Merger Arbitrage Mondays – Qualcomm and SSW Partners Win The Bidding War for Veoneer

  • October 11, 2021

Merger activity increased last week with four new deals announced, four deals completed and one deal terminated.

Headquartered in Stockholm, Sweden, Veoneer (VNE) is an auto-tech company that is focused on the hardware and software designs for automotive safety electronics. The company develops hardware and systems for occupant protection, advanced driving assistance systems (ADAS), and collaborative and automated driving technology that includes vision systems, radar, lidar, thermal sensing, electronic controls, and human-machine interface — developed to prevent traffic incidents from happening and mitigate the effect when accidents are unavoidable.

(Source: Company presentation)

Veoneer was spun off from Autoliv (ALV) in July 2018 and started trading independently on the New York Stock Exchange and Nasdaq Stockholm. We were tracking the Veoneer spinoff situation back in 2017-2018, along with another merger arbitrage situation related to Qualcomm at the same time. Qualcomm (QCOM) had entered into an agreement to acquire NXP Semiconductors (NXPI) for $110 on October 27, 2016. At the same time, Broadcom (AVGO) was attempting to acquire Qualcomm for $70. Qualcomm attempted to fend off that acquisition by sweetening its bid for NXPI to $127.50 per share. Neither of the deals worked out as China ran out the clock on the NXPI deal and the U.S. government blocked Broadcom’s attempt to acquire Qualcomm. Little did we know back then that three years later, Qualcomm would outbid Magna to acquire Veoneer. Arbitraguers that picked up NXPI either before the deal break or after the forced selling following the deal break did very well as NXPI now trades north of $190.

Qualcomm is a significant player in the semiconductor industry and has been focused on mobile chips and other wireless devices. By acquiring Veoneer, Qualcomm intends to increase its footprint in the automotive market. Earlier this year, Qualcomm and Veoneer signed an agreement to create a new software brand called Arriver by collaborating on the delivery of scalable Advanced Driver Assistance Systems (ADAS), Collaborative and Autonomous Driving (AD) solutions. The system integrates Veoneer’s perception and driving policy software stack and Qualcomm® Snapdragon Ride™ ADAS/AD scalable portfolio of System on a Chip (SoC) and Accelerators.

As part of the merger agreement, investment firm SSW Partners will acquire all of the outstanding capital stock of Veoneer, shortly after which it will sell the Arriver business to Qualcomm and retain Veoneer’s Restraint Control Systems (RCS) and Active Safety businesses. The spread on this two-step deal is 3.35% or 4.65% annualized if it takes until the middle of next year for the deal to complete.

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.

SPAC Arbitrage

There were 11 SPAC IPOs filed and 4 new SPAC business combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. MoonLake Immunotherapeutics AG, a clinical-stage biotechnology company focused on creating therapies for inflammatory skin and joint diseases and Helix Acquisition (HLXAentered into a definitive business combination agreement.
  2. AgiiPlus, a work solutions provider for rapid-change, quick-pivot enterprises in China and Singapore, entered into a definitive merger agreement for a business combination with Goldenbridge Acquisition Limited (GBRG).
  3. Rigetti & Co, a pioneer in full-stack quantum computing entered into a definitive merger agreement with Supernova Partners Acquisition Company II, (SNII).
  4. Starry, a licensed fixed wireless technology developer and internet service provider, and FirstMark Horizon Acquisition (FMACentered into a definitive merger agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between October 1 and October 8, 2021.

SymbolQuoteAcquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
TEDU1.03Kidedu Holdings Limited (N/A)288.35%244.83%43.52%All Cash
XONE22.73Desktop Metal, Inc. (DM)7.0612.19%9.58%2.61%Special Conditions
CHNG20.77UnitedHealth Group Incorporated (UNH)408.4623.98%21.92%2.06%All Cash
RIVE12.99Mid Penn Bancorp, Inc. (MPB)28.35.29%3.25%2.04%All Stock
MX17.66South Dearborn Limited (N/A)64.21%62.92%1.29%All Cash
FOE20.72Prince International Corporation (N/A)6.18%8.00%-1.82%All Cash
KOR3.25AngloGold Ashanti Limited (N/A)-1.54%0.63%-2.17%All Cash
JOBS69.34Garnet Faith Limited (N/A)0.0014.00%16.25%-2.25%All Cash
NFH11.5Unicorn II Holdings Limited (N/A)4.35%6.86%-2.51%All Cash
AJRD43.5Lockheed Martin Corporation (LMT)353.7517.24%19.86%-2.62%All Cash

Deal Statistics:

