Merger Arbitrage Mondays – CVS Health To Acquire Signify Health
Merger activity increased last week with four new deals announced and one deal completed.
Signify Health (SGFY) is a healthcare platform that combines analytics, technology, and healthcare provider networks across the nation to create value-based payment programs. The company was founded in 2017 and is headquartered in Dallas, Texas.
We added Signify Health (SGFY) as a potential deal in the works on August 2, 2022, when The Wall Street Journal reported that the company was working with bankers to explore strategic alternatives including a sale. Amazon (AMZN) was among the bidders for Siginify. On September 2, 2022, Reuters reported that CVS Health Corp (CVS) was in advanced talks to buy Signify Health for about $8 billion. On September 5, 2022, CVS Health entered into an agreement to acquire Signify Health for $30.50 per share in cash, representing a total transaction value of approximately $8 billion.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.
Merger Arbitrage
Deal Statistics:
| Total Number of Deals Closed in 2022 | 131 |
| Total Number of Deals Not Completed in 2022 | 5 |
| Total Number of Pending Deals |
| Cash Deals | 58 |
| Stock Deals | 20 |
| Stock & Cash Deals | 3 |
| Special Conditions | 9 |
| Total Number of Pending Deals | 90 |
| Aggregate Deal Consideration | $1.06 trillion |
New Deals:
- The acquisition of Signify Health (SGFY) by CVS Health Corporation (CVS) for $8 billion or $30.50 per share in cash. Deal is expected to close in the first half of 2023. We added SGFY as a potential deal to the Deals in the Works section on August 2, 2022 and the price after the news of the potential deal came out was $18.31.
- The acquisition of Turquoise Hill Resources (TRQ) by Rio Tinto (RIO) for $5.63 billion. Rio Tinto will acquire the approximately 49% of common shares of Turquoise Hill that it does not currently own for C$43 per share in cash or USD$32.73. Deal is expected to close in the fourth quarter of 2022. We added TRQ as a potential deal to the Deals in the Works section on March 14, 2022 and the price after the news of the potential deal came out was $26.55.
- The acquisition of ChannelAdvisor Corporation (ECOM) by CommerceHub for $596.19 million or $23.10 per share in cash. Deal is expected to close in 2022.
- The combination of Brigham Minerals (MNRL) and Sitio Royalties Corp. (STR) in an all-stock merger, with an enterprise value of approximately $4.8 billion. Brigham shareholders will receive 1.133 shares in the combined company for each share of Brigham owned on the closing date, and Sitio’s shareholders will receive one share of common stock in the combined company for each share of Sitio owned on the closing date. Deal is expected to close in the first quarter of 2023. We added MNRL as a potential deal to the Deals in the Works section on August 3, 2022 and the price after the news of the potential deal came out was $26.83.
Deal Updates:
- September 7, 2022: According to Bloomberg, a group of banks kicked off a roughly $4.5 billion leveraged loan sale on Wednesday to help support the buyout of Citrix Systems (CTXS) in a closely-watched transaction that will reveal just how willing investors are to buy risky corporate debt.
- On September 9, 2022, Tenneco (TEN) rose after a report that Apollo Global (APO) plans to file its planned purchase with the European Commission imminently.
Approvals
- Infrastructure and Energy Alternatives (IEA) – MasTec (MTZ) deal clears HSR (Press Release)
- Citrix Systems (CTXS) – received all regulatory approvals (Press Release)
- ManTech International Corporation (MANT) – received stockholders approval (Press Release)
- Hemisphere Media Group (HMTV) – received stockholders approval (Press Release)
Hurdles
- September 7, 2022: Canada’s competition watchdog said that the sale of Shaw Communications (SJR) unit Freedom mobile to Quebecor was not enough to eliminate antitrust concerns with the proposed purchase of Shaw by Rogers Communications (RCI).
- September 7, 2022: The Delaware judge steering the lawsuit over Twitter (TWTR) and Elon Musk’s stalled takeover denied Mr. Musk’s request to push back a trial over the deal in Delaware Chancery Court to November from October 17. She did grant Mr. Musk the ability to amend his countersuit to incorporate allegations from a whistleblower complaint by the company’s former head of security.
- The Australian Competition & Consumer Commission delayed its decision on Microsoft’s (MSFT) planned purchase of Activision (ATVI).
- Change Healthcare (CHNG) rose in regular trading amid closing arguments in the Dept. of Justice’s lawsuit to block UnitedHealth’s (UNH) planned purchase. (Seeking Alpha)
- On September 9, 2022, Turquoise Hill Resources (TRQ) holder Pentwater Capital said it doesn’t support Rio Tinto’s (RIO) C$43/share planned acquisition of the miner and that it “significantly undervalues” the common shares.
Shareholders Meeting Schedule
- CatchMark Timber Trust (CTT) – September 13, 2022
- Tyme Technologies (TYME) – September 15, 2022
- 1Life Healthcare (ONEM) – September 22, 2022
- IronSource (IS) pushes back shareholder vote – October 7, 2022
- Meridian Bioscience (VIVO) – October 10, 2022
Closed Deals:
- The acquisition of Alexco Resource (AXU) by Hecla Mining Company (HL) on September 7, 2022. It took 64 days for this deal to be completed.
