Merger Arbitrage Mondays – McAfee Acquired By An Investor Group For $14 Billion

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.

McAfee has a 45 day ‘go-shop’ period and the transaction is subject to customary closing conditions, including, among others, approval by McAfee shareholders, receipt of regulatory approvals, and clearance by the Committee on Foreign Investment in the United States (CFIUS).

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

1. Biotech Acquisition Company (BIOT) Blade Therapeutics, a biopharmaceutical company based in South San Francisco, Calif., entered into a definitive merger agreement.
2. FiscalNote Holdings, a leading AI-driven enterprise SaaS company that delivers legal and regulatory data and insights, and Duddell Street Acquisition (DSAC) entered into a definitive business combination agreement.
3. Panera Brands and USHG Acquisition (HUGS) signed an agreement through which HUGS will become a cornerstone partner with Panera Brands. HUGS shares will convert into Panera shares after Panera goes public through a traditional IPO process.
4. Tuatara Capital Acquisition Corporation (TCAC) has entered into a definitive agreement for a business combination that would result in springbig, a provider of marketing solutions, consumer mobile app experiences, and omnichannel loyalty programs in the cannabis industry, becoming a publicly listed company.
5. Brivo and Crown PropTech Acquisitions (CPTK) announced that they have entered into a definitive merger agreement that will result in Brivo becoming a publicly listed company.
6. Presto and Ventoux CCM Acquisition Corp. (VTAQ) have entered into a definitive merger agreement that will result in Presto becoming a publicly listed company.
7. Rosecliff Acquisition Corp I (RCLF) and GT Gettaxi Limited, a Ground Transportation Management (GTM) platform, entered into a definitive business combination agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between November 5 and November 12, 2021.

Symbol	Quote	Acquiring Company	Acquiring Company Quote	Current Spread	Last Week Spread	Spread Change Weekly	Deal Type
JOBS	54.28	Garnet Faith Limited (N/A)	0.00	45.63%	17.74%	27.89%	All Cash
AZPN	148.93	Emerson Electric Co. (EMR)	97.42	7.43%	-0.79%	8.22%	Special Conditions
TEDU	0.7992	Kidedu Holdings Limited (N/A)		400.50%	394.74%	5.76%	All Cash
AJRD	43.64	Lockheed Martin Corporation (LMT)	339.06	16.87%	11.18%	5.69%	All Cash
MX	18.2	South Dearborn Limited (N/A)		59.34%	54.17%	5.17%	All Cash
PNM	48.87	Avangrid, Inc. (AGR)	50.43	2.93%	3.67%	-0.74%	All Cash
MNTV	23.25	Zendesk (ZEN)	103.83	0.48%	1.84%	-1.36%	All Stock
ICBK	36.725	Nicolet Bankshares, Inc. (NCBS)	74.88	-2.13%	-0.77%	-1.36%	All Stock
FCCY	25.89	Lakeland Bancorp, Inc. (LBAI)	19.05	-0.10%	1.92%	-2.02%	All Stock
SJR	29.49	Rogers Communications Inc. (RCI)	48.33	9.87%	12.46%	-2.59%	Special Conditions

Deal Statistics:

Total Number of Deals Closed in 2021	167
Total Number of Deals Not Completed in 2021	12
Total Number of Pending Deals
Cash Deals	54
Stock Deals	30
Stock & Cash Deals	6
Special Conditions	6
Total Number of Pending Deals	96
Total Deal Size	$978.45 billion

New Deals:

1. The acquisition of CorePoint Lodging (CPLG) by Highgate and Cerberus Capital Management for $1.5 billion or $15.65 per share in cash. 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. We added CPLG as a potential deal to the Deals in the Works section on July 13, 2021, and the price after the news of the potential deal came out was $13.45.
2. The acquisition of Zix Corporation (ZIXI) by OpenText for $860 million or $8.50 per share in cash. We added ZIXI as a potential deal to the Deals in the Works section on October 18, 2021, and the price after the news of the potential deal came out was $8.08.
3. The acquisition of McAfee (MCFE) by an investor group comprised of Advent, Permira, Crosspoint Capital, CPP Investments, GIC and ADIA for $14 billion or $26 per share in cash. We added MCFE as a potential deal to the Deals in the Works section on November 5, 2021, and the price after the news of the potential deal came out was $25.46.
4. The acquisition of Metromile (MILE) by Lemonade (LMND) for $201.47 million in an all stock deal. Under the terms of the transaction, Metromile shareholders will receive Lemonade common shares at a ratio of 19:1.
5. The acquisition of Pretium Resources (PVG) by Newcrest Mining Limited (NCMGY) for $2.8 billion in a cash or stock deal. Pursuant to the transaction, Pretivm shareholders will have the option to elect to receive C$18.50 per Pretivm share in cash or 0.8084 Newcrest shares per Pretivm share.
6. The acquisition of Dover Motorsports (DVD) by Speedway Motorsports for $94.69 million or $3.61 per share in cash.
7. The acquisition of Independence Holding Company (IHC) by Geneve Holdings for $813.9 million or $57 per share in cash.
8. The acquisition of Allegiance Bancshares (ABTX) by CBTX Inc. (CBTX) for $1.5 billion in an all stock deal. Under the terms of the definitive merger agreement, Allegiance shareholders will receive 1.4184 shares of CBTX common stock for each share of Allegiance common stock they own.

