Merger Arbitrage Mondays – M&A Highlights H1 2022

Merger activity decreased significantly last week with one new deal announced and seven deals completed.

There were fourteen deals announced in the month of June worth over $53 billion. The two largest deals announced were the acquisition of Duke Realty Corporation (DRE) by Prologis (PLD) for $26 billion and the acquisition of Zendesk (ZEN) by Permira and Hellman & Friedman for $10.2 billion.

M&A Highlights H1 2022

M&A activity increased significantly in the first half of 2022, with a 23.22% increase in deal volume compared to the $429.05 billion worth of deals announced in the first half of 2021 and a 225.69% increase in deal volume compared to the $162.33 billion worth of deals announced in the first half of 2022.

There were 98 deals worth almost $529 billion announced in the first half of 2022. The three largest deals announced in the first half of 2022 were the acquisition of VMware (VMW) by Broadcom (AVGO) for $69 billion, the acquisition of Activision Blizzard (ATVI) by Microsoft Corporation (MSFT) for $68.7 billion and the acquisition of Twitter (TWTR) by Elon Musk for $44 billion. Each of these currently trade at large spreads on account of regulatory concerns for ATVI and VMW and performance/financing concerns in the case of TWTR. 

93 deals were completed successfully in the first half of 2022. Some of the multi-billion dollar deals that were completed, include the merger of IHS Markit (INFO) and S&P Global (SPGI) for $44 billion, the acquisition of Xilinx (XLNX) by Advanced Micro Devices (AMD), the acquisition of Cerner Corporation (CERN) by Oracle Corporation (ORCL) and the acquisition of Nuance Communications (NUAN) by Microsoft (MSFT).

Some of the multi-billion dollar deals that were announced and completed in the first half of 2022 include the acquisition of Zynga (ZNGA) by Take-Two Interactive Software (TTWO) for $12.7 billion, the acquisition of Anaplan (PLAN) by Thoma Bravo for $10.7 billion, the acquisition of Datto Holding (MSP) by Kaseya for $6.2 billion and the acquisition of Preferred Apartment Communities (APTS) by Blackstone Real Estate Income Trust for $5.8 billion.

Additionally, there were 92 potential deals in the works announced in the first half of 2022 and 21 of these were successful. This is lower than what we have seen in the past and it is possible that more of them will come to fruition in the coming months.

Multiple deals went through bidding wars in H1 2022. The most significant one that is still ongoing is the acquisition Spirit Airlines (SAVE) by Frontier Group Holdings (ULCC). The latest update regarding this deal is  Spirit Airlines (SAVE) announcing that it intends to open and immediately adjourn its special meeting of stockholders, to allow the Spirit Board of Directors to continue discussions with Frontier and JetBlue Airways Corporation (JBLU).

There was a significant increase in spreads in H1 2022 due to adverse market conditions. Three deals were terminated in the first half of 2022. In comparison, four deals were terminated in H1 2021 and eleven deals terminated in H1 2020.

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

Deals In The Works

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

SPAC Arbitrage

There was one new SPAC combination announced last week. You can find new SPAC IPO announcements in our SPACs tool here.

  1. On June 29, 2022, Royalty Management and American Acquisition Opportunity (AMAOentered into a definitive agreement that will result in RMC becoming a publicly listed company.

Terminated

  1. On June 30, 2022, USHG Acquisition Corp. (HUGS) and Panera Brands announced that, due to deteriorating capital market conditions, the parties have decided not to extend their previously announced agreement.
  2. On July 1, 2022, North Atlantic Acquisition Corporation (NAAC) announced that its business combination agreement with TeleSign has terminated, effective immediately.

Weekly Spread Changes:

The table below shows weekly spread changes between June 24 and July 1, 2022.

