Merger Arbitrage Mondays – The Twitter – Musk Saga Unfolds

  • May 2, 2022

Merger activity remained steady last week with four new deals announced and two deals completed. Two of the four deals announced were potential deals in the works.

The month of April ended with 16 new deals announced for an aggregate deal value of $92.92 billion. Elon Musk’s acquisition of Twitter (TWTR) announced last Monday was the largest deal announced last week and the most talked about deal this year.

Twitter (TWTR)

Looking back over the years, I have written about Twitter multiple times going all the way back to 2009. In an article titled “Customer Service ala Twitter Style“, I had written about Twitter, a micro-blogging site that had exploded in popularity and more than doubled its unique visitors in March 2009 to 9.3 million. I was reminiscing about the company Kitchenette SF, that was discussed in the customer service article, with a friend and ex-colleague recently and neither of us could remember the name of that pop-up food truck. In 2017, I wrote about Jack Dorsey’s well-timed $7 million purchase of Twitter in an Insider Weekends article. The same year I wrote another article on Seeking Alpha titled ‘10 Things Worth Celebrating About Twitter‘, highlighting as the title suggests, aspects of Twitter that were worth celebrating.

Earlier this year, in February 2022, in a Seeking Alpha article titled Broken Growth Stocks: Twitter, I talked about how Twitter had been a show me story for years with a lot of potential that was yet to be realized. In spite of seeing significant revenue growth since going public the stock had not appreciated much. Having outperformed Facebook (FB) during the last five years and with a new CEO at the helm, the future looked bright for Twitter. We wrote the following about our valuation model in that article and the intrinsic value of $55.16 we came up with was remarkably close to the price Elon Musk ended up offering for Twitter,

Plugging the next two years of consensus analyst estimates for 2022 earnings of 20 cents per share and 2023 earnings of 90 cents per share into a DCF model, assuming an EPS growth rate of 35% in year 3, declining 3% a year through 2031, an 8% discount rate and a 2% terminal growth rate, I get an intrinsic value of $55.16 per share, a 53% discount to current price. A DCF model is only as good as its assumptions and it’s entirely possible that the future might unfold differently.

Twitter DCF Model

In our latest Insider Weekends article, titled ‘Insider Weekends: Elon Musk Sells $8.52 Billion Of Tesla To Fund Twitter Purchase‘, we wrote the following,

The other big event last week was Elon Musk’s acquisition of Twitter (TWTR) in a deal financed through $13 billion in debt from banks, $12.5 billion through a margin loan on his Tesla (TSLA) shares and an additional $21 billion in equity financing from him. Towards this end, he sold 9.645 million shares of Tesla generating $8.52 billion from the sales. We discussed his sales of Tesla late last year in an article titled The Pied Piper Is Heading Out Of Town.

The spread on the Twitter-Musk deal is 10.57%, indicating that investors are concerned about the deal being consummated. Primary concerns include potential regulatory issues with the Biden administration focused on big tech and Musk’s financing of the deal, partly through loans backed by Tesla.

We did a series of four Twitter threads last week to create a primer about the merger arbitrage strategy. You can find the threads here:

  1. Introduction to merger arbitrage
  2. Deal types, CVRs and methods to capture the spread
  3. Next steps and regulatory processes
  4. Different ways to express a merger arbitrage strategy

Significant Tweets related to the deal:


The merger agreement includes a termination fee of $1 billion, which is payable both ways depending on which party terminates the deal. The agreement also barred Elon Musk from sending disparaging tweets about the company or its representatives.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

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Deals In The Works

There were three new deals announced in the Deals in the Works section last week.

SPAC Arbitrage

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

  1. On April 25, 2022, SuperBac Biotechnology Solutions, a biotech company in Brazil, entered into a definitive business combination agreement with XPAC Acquisition Corp. (XPAX).
  2. On April 25, 2022, OneMedNet Corporation, a curator of regulatory-grade Imaging Real Word Data and Data Knights Acquisition Corp. (DKDCAannounced the signing of a definitive business combination agreement
  3. On April 26, 2022, Arogo Capital Acquisition (AOGOentered into a definitive business combination agreement with EON Reality.
  4. On April 26, 2022, Isleworth Healthcare Acquisition (ISLE) and Cytovia Holdings, a biopharmaceutical company empowering natural killer (NK) cells to fight cancer through stem cell engineering and multispecific antibodies entered into a definitive business combination agreement.
  5. On April 28, 2022, Peak Bio, a clinical-stage biopharmaceutical company focused on developing the next-generation of therapeutics to treat oncology and inflammatory diseases, and Ignyte Acquisition (IGNY) have entered into a definitive business combination agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between April 22 and April 29, 2022.