Weekly Spread Changes:
The table below shows weekly spread changes between September 2, 2022, and September 9, 2022.
| Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
| SRLP | 19.85 | Hartree Partners, LP (N/A) | | 0.76% | -4.52% | 5.28% | All Cash |
| LOTZ | 0.3988 | Shift Technologies, Inc. (SFT) | 0.848 | 47.18% | 42.39% | 4.79% | All Stock |
| EXTN | 5.01 | Enerflex Ltd. (EFX.TO) | 6.9 | 7.97% | 3.36% | 4.61% | All Stock |
| FSTX | 6.49 | invoX Pharma (N/A) | | 9.71% | 6.11% | 3.60% | All Cash |
| TYME | 0.2449 | Syros Pharmaceuticals, Inc. (SYRS) | 0.69 | 21.49% | 18.28% | 3.21% | All Stock |
| SIMO | 73.94 | MaxLinear, Inc. (MXL) | 37.89 | 46.39% | 50.94% | -4.55% | Cash Plus Stock |
| TEN | 19.48 | Apollo Global Management, Inc. (APO) | 58.11 | 2.67% | 7.35% | -4.68% | All Cash |
| IS | 4.11 | Unity (U) | 41.3 | 9.43% | 15.68% | -6.25% | All Stock |
| SJR | 26.44 | Rogers Communications Inc. (RCI) | 41.87 | 17.61% | 25.19% | -7.58% | Special Conditions |
| TWTR | 42.19 | Elon Musk (N/A) | | 28.47% | 40.31% | -11.84% | All Cash |
Top 10 deals with the 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.
Closing
Price |
|---|
| SAVE | 07/28/2022 | JetBlue Airways Corporation (JBLU) | $33.50 | $22.56 | 06/30/2024 | 48.49% | 26.90% |
| LOTZ | 08/09/2022 | Shift Technologies, Inc. (SFT) | $0.59 | $0.3988 | 12/31/2022 | 47.18% | 155.14% |
| SIMO | 05/05/2022 | MaxLinear, Inc. (MXL) | $108.24 | $73.94 | 06/30/2023 | 46.39% | 57.99% |
| TWTR | 04/25/2022 | Elon Musk (N/A) | $54.20 | $42.19 | 12/31/2022 | 28.47% | 93.61% |
| BKI | 05/04/2022 | Intercontinental Exchange, Inc. (ICE) | $85.00 | $67.74 | 06/30/2023 | 25.48% | 31.85% |
| MITO | 08/01/2022 | Stealth Parent Limited (N/A) | $0.38 | $0.3125 | 11/30/2022 | 21.60% | 98.55% |
| TYME | 07/05/2022 | Syros Pharmaceuticals, Inc. (SYRS) | $0.30 | $0.2449 | 12/31/2022 | 21.49% | 70.66% |
| ATVI | 01/18/2022 | Microsoft Corporation (MSFT) | $95.00 | $78.51 | 06/30/2023 | 21.00% | 26.25% |
| VMW | 05/26/2022 | Broadcom Inc. (AVGO) | $142.50 | $118.12 | 04/30/2023 | 20.64% | 32.61% |
| SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $31.09 | $26.44 | 09/30/2022 | 17.59% | 337.98% |
Deals In The Works
Last week, four new potential deals were added to the ‘Deals In The Works‘ section.
- On September 8, 2022, The Very Good Food Company (VGFC) initiated a process to evaluate potential strategic alternatives to maximize shareholder value, which could include the acquisition by, or a merger with, an industry partner involving all or part of VERY GOOD’s business or assets.
- On September 8, 2022, SPAR Group (SGRP) initiated a process to evaluate potential strategic alternatives to maximize shareholder value.
- On September 8, 2022, Digital Media Solutions (DMS) received an offer from Prism Data to acquire all of the outstanding stock of DMS for $2.50 per share in cash.
- On September 9, 2022, 111 Inc. (YI) received an unsolicited preliminary non-binding proposal letter jointly submitted by Dr. Gang Yu, co-founder and co-chairman of the company, Junling Liu, cofounder, co-chairman and chief executive officer of the company and Shanghai Guosheng Capital Management, proposing to acquire the company in a going-private transaction at a proposed purchase price of US$1.83 per Class A Share or US$3.66 per ADS in cash.
Updates
- On September 6, 2022, Albright Capital Management, a large minority shareholder in Atlas Corporation (ATCO), announced that it will vote no on the $14.45 per share unsolicited offer from a Consortium of ATCO insiders and ONE.
- On September 8, 2022, PlayAGS (AGS) turned down the acquisition bid from Inspired Entertainment (INSE).
SPAC Arbitrage
There was one new SPAC IPO filed and three new SPAC combinations announced last week. You can find new SPAC IPO announcements in our SPACs tool here.
- On September 9, 2022, EF Hutton Acquisition Corporation I priced its initial public offering of 10,000,000 units at $10.00 per unit.
New Business Combinations
- On September 6, 2022, Minority Equality Opportunities Acquisition (MEOA) signed a definitive business combination agreement to merge with Digerati Technologies (DTGI), a Hispanic-led and founded provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the small to medium-sized business market.
- On September 7, 2022, Pono Capital (PONO) announced the execution of a definitive Agreement and Plan of Merger with AERWINS Technologies.
- On September 9, 2022, DLQ, a provider of digital consumer acquisition solutions, and a wholly-owned subsidiary of Logiq (LGIQ), entered into a definitive merger agreement for a business combination whereby it will merge with Abri Merger Sub a wholly owned subsidiary of Abri SPAC I (ASPA).
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 CVS Health (CVS), Atlas Air Worldwide (AAWW), Biohaven Pharmaceutical (BHVN), Twitter (TWTR), First Horizon (FHN), Tower Semiconductor (TSEM), 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.
