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Top 10 deals with the largest spreads:
Merger activity decreased last week with one new deal announced and seven deals completed.
STORE Capital Corporation (STOR)
Founded in 2011 and headquartered in Scottsdale, Arizona, STORE Capital is an internally managed net-lease REIT that acquires, invests, and manages Single Tenant Operational Real Estate. 80% of the company’s acquisitions are accounted for by companies in sale/leaseback transactions. STORE Capital primarily invests in properties that are subject to long-term NNN Leases. In a ‘triple net lease’, the three most common expenses charged back to the tenant or lessee include property taxes, insurance, and maintenance, often called the “three nets”.
Approximately 94% of the company’s portfolio is represented by commercial real estate properties, subject to long-term leases, and 6% is represented by mortgage loans and financing receivables on commercial real estate properties.
Berkshire Hathaway owned 9% of STORE Capital’s stock as of February 2021. The company reduced its ownership in the company from 9% to 5.26% during Q2 2022.
On September 15, 2022, STORE Capital entered into a definitive agreement to be acquired by GIC, a global institutional investor in partnership with Oak Street, a Division of Blue Owl, one of the largest net lease investors, in an all-cash transaction valued at approximately $14 billion. Under the terms of the definitive merger agreement, STORE Capital stockholders will receive $32.25 per share in cash, representing a premium of 20.4% to the company’s closing stock price as of September 14, 2022. Using the mid-point of STORE’s adjusted funds from operations (AFFO) guidance for 2022, GIC and Oak Street are paying 14.27 times AFFO for the company.
The deal is expected to be completed in the first quarter of 2023 and includes a 30-day “go-shop” period that will expire on October 15, 2022. STORE Capital will pay a dividend in the third quarter but will suspend its dividend thereafter. The company’s second quarter dividend was $0.39 per share and the ex-dividend date was June 29, 2022.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.
Deal Statistics:
| Total Number of Deals Closed in 2022 | 138 |
| Total Number of Deals Not Completed in 2022 | 5 |
| Total Number of Pending Deals | |
| Cash Deals | 54 |
| Stock Deals | 18 |
| Stock & Cash Deals | 3 |
| Special Conditions | 9 |
| Total Number of Pending Deals | 84 |
| Aggregate Deal Consideration | $1.07 trillion |
New Deals:
Deal Updates:
Approvals
Hurdles
Shareholders Meeting Schedule
Closed Deals:
Weekly Spread Changes:
The table below shows weekly spread changes between September 9, 2022, and September 16, 2022.
| Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
|---|---|---|---|---|---|---|---|
| RMO | 0.5301 | Nikola Corporation (NKLA) | 5.12 | 14.55% | 2.03% | 12.52% | All Stock |
| FSTX | 5.97 | invoX Pharma (N/A) | 19.26% | 9.71% | 9.55% | All Cash | |
| SIMO | 69.96 | MaxLinear, Inc. (MXL) | 34.53 | 52.86% | 46.39% | 6.47% | Cash Plus Stock |
| VMW | 112.44 | Broadcom Inc. (AVGO) | 502.5 | 26.73% | 20.64% | 6.09% | Special Conditions |
| ATVI | 76.02 | Microsoft Corporation (MSFT) | 244.74 | 24.97% | 21.00% | 3.97% | All Cash |
| ELSE | 5.65 | Mobile X Global, Inc. (N/A) | -14.51% | -12.18% | -2.33% | All Cash | |
| EXTN | 4.7 | Enerflex Ltd. (EFX.TO) | 6.43 | 5.34% | 7.97% | -2.63% | All Stock |
| IS | 3.79 | Unity (U) | 35.54 | 2.12% | 9.43% | -7.31% | All Stock |
| EMCF | 36.5 | Farmers National Banc Corp. (FMNB) | 13.95 | -17.83% | -8.73% | -9.10% | All Stock |
| LOTZ | 0.3805 | Shift Technologies, Inc. (SFT) | 0.7425 | 35.07% | 47.18% | -12.11% | All Stock |
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 |
|---|---|---|---|---|---|---|---|
| SIMO | 05/05/2022 | MaxLinear, Inc. (MXL) | $106.94 | $69.96 | 06/30/2023 | 52.86% | 67.69% |
| SAVE | 07/28/2022 | JetBlue Airways Corporation (JBLU) | $33.50 | $22.64 | 06/30/2024 | 47.97% | 26.89% |
| LOTZ | 08/09/2022 | Shift Technologies, Inc. (SFT) | $0.51 | $0.3805 | 12/31/2022 | 35.07% | 123.07% |
| TWTR | 04/25/2022 | Elon Musk (N/A) | $54.20 | $41.45 | 12/31/2022 | 30.76% | 107.96% |
| VMW | 05/26/2022 | Broadcom Inc. (AVGO) | $142.50 | $112.44 | 04/30/2023 | 26.73% | 43.56% |
| BKI | 05/04/2022 | Intercontinental Exchange, Inc. (ICE) | $85.00 | $67.29 | 06/30/2023 | 26.32% | 33.71% |
| ATVI | 01/18/2022 | Microsoft Corporation (MSFT) | $95.00 | $76.02 | 06/30/2023 | 24.97% | 31.98% |
| SJR | 03/15/2021 | Rogers Communications Inc. (RCI) | $30.54 | $25.42 | 09/30/2022 | 20.14% | 612.45% |
| MITO | 08/01/2022 | Stealth Parent Limited (N/A) | $0.38 | $0.3164 | 11/30/2022 | 20.10% | 100.51% |
| FSTX | 06/23/2022 | invoX Pharma (N/A) | $7.12 | $5.97 | 12/31/2022 | 19.26% | 67.61% |
Last week, two new potential deals were added to the ‘Deals In The Works‘ section.
Updates
There were seven new SPAC combinations announced last week. You can find new SPAC IPO announcements in our SPACs tool here.
New Business Combinations
Completed
List of all pending deals:
Disclaimer: I have long positions in 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.