Company Quote
Last Week
Spread Change
ZNGA8.27Take-Two Interactive Software, Inc. (TTWO)119.5119.23%10.79%8.44%Special Conditions
MILE0.9814Lemonade (LMND)20.8611.80%5.83%5.97%All Stock
ATVI75.6Microsoft Corporation (MSFT)277.5225.66%20.85%4.81%All Cash
NP35.4Schweitzer-Mauduit International, Inc. (SWM)25.16-3.48%-7.27%3.79%All Stock
SAVE23.61Frontier Group Holdings, Inc. (ULCC)10.61-5.03%-8.24%3.21%Cash Plus Stock
ABTX40.86CBTX, Inc. (CBTX)28.52-1.00%-0.14%-0.86%All Stock
AZPN158.54Emerson Electric Co. (EMR)90.180.92%1.97%-1.05%Special Conditions
GCP31.37Saint-Gobain (N/A)2.01%3.29%-1.28%All Cash
MBII1.16Bioceres Crop Solutions Corp. (BIOX)14.610.76%14.98%-4.22%All Stock
PTRS8.94OceanFirst Financial Corp. (OCFC)18.73-5.47%15.98%-21.45%All Stock

Deal Statistics:

Total Number of Deals Closed in 202262
Total Number of Deals Not Completed in 20224
Total Number of Pending Deals
Cash Deals55
Stock Deals10
Stock & Cash Deals9
Special Conditions7
Total Number of Pending Deals81
Aggregate Deal Consideration$791.96 billion

New Deals:

  1. The acquisition of PS Business Parks (PSB) by Blackstone (BX) for $7.6 billion or $187.50 per share in cash.
  2. The acquisition of Twitter (TWTR) by an entity wholly owned by Elon Musk for $44 billion or $54.20 per share in cash. We added TWTR as a potential deal to the Deals in the Works section on April 14, 2022,  and the price after the news of the potential deal came out was $45.08.
  3. The acquisition of GTY Technology Holdings (GTYH) by GI Partners for $383.29 million or $6.30 per share in cash.
  4. The merger of BlueCity Holdings Limited (BLCT) with Multelements Limited for $60 million or $1.6 per share in cash. We added BLCT as a potential deal to the Deals in the Works section on April 18, 2022,  and the price after the news of the potential deal came out was $1.27.

Deal Updates:

  1. On April 25, 2022, UnitedHealth Group Incorporated (UNHentered into an equity purchase agreement and related agreements relating to the sale of the claims editing business (ClaimsXten) of Change Healthcare (CHNG) to an affiliate of investment funds of TPG Capital for a base purchase price in cash equal to $2.2 billion.
  2. On April 25, 2022, Tower Semiconductor (TSEM) announced that at its extraordinary general meeting of shareholders, certain proposals related to the agreement and plan of merger with Intel Corporation (INTCwere approved.
  3. On April 26, 2022, shareholders of US Ecology (ECOLapproved the company’s merger with Republic Services (RSG) at a special meeting of shareholders.
  4. On April 27, 2022, New York Community Bancorp (NYCB) and Flagstar Bancorp (FBC) announced that they have mutually extended their merger agreement to October 31, 2022.
  5. On April 27, 2022, 51job (JOBS) announced that the company’s shareholders voted in favor of the proposal to approve the previously announced agreement and plan of merger with Garnet Faith Limited.
  6. On April 28, 2022, Activision Blizzard (ATVI) announced that its stockholders approved Microsoft Corporation’s (MSFT) proposal to acquire Activision Blizzard.

Closed Deals:

  1. The acquisition of Volt Information Sciences (VOLT) by Vega Consulting on April 25, 2022. It took 42 days for this deal to be completed.
  2. The acquisition of MGM Growth Properties (MGP) by VICI Properties (VICI) on April 29, 2022. It took 268 days for this deal to be completed.