Deal Updates:

1. On November 7, 2021, AbbVie delivered notice to Soliton (SOLY) of the exercise of AbbVie’s right under the Merger Agreement to extend the date by which either party has a right to terminate the Merger Agreement if the consummation of the Merger has not occurred from November 8, 2021 to February 8, 2022.
2. On November 8, 2021, Merck (MRK) announced that its pending acquisition of Acceleron Pharma (XLRN) has been cleared by the competition authorities in Germany and Austria.
3. On November 9, 2021, shareholders of Howard Bancorp (HBMD) approved the company’s merger with F.N.B. Corporation (FNB) at a special meeting of shareholders.
4. On November 9, 2021, The ExOne Company (XONE) announced that its stockholders voted to approve the acquisition of ExOne by Desktop Metal (DM).
5. On November 11, 2021, Independent Proxy Advisory Firm ISS recommended Kirkland Lake Gold (KL) shareholders vote in favour of proposed merger of equals with Agnico Eagle Mines Limited (AEM).
6. November 12, 2021: According to the Justice Department, S&P Global (SPGI) and IHS Markit (INFO) have won U.S. antitrust approval for their planned merger, on condition it sell some businesses and scrap a non-compete agreement with GasBuddy.
7. On November 12, 2021, shareholders of JMP Group (JMP) approved the company’s merger with Citizens Financial Group (CFG) at a special meeting of shareholders. The closing of the merger is anticipated to take place on November 15, 2021.
8. On November 13, 2021, PNM Resources (PNM) and Avangrid (AGR) said that they will accept all conditions recommended by a Public Regulation Commission hearing examiner if the five-member commission decides to approve their proposed merger.

Closed Deals:

1. The acquisition of Kadmon Holdings (KDMN) by Sanofi (SNY) on November 9, 2021. It took 62 days for this deal to be completed.
2. The acquisition of Century Bancorp (CNBKA) by Eastern Bankshares (EBC) on November 12, 2021. It took 219 days for this deal to be completed.
3. The acquisition of The ExOne Company (XONE) by Desktop Metal (DM) on November 12, 2021. It took 93 days for this deal to be completed.
4. The acquisition of Meridian Bancorp (EBSB) by Independent Bank (INDB) on November 12, 2021. It took 203 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	$0.7992	12/31/2021	400.50%	3110.27%
MX	03/26/2021	South Dearborn Limited (N/A)	$29.00	$18.2	12/31/2021	59.34%	460.84%
JOBS	06/21/2021	Garnet Faith Limited (N/A)	$79.05	$54.28	12/31/2021	45.63%	354.39%
CHNG	01/06/2021	UnitedHealth Group Incorporated (UNH)	$25.75	$21.36	02/28/2022	20.55%	70.77%
XLNX	10/27/2020	Advanced Micro Devices, Inc. (AMD)	$254.87	$213.80	12/31/2021	19.21%	149.19%
AJRD	12/20/2020	Lockheed Martin Corporation (LMT)	$51.00	$43.64	12/31/2021	16.87%	130.97%
SOLY	05/10/2021	Allergan Aesthetics (N/A)	$22.60	$20.52	03/31/2022	10.14%	27.01%
SJR	03/15/2021	Rogers Communications Inc. (RCI)	$32.40	$29.49	06/30/2022	9.87%	15.80%
SAFM	08/09/2021	Cargill and Continental Grain Company (N/A)	$203.00	$186.8	01/31/2022	8.67%	40.58%
NFH	08/04/2021	Unicorn II Holdings Limited (N/A)	$12.00	$11.06	12/31/2021	8.50%	66.00%

List of all pending deals:

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

Conclusion: