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Merger Arbitrage Mondays – AgroFresh Solutions To Be Acquired By Paine Schwartz

  • November 28, 2022

Merger activity remained steady last week with two new deals announced, and three deals completed.

AgroFresh Solutions (AGFS) to be taken private by Paine Schwartz Partners

AgroFresh Solutions is an AgTech company that provides solutions and technology for food preservation and reducing food waste. The company used to be the post-harvest specialty chemical business of The Dow Chemical Company (DOW) and was sold to Boulevard Acquisition Corp. as part of a plan to divest less-lucrative units. AgroFresh became a publicly traded company in 2015.

SmartFresh system, the company’s flagship product, uses 1-methylcyclopropene (1-MCP), an ingredient similar to ethylene, a naturally occurring hormone that causes fruit to ripen. SmartFresh targets ethylene-sensitive sites in the fruit and puts the ripening process “on hold” so that softening and over-ripening occur much more slowly. The company also offers a line of fungicides, wax coatings, and packaging to improve the shelf life of post-harvest produce.

AgrFresh also sells a software solution called FreshCloud, that allows customers to control the state of their produce with monitoring and screening.

AgroFresh Solutions and Technology

We added AgroFresh Solutions as a potential deal in the works on October 27, 2022, when the company agreed to pursue a deal with Paine Schwartz Partners to sell itself for $3 per share in cash, which resulted in the stock soaring 58% in premarket trading. The offer price represented a 91% premium over AgroFresh’s share price on October 26, 2022.

The company reported a net loss of $4.6 million for the third quarter of 2022, compared to net income of $0.8 million for the third quarter of 2021. For the nine months ended September 30, 2022, the net loss was $26.2 million compared a net loss of $8.3 million in the prior year period. While net income was negative in six of the last seven years, free cash flow headed in the opposite direction with positive free cash flow in six of the last seven years. The company has a leveraged balance sheet with $228 million in net debt.

The deal is expected to be completed in the first quarter of 2023.

Clint Lewis, Chief Executive Officer for AgroFresh, said,

“This transaction marks an important milestone in AgroFresh’s history as the Company embarks on a new chapter as a private company. This transaction with Paine Schwartz will provide enhanced flexibility for AgroFresh to build on its strong foundation and advance its mission of preventing food waste and conserving the planet’s resources for years to come. We are confident that this agreement is in the best interests of the Company and all its stakeholders and represents the best path forward to maximize value for shareholders.”

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 2022180
Total Number of Deals Not Completed in 20229
Total Number of Pending Deals
Cash Deals39
Stock Deals17
Stock & Cash Deals3
Special Conditions15
Total Number of Pending Deals74
Aggregate Deal Consideration$1.16 trillion

New Deals:

  1. The acquisition of Imago BioSciences (IMGO) by Merck (MRK) for $848.46 million or $36 per share in cash.
  2. The acquisition of AgroFresh Solutions (AGFS) by funds affiliated with Paine Schwartz Partners for $585.68 million or $3.00 per share in cash. We added AGFS as a potential deal on October 27, 2022, and the price after the news of the potential deal came out was $2.69.

Deal Updates:

  1. On November 18, 2022, Johnson & Johnson (JNJfiled with the Austria Federal Competition Authority for its proposed acquisition of Abiomed (ABMD).
  2. On November 18, 2022, the EU Commission disclosed that it has extended its deadline for a decision on Microsoft’s (MSFT) proposed acquisition of Activision Blizzard (ATVI) to 11 April 2023.
  3. On November 20, 2022, F-star Therapeutics (FSTX) and Sino Biopharmaceutical Limited amended their merger agreement by extending the end date from November 19, 2022, to December 19, 2022. The parties are in discussions with the Committee on Foreign Investment in the United States (CFIUS) regarding the transaction and have extended the end date to provide additional time to satisfy the Foreign Investment Condition concerning CFIUS.
  4. On November 22, 2022, Tegna (TGNAextended the end date for its sale to Standard General from November 22, 2022, to February 22, 2023.
  5. On November 23, 2022, Altra Industrial Motion (AIMC) and Regal Rexnord Corporation (RRXfiled their preliminary proxy statement. The initial 30-day waiting period, with respect to the HSR Act, is scheduled to expire on December 9, 2022, unless otherwise extended. The deal is expected to be completed in the first half of 2023.
  6. On November 23, 2022, UserTesting (USER) and Thoma Bravo, and Sunstone Partners filed their preliminary proxy statement. The companies made the filings required under the HSR Act on November 9, 2022. Completion of the Merger is further subject to certain regulatory actions by the United Kingdom Competition and Markets Authority (“CMA”) and the Australian Competition and Consumer Commission (“ACCC”). The “Go-Shop Period” ends on December 10, 2022.
  7. AVEO (AVEO) and LG Chem filed their respective HSR Act notifications on November 1, 2022, and delivered the draft joint voluntary notice to CFIUS on November 8, 2022.