Top 10 deals with largest spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

BLCT04/30/2022Multelements Limited (N/A)$1.60$1.2612/31/202226.98%40.37%
ATVI01/18/2022Microsoft Corporation (MSFT)$95.00$75.606/30/202325.66%22.04%
ZNGA01/10/2022Take-Two Interactive Software, Inc. (TTWO)$9.86$8.2706/30/202219.23%116.96%
CHNG01/06/2021UnitedHealth Group Incorporated (UNH)$27.75$23.5612/31/202217.78%26.60%
TEN02/23/2022Apollo Global Management, Inc. (APO)$20.00$17.1712/31/202216.48%24.66%
WLL03/07/2022Oasis Petroleum Inc. (OAS)$82.85$73.0512/31/202213.41%20.06%
BRG12/20/2021Blackstone Real Estate (N/A)$29.85$26.6106/30/202212.18%74.07%
MILE11/08/2021Lemonade (LMND)$1.10$0.981406/30/202211.80%71.80%
FHN02/28/2022The Toronto-Dominion Bank (TD)$25.00$22.3811/27/202211.71%20.35%
MBII03/16/2022Bioceres Crop Solutions Corp. (BIOX)$1.28$1.1609/30/202210.76%25.83%

List of all pending deals:

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

Target VolumeEstimated
Closing Date
+BLCT4/30/22Multelements Limited (N/A)All Cash$60 M$1.60$1.2664,07512/31/2226.98%40.53%
+ATVI1/18/22Microsoft Corporation (MSFT)All Cash$68.7 B$95.00$75.68,450,4246/30/2325.66%22.09%
+TMX12/14/21Rentokil Initial plc (RTOKY)Special Conditions$6.7 B$55.00$45.89701,33012/31/2219.85%29.82%
+ZNGA1/10/22Take-Two Interactive Software, Inc. (TTWO)Special Conditions$12.7 B$9.86$8.2718,312,4806/30/2219.23%118.94%
+CHNG1/06/21UnitedHealth Group Incorporated (UNH)All Cash$13.28 B$27.75$23.561,096,05612/31/2217.78%26.71%
+TEN2/23/22Apollo Global Management, Inc. (APO)All Cash$7.1 B$20.00$17.171,624,83012/31/2216.48%24.76%
+WLL3/07/22Oasis Petroleum Inc. (OAS)Cash Plus Stock$2.82 B$82.85$73.05196,88312/31/2213.41%20.15%
+BRG12/20/21Blackstone Real Estate (N/A)Special Conditions$3.6 B$29.85$26.61118,8066/30/2212.18%75.33%
+MILE11/08/21Lemonade (LMND)All Stock$201.47 M$1.10$0.9814670,5996/30/2211.80%73.02%
+FHN2/28/22The Toronto-Dominion Bank (TD)Special Conditions$13.4 B$25.00$22.386,317,14111/27/2211.71%20.45%
+MBII3/16/22Bioceres Crop Solutions Corp. (BIOX)All Stock$236 M$1.28$1.164,149,5279/30/2210.76%26.01%
+TWTR4/25/22Elon Musk (N/A)All Cash$44 B$54.20$49.0237,793,47312/31/2210.57%15.87%
+TSEM2/15/22Intel Corporation (INTC)All Cash$5.4 B$53.00$48.3890,7372/15/239.73%12.29%
+TGNA2/22/22Standard General L.P. (N/A)Special Conditions$8.6 B$24.00$22.052,010,74812/31/228.84%13.28%
+SJR3/15/21Rogers Communications Inc. (RCI)Special Conditions$26 B$32.40$29.78339,6396/30/228.80%54.43%
+MGI2/15/22Madison Dearborn Partners, LLC (N/A)All Cash$1.8 B$11.00$10.131,650,32512/31/228.59%12.90%
+PNM10/21/20Avangrid, Inc. (AGR)All Cash$8.05 B$50.30$46.66623,2576/30/227.80%48.26%
+SAFM8/09/21Cargill and Continental Grain Company (N/A)All Cash$4.49 B$203.00$189.37250,4076/30/227.20%44.53%
+NPTN11/04/21Lumentum Holdings Inc. (LITE)All Cash$745.24 M$16.00$15.14414,75212/31/225.68%8.53%
+ATC7/01/21MKS Instruments, Inc. (MKSI)Cash Plus Stock$6.5 B$22.49$21.3390,8699/30/225.59%13.52%
+SJI2/24/22Infrastructure Investments Fund (N/A)All Cash$8.1 B$36.00$34.192,147,21912/31/225.29%7.95%
+VG11/22/21Ericsson (ERIC)All Cash$6.2 B$21.00$19.962,526,0316/30/225.21%32.23%
