Merger activity increased last week with eight new deals announced and four deals completed. This is the highest number of new deals we have come across in a week during the last several months. Three of the eight new deals announced were potential deals in the works. Five of these new deals were acquired at a premium of over 20%.
It is not just merger activity that is ramping up. When doing some research for our mid-month update for premium members, we mined our SPAC data and found that 2021 has already seen 546 SPAC IPOs worth over $128 billion compared to 242 IPOs for the full prior year worth $66.8 billion.
Headquartered in Irving, Texas, CorePoint Lodging (CPLG) is a pure play select-service hotel owner. The company was spun off from La Quinta Holdings in 2018. We added CPLG as a potential deal in the works when the company reported in its second quarter earnings report that it had decided to explore strategic alternatives to maximize stockholder value. The price of CPLG after this announcement was $13.45. We added this deal to our Merger Arbitrage Tool (MAT) as a special conditions deal because the press release announcing the deal mentioned,
“in addition to the $15.65 per share payable in cash at closing, CorePoint stockholders may receive incremental cash consideration per share pending timely resolution of the previously disclosed tax proceedings with the IRS related to an ongoing audit of CorePoint entities, which began prior to the Company’s 2018 spin-off from La Quinta Holdings, Inc. The amount of any potential additional cash consideration payable to CorePoint stockholders will be calculated based on the amount, if any, by which the settlement amount is less than a buyer liability reserve of $160 million agreed to by the parties.”
The largest deal announced last week was the the acquisition of McAfee (MCFE) by an investor group comprised of Advent, Permira, Crosspoint Capital, CPP Investments, GIC and ADIA for $14 billion. On November 5, 2021, Bloomberg reported that McAfee was in advanced talks to go private through a deal with buyout firms Advent International and Permira, just over a year after it returned to the public markets. The stock was up 20% last Friday after this announcement. McAfee started selling firewall software in the 1980s and went public before Intel purchased it for $7.7 billion in 2010. The company changed its name to Intel Security before Intel changed the name back to McAfee after selling a majority stake to TPG in 2017 for $4.2 billion.