Total Number of Deals Closed in 2021146
Total Number of Deals Not Completed in 202112
Total Number of Pending Deals
Cash Deals48
Stock Deals31
Stock & Cash Deals8
Special Conditions3
Total Number of Pending Deals90
Total Deal Size$896.11 billion

New Deals:

  1. The acquisition of Elmira Savings Bank (ESBK) by Community Bank System (CBU) for $82.8 million or $23.10 per share in cash.
  2. The acquisition of Veoneer (VNE) by QUALCOMM Incorporated (QCOM) for $3.87 billion or $37.00 per share in cash.
  3. The acquisition of Teekay LNG Partners (TGP) by Stonepeak for $6.2 billion or $17.00 per share in cash.
  4. The acquisition of Meredith Corporation (MDP) by IAC/InterActiveCorp (IAC) and Gray Television (GTN) for $6.02 billion and a combined acquisition price of $59.17 per share in cash. Under the terms of the agreements, Meredith Corporation’s National Media Group will be acquired by IAC/InterActiveCorp’s Dotdash for $42.18 per share and its Local Media Group business will be acquired by Gray Television for $16.99 per share in cash.

Deal Updates:

  1. On October 5, 2021, shareholders of County Bancorp (ICBKapproved the company’s merger with Nicolet Bankshares (NCBS) at a special meeting of shareholders.
  2. On October 7, 2021, GP Strategies Corporation (GPX) and Learning Technologies Group received CFIUS Approval. The companies intend to complete the Merger on October 14, 2021.
  3. On October 7, 2021, Score Media and Gaming (SCR) announced that Penn National Gaming (PENN) has received approval from the Minister of Canadian Heritage under the Investment Canada Act in connection with its previously announced acquisition of theScore.
  4. On October 8, 2021, Intersect ENT (XENT) announced that it has received shareholder approval to be acquired by Medtronic (MDT).

Closed Deals:

  1. The acquisition of IEC Electronics (IEC) by Creation Technologies on October 5, 2021. It took 54 days for this deal to be completed.
  2. The acquisition of Stamps.com (STMP) by Thoma Bravo on October 5, 2021. It took 88 days for this deal to be completed.
  3. The acquisition of Strongbridge Biopharma (SBBP) by Xeris Pharmaceuticals (XERS) on October 5, 2021. It took 134 days for this deal to be completed.
  4. The acquisition of Cloudera (CLDR) by Clayton, Dubilier & Rice and KKR on October 8, 2021. It took 129 days for this deal to be completed.

Terminated Deals:

  1. Veoneer (VNEterminated its prior acquisition agreement with Magna International (MGA) and canceled its October 19, 2021, special meeting that was previously scheduled to approve that agreement after agreeing to be acquired by Qualcomm Incorporated (QCOM).

Top 10 deals with largest spreads:

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
TEDU04/30/2021Kidedu Holdings Limited (N/A)$4.00$1.0312/31/2021288.35%1283.51%
MX03/26/2021South Dearborn Limited (N/A)$29.00$17.6612/31/202164.21%285.83%
CHNG01/06/2021UnitedHealth Group Incorporated (UNH)$25.75$20.7712/31/202123.98%106.73%
AJRD12/20/2020Lockheed Martin Corporation (LMT)$51.00$43.512/31/202117.24%76.75%
XLNX10/27/2020Advanced Micro Devices, Inc. (AMD)$181.06$156.2712/31/202115.86%70.61%
JOBS06/21/2021Garnet Faith Limited (N/A)$79.05$69.3412/31/202114.00%62.33%
XONE08/11/2021Desktop Metal, Inc. (DM)$25.50$22.7312/31/202112.19%54.24%
MSON07/29/2021Bioventus Inc. (BVS)$28.00$25.2912/31/202110.72%47.70%
SOLY05/10/2021Allergan Aesthetics (N/A)$22.60$20.4512/31/202110.51%46.80%
SJR03/15/2021Rogers Communications Inc. (RCI)$32.40$29.7206/30/20229.02%12.51%

List of all pending deals:

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

TargetAnnounced
Date
AcquirerDeal
Type
Closing
Value
Deal
Price
Last
Price
Target VolumeEstimated
Closing Date
ReturnAnnualized
Return
+TEDU4/30/21Kidedu Holdings Limited (N/A)All Cash$230.6 M$4.00$1.03120,36812/31/21288.35%1299.35%
+MX3/26/21South Dearborn Limited (N/A)All Cash$1.4 B$29.00$17.66303,39712/31/2164.21%289.35%
+CHNG1/06/21UnitedHealth Group Incorporated (UNH)All Cash$13.28 B$25.75$20.77681,00812/31/2123.98%108.04%
+AJRD12/20/20Lockheed Martin Corporation (LMT)All Cash$3.79 B$51.00$43.5352,00012/31/2117.24%77.69%
+XLNX10/27/20Advanced Micro Devices, Inc. (AMD)All Stock$33.43 B$181.06$156.271,448,36612/31/2115.86%71.49%
+JOBS6/21/21Garnet Faith Limited (N/A)All Cash$3.63 B$79.05$69.34253,94512/31/2114.00%63.10%
+XONE8/11/21Desktop Metal, Inc. (DM)Special Conditions$418.26 M$25.50$22.73191,76312/31/2112.19%54.91%
+MSON7/29/21Bioventus Inc. (BVS)Special Conditions$518 million$28.00$25.2928,03912/31/2110.72%48.29%
+SOLY5/10/21Allergan Aesthetics (N/A)All Cash$550 M$22.60$20.45164,01512/31/2110.51%47.38%
+SJR3/15/21Rogers Communications Inc. (RCI)Special Conditions$26 B$32.40$29.72180,0626/30/229.02%12.56%
+COHR3/25/21II-VI Incorporated (IIVI)Cash Plus Stock$6.84 B$272.06$252.0493,92512/31/217.94%35.80%
+SAFM8/09/21Cargill and Continental Grain Company (N/A)All Cash$4.49 B$203.00$188.477,8051/31/227.75%25.25%
+KDMN9/08/21Sanofi (SNY)All Cash$1.64 B$9.50$8.861,052,79412/31/217.22%32.55%
+FOE5/11/21Prince International Corporation (N/A)All Cash$2.1 B$22.00$20.72433,4043/31/226.18%13.19%
+MRLN4/19/21HPS Investment Partners LLC (N/A)All Cash$109.4 M$23.50$22.318,8133/31/225.33%11.39%
+RIVE7/01/21Mid Penn Bancorp, Inc. (MPB)All Stock$124.7 M$13.68$12.998,62212/31/215.29%23.85%
+NFH8/04/21Unicorn II Holdings Limited (N/A)All Cash$2.09 billion$12.00$11.5148,59312/31/214.35%19.59%
+TRIL8/23/21Pfizer Inc. (PFE)All Cash$1.2 B$18.50$17.761,903,28912/31/214.17%18.78%
+XENT8/06/21Medtronic plc (MDT)All Cash$1.1 billion$28.25$27.2492,2303/31/223.71%7.91%
+HBMD7/13/21F.N.B. Corporation (FNB)All Stock$418 M$21.65$20.89103,3281/31/223.66%11.92%
+GWB9/16/21First Interstate BancSystem, Inc. (FIBK)All Stock$2 B$35.52$34.33357,3703/31/223.47%7.40%
+VNE10/04/21Qualcomm Incorporated (QCOM)All Cash$3.87 B$37.00$35.802,745,0626/30/223.35%4.67%
+HRC9/02/21Baxter International Inc. (BAX)All Cash$12.4 B$156.00$151.28362,1643/31/223.12%6.66%
+XLRN9/30/21Merck (MRK)All Cash$10.8 B$180.00$1751,270,14512/31/212.86%12.87%
+ITMR9/13/21ZOLL Medical Corporation (N/A)All Cash$399.11 M$31.00$30.2753,49812/31/212.41%10.87%
+INFO11/30/20S&P Global (SPGI)All Stock$44 B$121.95$119.141,883,26812/31/212.36%10.65%
+GTS8/24/21GuideWell Mutual Holding Corporation (N/A)All Cash$665.93 M$36.00$35.2236,5676/30/222.21%3.09%
+KRA9/27/21DL Chemical Co., Ltd. (N/A)All Cash$2.5 B$46.50$45.53386,4156/30/222.13%2.97%
+GSKY9/15/21The Goldman Sachs Group (GS)All Stock$2.24 B$11.78$11.54508,7163/31/222.12%4.52%
+ATH3/08/21Apollo Global Management, Inc. (APO)All Stock$6.01 B$75.10$73.6584,9401/31/222.04%6.64%