+FBC4/26/21New York Community Bancorp, Inc. (NYCB)All Stock$2.6 B$37.10$35.3691,35410/31/225.10%10.22%
+HTA2/28/22Healthcare Realty Trust Incorporated (HR)Cash Plus Stock$10.74 B$31.90$30.462,168,0349/30/224.73%11.43%
+MNDT3/08/22Alphabet Inc. (GOOG)All Cash$5.4 B$23.00$21.983,005,85212/31/224.64%6.97%
+NLSN3/29/22Evergreen Coast Capital Corporation (N/A)All Cash$16 B$28.00$26.812,634,61912/31/224.44%6.67%
+CTXS1/31/22Vista Equity Partners and Elliott Investment Management LP (N/A)All Cash$16.5 B$104.00$100.11,090,1486/30/223.90%24.10%
+EXTN1/24/22Enerflex Ltd. (EFX.TO)All Stock$735 M$7.02$6.79204,2729/30/223.46%8.35%
+GTYH4/29/22GI Partners (N/A)All Cash$383.29 M$6.30$6.0918,386,4799/30/223.45%8.34%
+XENT8/06/21Medtronic plc (MDT)All Cash$1.1 billion$28.25$27.37838,0064/30/223.22%0.00%
+COHR3/25/21II-VI Incorporated (IIVI)Cash Plus Stock$6.84 B$275.70$267.9220,6265/31/222.91%36.65%
+RNDB3/28/22Hometown Financial Group, Inc. (N/A)All Cash$146.5 M$27.00$26.3411,71712/31/222.51%3.76%
+LHCG3/28/22Optum (N/A)All Cash$6.2 B$170.00$165.85616,72912/31/222.50%3.76%
+CCMP12/15/21Entegris, Inc. (ENTG)Cash Plus Stock$6.5 B$183.19$178.91223,33112/31/222.39%3.60%
+ROG11/02/21DuPont de Nemours, Inc. (DD)All Cash$5.2 B$277.00$270.72133,2006/30/222.32%14.35%
+MSP4/11/22Kaseya (N/A)All Cash$6.2 B$35.50$34.7889,10512/31/222.31%3.46%
+SAIL4/11/22Thoma Bravo (N/A)All Cash$6.9 B$65.25$63.836,238,80012/31/222.22%3.34%
+CDR3/02/22Wheeler Real Estate Investment Trust, Inc. (WHLR)All Cash$291.3 M$29.00$28.38624,0016/30/222.18%13.52%
+GCP12/06/21Saint-Gobain (N/A)All Cash$2.3 B$32.00$31.37802,85412/31/222.01%3.02%
+BKEP4/22/22Ergon, Inc. (N/A)All Cash$199.72 M$4.65$4.56792,7066/30/221.97%12.21%
+MTOR2/22/22Cummins Inc. (CMI)All Cash$3.7 B$36.50$35.91602,71012/31/221.64%2.47%
+WBT7/14/21Ali Holding S.r.l. (N/A)All Cash$4.8 B$24.00$23.622,704,9616/30/221.61%9.95%
+PLAN3/20/22Thoma Bravo (N/A)All Cash$10.7 B$66.00$64.994,478,1566/30/221.55%9.61%
+PBIP3/02/22Fulton Financial Corporation (FULT)Cash Plus Stock$142.1 M$15.75$15.529,2979/30/221.46%3.53%
+CERN12/20/21Oracle Corporation (ORCL)All Cash$28.4 B$95.00$93.642,924,09512/31/221.45%2.18%
+Y3/21/22Berkshire Hathaway (BRK.A)All Cash$11.6 B$848.02$836.5151,79312/31/221.38%2.07%
+SUMR3/16/22Kids2, Inc. (N/A)All Cash$97.44 M$12.00$11.843,8706/30/221.35%8.36%
+ACC4/19/22Blackstone (BX)All Cash$12.8 B$65.47$64.676,758,9539/30/221.24%2.99%
+CMPI4/19/22Regeneron Pharmaceuticals, Inc. (REGN)All Cash$250 M$10.50$10.38374,7866/30/221.16%7.15%
+TVTY4/05/22Stone Point Capital (N/A)All Cash$2 B$32.50$32.13833,6829/30/221.15%2.78%
+UMPQ10/12/21Columbia Banking System, Inc. (COLB)All Stock$4.5 B$16.73$16.541,334,0456/30/221.15%7.11%
+CNR3/07/22Clayton, Dubilier & Rice (N/A)All Cash$5.8 B$24.65$24.391,536,2629/30/221.07%2.58%
+IIN2/28/22Altaris Capital Partners, LLC (N/A)All Cash$183.22 M$24.25$24.0168,6296/30/221.00%6.18%
+AZPN10/11/21Emerson Electric Co. (EMR)Special Conditions$12.34 B$160.00$158.54301,2236/30/220.92%5.70%
+SRRA4/13/22GlaxoSmithKline plc (GSK)All Cash$1.1 B$55.00$54.51381,7699/30/220.90%2.17%
