of Trillium Therapeutics (TRIL) sports a spread of 4.88% and Sanofi’s acquisition of Kadmon Holdings (KDMN) has an even wider spread of 7.1%.
Merger activity increased last week with three new deals announced, six deals completed and one deal terminated. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.
There were five new deals announced in the Deals in the Works section last week.
There were 9 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.
Weekly Spread Changes:
The table below shows weekly spread changes between September 17 and September 24, 2021.
|TEDU||1.16||Kidedu Holdings Limited (N/A)||244.83%||181.69%||63.14%||All Cash|
|JOBS||68||Garnet Faith Limited (N/A)||0.00||16.25%||10.34%||5.91%||All Cash|
|MGP||39.07||VICI Properties Inc. (VICI)||29.13||1.85%||-0.46%||2.31%||All Stock|
|XEC||87.2||Cabot Oil & Gas Corporation (COG)||22.25||2.44%||0.33%||2.11%||All Stock|
|CLDB||27.8||Farmers National Banc Corp. (FMNB)||16.11||1.41%||-0.58%||1.99%||All Stock|
|SJR||29.25||Rogers Communications Inc. (RCI)||46.57||10.77%||11.69%||-0.92%||Special Conditions|
|RPAI||13.36||Kite Realty Group Trust (KRG)||21.4||-0.21%||0.75%||-0.96%||All Stock|
|GTS||35.12||GuideWell Mutual Holding Corporation (N/A)||0.00||2.51%||3.51%||-1.00%||All Cash|
|KSU||276.96||Canadian Pacific Railway Limited (CP)||66.32||1.56%||2.68%||-1.12%||Cash Plus Stock|
|CIT||53.4||First Citizens BancShares, Inc. (FCNCA)||862.47||0.14%||3.20%||-3.06%||All Stock|
|Total Number of Deals Closed in 2021||141|
|Total Number of Deals Not Completed in 2021||11|
|Total Number of Pending Deals|
|Stock & Cash Deals||8|
|Total Number of Pending Deals||93|
|Total Deal Size||$889.26 billion|
Top 10 deals with largest spreads:
|TEDU||04/30/2021||Kidedu Holdings Limited (N/A)||$4.00||$1.16||12/31/2021||244.83%||1015.48%|
|MX||03/26/2021||South Dearborn Limited (N/A)||$29.00||$17.8||12/31/2021||62.92%||260.98%|
|CHNG||01/06/2021||UnitedHealth Group Incorporated (UNH)||$25.75||$21.12||12/31/2021||21.92%||90.93%|
|AJRD||12/20/2020||Lockheed Martin Corporation (LMT)||$51.00||$42.55||12/31/2021||19.86%||82.37%|
|XLNX||10/27/2020||Advanced Micro Devices, Inc. (AMD)||$176.56||$151.87||12/31/2021||16.26%||67.44%|
|JOBS||06/21/2021||Garnet Faith Limited (N/A)||$79.05||$68||12/31/2021||16.25%||67.40%|
|SJR||03/15/2021||Rogers Communications Inc. (RCI)||$32.40||$29.25||06/30/2022||10.77%||14.61%|
|SOLY||05/10/2021||Allergan Aesthetics (N/A)||$22.60||$20.49||12/31/2021||10.30%||42.71%|
|MSON||07/29/2021||Bioventus Inc. (BVS)||$28.00||$25.44||12/31/2021||10.06%||41.74%|
|XONE||08/11/2021||Desktop Metal, Inc. (DM)||$25.50||$23.27||12/31/2021||9.58%||39.75%|
List of all pending deals:
List of all pending deals:
We wrote the following with respect to the Five9 deal last week, “In the case of the Five9 – Zoom deal, there is evident risk involved with respect to regulatory approvals with Five9 having operations in Russia and Zoom having ties in China.” The companies mutually terminated their merger agreement after Five9 shareholders rejected the deal.
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.