+FVCB7/14/21Blue Ridge Bankshares, Inc. (BRBS)All Stock$113.36 M$20.63$20.227,5121/31/222.02%6.58%
+ESBK10/04/21Community Bank System, Inc. (CBU)All Cash$82.8 M$23.10$22.6519,7933/31/221.99%4.24%
+ACBI7/23/21SouthState Corporation (SSB)All Stock$542 M$28.09$27.5746,5143/31/221.90%4.06%
+MGP8/04/21VICI Properties Inc. (VICI)All Stock$17.2 billion$39.93$39.211,347,2196/30/221.83%2.55%
+ISBC7/28/21Citizens Financial Group, Inc. (CFG)Cash Plus Stock$3.5 B$16.03$15.76555,6026/30/221.70%2.37%
+MDP10/06/21IAC/InterActiveCorp and Gray Television, Inc. (IAC)All Cash$6.02 B$59.17$58.222,709,07412/31/211.63%7.35%
+WBT7/14/21Ali Holding S.r.l. (N/A)All Cash$4.8 B$24.00$23.63584,4131/31/221.57%5.10%
+FBC4/26/21New York Community Bancorp, Inc. (NYCB)All Stock$2.6 B$54.89$54.06123,63012/31/211.53%6.89%
+STFC7/12/21Liberty Mutual Holding Company Inc. (N/A)All Cash$2.48 B$52.00$51.2244,1853/31/221.52%3.25%
+ATC7/01/21MKS Instruments, Inc. (MKSI)Cash Plus Stock$6.5 B$24.08$23.72179,18912/31/211.50%6.75%
+FCCY7/12/21Lakeland Bancorp, Inc. (LBAI)All Stock$244.4 M$24.72$24.363,4901/31/221.49%4.87%
+SPWH12/21/20The Great American Outdoors Group (N/A)All Cash$1.5 B$18.00$17.74228,86712/31/211.47%6.60%
+KSU9/15/21Canadian Pacific Railway Limited (CP)Cash Plus Stock$30.44 B$289.60$285.47673,34112/31/211.45%6.52%
+PNM10/21/20Avangrid, Inc. (AGR)All Cash$8.05 B$50.30$49.59525,96912/31/211.43%6.45%
+NUAN4/12/21Microsoft Corp (MSFT)All Cash$19.7 B$56.00$55.212,456,11312/31/211.43%6.45%
+RBNC7/15/21United Community Banks, Inc. (UCBI)All Stock$517 M$33.34$32.8838,7823/31/221.41%3.02%
+CLDB6/23/21Farmers National Banc Corp. (FMNB)All Stock$124 M$29.40$2915,98212/31/211.38%6.22%
+GNOG8/09/21DraftKings Inc. (DKNG)All Stock$1.52 B$17.49$17.27512,6793/31/221.26%2.68%
+ESXB6/03/21United Bankshares, Inc. (UBSI)All Stock$303.3 M$11.68$11.5411,97212/31/211.21%5.46%
+FRTA2/22/21Quikrete Holdings, Inc. (N/A)All Cash$2.74 B$24.00$23.7476,57612/31/211.10%4.94%
+STL4/19/21Webster Financial Corporation (WBS)All Stock$5.12 B$26.16$25.88678,56112/31/211.08%4.87%
+PPD4/15/21Thermo Fisher Scientific Inc. (TMO)All Cash$20.9 B$47.50$47.041,082,67912/31/210.98%4.41%
+PBCT2/22/21M&T Bank Corporation (MTB)All Stock$7.6 B$18.14$17.992,490,78512/31/210.84%3.79%
+INOV8/19/21Nordic Capital (N/A)All Cash$7.3 B$41.00$40.66627,7591/31/220.84%2.73%
+DSPG8/30/21Synaptics Incorporated (SYNA)All Cash$399.78 M$22.00$21.82118,53612/31/210.82%3.72%
+CXP9/07/21Pacific Investment Management Company LLC (N/A)All Cash$3.9 B$19.30$19.15359,08312/31/210.78%3.53%
+VER4/29/21Realty Income Corporation (O)All Stock$17.66 B$47.38$47.01709,67812/31/210.78%3.51%
+ENBL2/17/21Energy Transfer LP (ET)All Stock$7.2 B$8.54$8.48285,95412/31/210.75%3.37%
+FMBI6/01/21Old National Bancorp (ONB)All Stock$2.86 B$19.65$19.51130,4591/31/220.69%2.26%
+EBSB4/23/21Independent Bank Corp. (INDB)All Stock$1.15 B$22.35$22.21143,51812/31/210.65%2.94%
+CIT10/16/20First Citizens BancShares, Inc. (FCNCA)All Stock$2.42 B$53.33$53.02212,5853/31/220.59%1.26%
+UFS5/11/21Paper Excellence (N/A)All Cash$3.02 B$55.50$55.2146,75812/31/210.54%2.45%