+CDK4/07/22Brookfield Business Partners (N/A)All Cash$8.3 B$54.87$54.411,915,1179/30/220.85%2.04%
+OCDX12/23/21Quidel Corporation (QDEL)Cash Plus Stock$8.33 B$17.76$17.61770,9696/30/220.83%5.11%
+TUFN4/06/22Turn/River Capital (N/A)All Cash$570 M$13.00$12.91,387,4446/30/220.78%4.80%
+ANAT8/09/21Brookfield Asset Management Reinsurance Partners Ltd. (BAMR)All Cash$5.1 B$190.00$188.6152,7466/30/220.74%4.56%
+REGI2/28/22Chevron Corporation (CVX)All Cash$2.75 B$61.50$61.061,722,57812/31/220.72%1.08%
+NTUS4/18/22ArchiMed (N/A)All Cash$1.2 B$33.50$33.27417,4869/30/220.69%1.67%
+EPAY12/17/21Thoma Bravo (N/A)All Cash$2.6 B$57.00$56.62534,6076/30/220.67%4.15%
+ATRS4/13/22Halozyme Therapeutics, Inc. (HALO)All Cash$960 M$5.60$5.5655,243,1116/30/220.63%3.89%
+MN4/01/22Callodine (N/A)All Cash$137.1 M$12.85$12.77201,5009/30/220.63%1.51%
+TSC10/20/21Raymond James Financial, Inc. (RJF)Cash Plus Stock$1.1 B$30.37$30.21127,4346/30/220.51%3.17%
+APTS2/16/22Blackstone Real Estate Income Trust, Inc. (N/A)All Cash$5.8 B$25.00$24.881,056,3336/30/220.48%2.98%
+MIME12/07/21Permira (N/A)All Cash$5.8 B$80.00$79.68820,3616/30/220.40%2.48%
+POLY3/28/22HP Inc. (HPQ)All Cash$3.3 B$40.00$39.861,122,49012/31/220.35%0.53%
+JOBS6/21/21Garnet Faith Limited (N/A)All Cash$3.63 B$61.00$60.85981,2526/30/220.25%1.53%
+ESBK10/04/21Community Bank System, Inc. (CBU)All Cash$82.8 M$23.10$23.053793/31/220.22%0.00%
+HBP3/21/22Woodgrain Inc. (N/A)All Cash$350 M$10.70$10.68897,9276/30/220.19%1.16%
+PSB4/25/22Blackstone (BX)All Cash$7.6 B$187.50$187.2544,1489/30/220.16%0.39%
+VWTR4/14/22D.R. Horton, Inc. (DHI)All Cash$260 M$15.75$15.74254,5796/30/220.06%0.39%
+ECOL2/09/22Republic Services, Inc. (RSG)All Cash$2.2 B$48.00$47.991,034,1956/30/220.02%0.13%
+NSEC1/26/22VR Insurance Holdings, Inc. (N/A)All Cash$41.4 M$16.35$16.354266/30/220.00%0.00%
+GNOG8/09/21DraftKings Inc. (DKNG)All Stock$1.52 B$4.99$5.01470,0985/31/22-0.34%-4.22%
+ABTX11/10/21CBTX, Inc. (CBTX)All Stock$1.5 B$40.45$40.8659,3986/30/22-1.00%-6.17%
+NP3/28/22Schweitzer-Mauduit International, Inc. (SWM)All Stock$1.18 B$34.17$35.464,27012/31/22-3.48%-5.23%
+SAVE2/07/22Frontier Group Holdings, Inc. (ULCC)Cash Plus Stock$6.6 B$22.42$23.611,678,11412/31/22-5.03%-7.55%
+PTRS11/04/21OceanFirst Financial Corp. (OCFC)All Stock$186 M$8.45$8.945,1866/30/22-5.47%-33.84%
+EMCF3/24/22Farmers National Banc Corp. (FMNB)All Stock$105 M$32.94$35.651,42712/31/22-7.61%-11.43%


SPAC activity picked up a little last week with three new SPAC IPOs filed and five business combinations announced. As companies have started filing their first quarter earnings, we can see a change in the spreads for some deals. Multiple deals received required shareholder approvals last week. There was a significant change in the spread for the Zynga (ZNGA) – Take Two Interactive (TTWO) deal last week, probably caused by reports regarding the videogame industry sales that slipped year-over-year for a fifth straight month in March.

Disclaimer: I have long positions in Twitter (TWTR), First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). 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.