Symbol Quote Acquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
EXTN 3.89 Enerflex Ltd. (EFX.TO) 6.07 23.67% 8.75% 14.92% All Stock
CTEK 1.18 Clearwater Compliance LLC (N/A) 5.93% -1.57% 7.50% All Cash
SAVE 24.55 Frontier Group Holdings, Inc. (ULCC) 10.17 -3.95% -9.10% 5.15% Cash Plus Stock
TWTR 38.23 Elon Musk (N/A) 41.77% 37.53% 4.24% All Cash
VMW 114.06 Broadcom Inc. (AVGO) 477.84 24.93% 20.80% 4.13% Special Conditions
MILE 0.9212 Lemonade (LMND) 18.73 6.95% 11.58% -4.63% All Stock
TEN 17.45 Apollo Global Management, Inc. (APO) 49.26 14.61% 19.76% -5.15% All Cash
MBII 1.03 Bioceres Crop Solutions Corp. (BIOX) 12.76 9.02% 16.73% -7.71% All Stock
VG 19.08 Ericsson (ERIC) 7.43 10.06% 18.78% -8.72% All Cash
HMTV 7.7 Gato Investments LP (N/A) -9.09% 2.64% -11.73% All Cash

Deal Statistics:

Total Number of Deals Closed in 2022 93
Total Number of Deals Not Completed in 2022 4
Total Number of Pending Deals
Cash Deals 55
Stock Deals 18
Stock & Cash Deals 5
Special Conditions 9
Total Number of Pending Deals 87
Aggregate Deal Consideration $973.63 billion

New Deals:

  1. The acquisition of Epizyme (EPZM) by Ipsen for $247 million or $1.45 per share in cash plus one contingent value right (CVR) per share.

Deal Updates:

  1. On June 27, 2022, Hemisphere Media Group (HMTVdisclosed that it received offers above the $7/share deal it agreed to with Searchlight Capital Partners early last month. HMTV received a takeover offer for $9 per share on June 3, 2022 from undisclosed Company E and it received an offer of $8 per share from undisclosed Company F on June 7, 2022.
  2. On June 27, 2022, Farmers National Banc Corp. (FMNB) and Emclaire Financial (EMCF), jointly announced an election deadline of July 19, 2022 for shareholders of Emclaire to elect the form of consideration they wish to receive for their shares of Emclaire common stock in connection with the proposed merge of Emclaire with and into FMNB Merger.
  3. On June 27, 2022, JetBlue Airways (JBLU) continued its fight to acquire Spirit Airlines (SAVE), raising its all-cash bid yet again in response to an increased offer by Frontier Group Holdings (ULCC). The new proposal includes an accelerated prepayment of $2.50 a share, structured as a cash dividend to Spirit shareholders after approval of the terms, JetBlue said Monday in a statement. That’s up from $1.50 a share in a prior offer. JetBlue also increased its breakup fee to $400 million from $350 million, to be paid if antitrust regulators block the combination. The revised bid includes a so-called ticking fee mechanism as well, which could boost the overall value of the offer to $34.15 a share, or $3.7 billion.
  4. On June 27, 2022, Points.com (PCOM) announced that it has obtained final approval from the Ontario Superior Court of Justice of the previously-announced plan of arrangement under section 192 of the Canada Business Corporations Act, pursuant to which Plusgrade will acquire all of the issued and outstanding common shares of Points.
  5. On June 28, 2022, Ericsson (ERIC) and Vonage (VG) reported that the closing of the merger remains subject to CFIUS Clearance. All other requisite foreign and U.S. regulatory requirements for the Closing, including as relates to the Hart-Scott-Rodino (HSR) Act, have been satisfied. The companies expect the deal to close by the end of July 2022.
  6. On June 28, 2022, II-VI Incorporated (IIVIreceived approval from China’s antitrust regulator for its planned purchase of Coherent (COHR).
  7. On June 28, 2022, MaxLinear (MXLannounced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the previously announced agreement under which MaxLinear will acquire Silicon Motion Technology Corporation (SIMO) in a cash and stock transaction.
  8. On June 28, 2022, Spirit Airlines (SAVE) reiterated recommendation that stockholders vote FOR the merger agreement with Frontier (ULCC). Spirit also stated that JetBlue’s (JBLU) latest offer does not address serious regulatory concerns or deliver greater value.
  9. On June 28, 2022, Biohaven Pharmaceutical Holding Company (BHVN) announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to Biohaven’s pending transaction with Pfizer (PFE). In addition to antitrust approval in the United States, the merger was cleared by the German Federal Cartel Office on June 13, 2022 and was cleared by the Austrian Federal Competition Authority on June 23, 2022. On June 24, 2022, in response to a briefing paper filed by Pfizer on May 20, 2022, the UK Competition & Markets Authority confirmed that no further information is required on the Merger.
  10. On June 28, 2022, shareholders of Whiting Petroleum Corporation (WLLapproved the company’s merger with Oasis Petroleum (OAS) at a special meeting of shareholders.
  11. On June 29, 2022, CynergisTek (CTEK) announced the expiration of the Excluded Party “go-shop” period set forth in the previously announced merger agreement with Clearwater Compliance.
  12. On June 29, 2022, Spirit Airlines (SAVE) announced that it intends to open and immediately adjourn its Special Meeting of Stockholders relating to the proposed merger agreement with Frontier Group Holdings (ULCC), to allow the Spirit Board of Directors to continue discussions with Frontier and JetBlue Airways Corporation (JBLU). The company intends to reconvene the Special Meeting on July 8, 2022.
  13. On June 29, 2022, shareholders of Sierra Oncology (SRRAapproved the company’s merger with GlaxoSmithKline (GSK) at a special meeting of shareholders.
  14. On June 29, 2022, shareholders of Neenah (NPapproved the company’s merger with Schweitzer-Mauduit International (SWM) at a special meeting of shareholders.
  15. On June 30, 2022, SailPoint Technologies Holdings (SAIL) announced that its stockholders voted to approve SailPoint’s pending acquisition by Thoma Bravo.
  16. On June 30, 2022, GTY Technology Holdings (GTYH) announced that its stockholders voted to approve GTY Technology’s pending acquisition by GI Partners.
  17. On June 30, 2022, The shareholders of Randolph Bancorp (RNDBapproved the proposed merger of Randolph Bancorp and Hometown Financial Group.