+ECHO9/10/21The Jordan Company, L.P. (N/A)All Cash$939.64 M$48.25$48424,43012/31/210.52%2.35%
+CVA7/14/21EQT Infrastructure (N/A)All Cash$5.35 B$20.25$20.172,745,43812/31/210.40%1.79%
+VEI8/10/21Chesapeake Energy Corporation (CHK)Cash Plus Stock$2.2 B$17.55$17.49277,41112/31/210.36%1.62%
+SIC8/09/21Sun Capital Partners, Inc. (N/A)All Cash$411 M$14.50$14.45103,96610/31/210.35%6.31%
+RAVN6/21/21CNH Industrial N.V (CNHI)All Cash$2.1 B$58.00$57.8361,17112/31/210.35%1.56%
+MGLN1/04/21Centene Corporation (CNC)All Cash$2.2 B$95.00$94.6867,55612/31/210.34%1.52%
+BMTC3/10/21WSFS Financial Corporation (WSFS)All Stock$976.4 M$49.14$48.9895,16112/31/210.33%1.47%
+JMP9/08/21Citizens Financial Group, Inc. (CFG)All Cash$149 M$7.50$7.4812,31712/31/210.27%1.20%
+MDLA7/26/21Thoma Bravo (N/A)All Cash$6.4 B$34.00$33.912,092,04812/31/210.27%1.20%
+SVBI3/03/21Shore Bancshares, Inc. (SHBI)Cash Plus Stock$146 M$12.99$12.968,79712/31/210.20%0.91%
+SLCT6/01/21First Bancorp (FBNC)All Stock$314.3 M$19.52$19.4948,08712/31/210.17%0.76%
+CSOD8/05/21Clearlake Capital Group, L.P. (N/A)All Cash$5.2 B$57.50$57.411,444,66012/31/210.16%0.71%
+CADE4/12/21BancorpSouth Bank (BXS)Cash Plus Stock$2.7 B$22.83$22.8244,10712/31/210.14%0.61%
+CAI6/17/21Mitsubishi HC Capital Inc. (N/A)All Cash$2.9 B$56.00$55.93110,57112/31/210.13%0.56%
+SCR8/05/21Penn National Gaming, Inc. (PENN)Cash Plus Stock$2 B$34.53$34.49551,0983/31/220.11%0.23%
+CNBKA4/07/21Eastern Bankshares, Inc. (EBC)All Cash$642 M$115.28$115.1715,16412/31/210.10%0.43%
+PMBC3/23/21Banc of California (BANC)All Stock$235 M$9.82$9.8114,77110/18/210.05%2.66%
+GPX7/15/21Learning Technologies Group (N/A)All Cash$394 M$20.85$20.84485,11010/14/210.05%5.84%
+QADA6/28/21Thoma Bravo (N/A)All Cash$2 B$87.50$87.47443,74412/31/210.03%0.15%
+ICBK6/22/21Nicolet Bankshares, Inc. (NCBS)All Stock$219 M$37.31$37.35,89612/31/210.03%0.13%
+LMRK8/23/21Landmark Dividend LLC (N/A)All Cash$997.25 M$16.50$16.5208,48412/31/210.00%0.00%
+ANAT8/09/21Brookfield Asset Management Reinsurance Partners Ltd. (BAMR)All Cash$5.1 B$190.00$190.1327,3766/30/22-0.07%-0.10%
+NNA8/26/21Navios Maritime Partners L.P. (NMM)All Stock$1.93 B$3.90$3.91331,47712/31/21-0.35%-1.57%
+SC8/24/21Santander Holdings USA, Inc. (N/A)All Cash$12.7 B$41.50$41.65954,59612/31/21-0.36%-1.62%
+RPAI7/16/21Kite Realty Group Trust (KRG)All Stock$4.96 B$13.51$13.56622,76112/31/21-0.39%-1.77%
+XOG5/10/21Bonanza Creek Energy, Inc. (BCEI)All Stock$2.6 B$59.32$59.65328,56811/30/21-0.56%-4.08%
+TPG10/05/21Stonepeak (N/A)All Cash$6.2 B$17.00$17.10N/A12/31/21-0.58%-2.64%
+KL9/28/21Agnico Eagle Mines Limited (AEM)All Stock$9.53 B$42.83$43.361,153,9253/31/22-1.22%-2.59%
+KOR9/13/21AngloGold Ashanti Limited (N/A)All Cash$450 M$3.20$3.2575,5953/31/22-1.54%-3.28%

Conclusion:

M&A activity remains interesting with bidding wars offsetting some of the impact from increased regulatory scrutiny. As we enter the fourth quarter, with higher bond yields and a faltering market, the scales may tip more towards the regulatory scrutiny side of things.

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.