Closed Deals:

  1. The acquisition of Tivity Health (TVTY) by Stone Point Capital on June 28, 2022. It took 84 days for this deal to be completed.
  2. The acquisition of Points.com (PCOM) by Plusgrade Parent on June 30, 2022. It took 52 days for this deal to be completed.
  3. The acquisition of Prudential Bancorp (PBIP) by Fulton Financial Corporation (FULT) on June 30, 2022. It took 120 days for this deal to be completed.
  4. The acquisition of The National Security Group (NSEC) by VR Insurance Holdings on June 30, 2022.  It took 155 days for this deal to be completed.
  5. The acquisition of Coherent (COHR) by II-VI Incorporated (IIVI) on July 1, 2022. It took 463 days for this deal to be completed.
  6. The acquisition of Sierra Oncology (SRRA) by GlaxoSmithKline (GSK) on July 1, 2022. It took 79 days for this deal to be completed.
  7. The acquisition of Whiting Petroleum Corporation (WLL) by Oasis Petroleum (OAS) on July 1, 2022. It took 116 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.

Symbol Announced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
Profit Annualized
Profit
TWTR 04/25/2022 Elon Musk (N/A) $54.20 $38.23 12/31/2022 41.77% 84.24%
SIMO 05/05/2022 MaxLinear, Inc. (MXL) $105.81 $81.95 06/30/2023 29.11% 29.35%
BKI 05/04/2022 Intercontinental Exchange, Inc. (ICE) $85.00 $66.18 06/30/2023 28.44% 28.67%
VMW 05/26/2022 Broadcom Inc. (AVGO) $142.50 $114.06 04/30/2023 24.93% 30.24%
EXTN 01/24/2022 Enerflex Ltd. (EFX.TO) $4.81 $3.89 09/30/2022 23.67% 97.05%
ATVI 01/18/2022 Microsoft Corporation (MSFT) $95.00 $78.57 06/30/2023 20.91% 21.08%
NLSN 03/29/2022 Evergreen Coast Capital Corporation (N/A) $28.00 $23.62 12/31/2022 18.54% 37.39%
AUY 05/31/2022 Gold Fields Limited (GFI) $5.62 $4.76 12/31/2022 18.11% 36.52%
CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $27.75 $23.72 12/31/2022 16.99% 34.26%
TSEM 02/15/2022 Intel Corporation (INTC) $53.00 $45.71 02/15/2023 15.95% 25.64%

List of all pending deals:

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

Disclaimer: I have long positions in Biohaven Pharmaceutical (BHVN), 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.

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