Approvals

  1. On November 21, 2022, Meridian Bioscience (VIVOobtained CFIUS approval and is actively working with the DOJ to resolve the DOJ legal matter. On August 22, they withdrew and resubmitted the merger filing to the FTC and DOJ.
  2. On November 23, 2022, Brigham Minerals (MNRL) announced that the waiting period under the HSR Act expired on November 18, 2022.
  3. Poshmark (POSH) announced that the waiting period under the HSR Act expired on November 18, 2022.

Hurdles

  1. November 21, 2022: Broadcom’s (AVGO) pact to acquire VMWare (VMW) is now under scrutiny in Britain, as the country’s antitrust regulator said it was looking into the deal to see if it could result in a “substantial lessening of competition.”
  2. On November 22, 2022, ForgeRock (FORG) was down 1%, after a report that Thoma Bravo plans to pull and refile its merger notice with U.S. antitrust regulators.
  3. November 23, 2022: According to Reuters, the U.S. Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block Microsoft’s (MSFT) takeover bid for Activision Blizzard (ATVI).

Shareholders Meeting Schedule

  1. Yamana Gold (AUY) – January 31, 2023
  2. Brigham Minerals (MNRL) – December 28, 2022
  3. SeaSpine Holdings Corporation (SPNE) – January 4, 2023
  4. Turquoise Hill Resources (TRQ) – December 9, 2022
  5. Poshmark (POSH) – December 27, 2022.
  6. AVEO Oncology (AVEO) – January 5, 2023

Closed Deals:

  1. The acquisition of Aerie Pharmaceuticals (AERI) by Alcon (ALC) on November 21, 2022. It took 91 days for this deal to be completed.
  2. The acquisition of Zendesk (ZEN) by Permira and Hellman & Friedman LLC on November 22, 2022. It took 151 days for this deal to be completed.
  3. The acquisition of Continental Resources (CLR) by Omega Acquisition on November 22, 2022. It took 36 days for this deal to be completed.

Weekly Spread Changes:

The table below shows weekly spread changes between November 18, 2022, and November 25, 2022.

SymbolQuoteAcquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
IAA37Ritchie Bros. Auctioneers Incorporated (RBA)54.4312.41%6.67%5.74%Cash Plus Stock
SIMO61.25MaxLinear, Inc. (MXL)35.7675.37%71.87%3.50%Cash Plus Stock
FORG21.62Thoma Bravo (N/A)7.54%5.87%1.67%All Cash
TGNA19.65Standard General L.P. (N/A)22.14%20.66%1.48%Special Conditions
VLDR1.02Ouster, Inc. (OUST)1.23-1.07%-2.45%1.38%All Stock
BKI62.69Intercontinental Exchange, Inc. (ICE)107.1235.59%39.80%-4.21%Special Conditions
LOTZ0.1801Shift Technologies, Inc. (SFT)0.291712.11%19.37%-7.26%All Stock
AYLA0.5999Advaxis, Inc. (ADXS)1.7-46.89%-36.42%-10.47%All Stock
AKUS13.2Eli Lilly and Company (LLY)365.25-5.30%16.63%-21.93%Special Conditions
FSTX5.85invoX Pharma (N/A)21.71%51.17%-29.46%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.

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
SIMO05/05/2022MaxLinear, Inc. (MXL)$107.41$61.2506/30/202375.37%127.96%
SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$21.7206/30/202442.73%26.84%
BKI05/04/2022Intercontinental Exchange, Inc. (ICE)$85.00$62.6905/04/202335.59%82.21%
ACI10/14/2022The Kroger Co. (KR)$27.25$20.6703/31/202431.83%23.71%
ATVI01/18/2022Microsoft Corporation (MSFT)$95.00$73.4706/30/202329.30%49.75%
TGNA02/22/2022Standard General L.P. (N/A)$24.00$19.6512/31/202222.14%237.65%
FSTX06/23/2022invoX Pharma (N/A)$7.12$5.8512/31/202221.71%233.06%
TSEM02/15/2022Intel Corporation (INTC)$53.00$44.1502/15/202320.05%91.46%
VMW05/26/2022Broadcom Inc. (AVGO)$142.50$119.2604/30/202319.49%46.19%
IRBT08/05/2022Amazon (AMZN)$61.00$52.212/31/202216.86%180.98%

Deals In The Works

Four new potential deals were added to the ‘Deals In The Works‘ section last week.

  1. On November 22, 2022, Bloomberg reported that Mirati Therapeutics (MRTX) is attracting fresh takeover interest from large pharmaceutical companies ahead of updates on its drug pipeline.
  2. On November 22, 022, Manchester United (MANU), announced that the company’s Board of Directors is commencing a process to explore strategic alternatives for the club.
  3. On November 23, 2022, Vista Equity Partners is exploring an acquisition of Coupa Software (COUP).
  4. On November 25, 2022, Bloomberg reported that Germany’s Brenntag SE is exploring a potential acquisition of US rival Univar Solutions (UNVR).

Updates

  1. On November 22, 2022, The Wall Street Journal reported that Fortress Investment Group has agreed to help finance Kushner Cos.’ unsolicited $4.3 billion bid to buy rival apartment building owner Veris Residential (VRE).

SPAC Arbitrage

SPAC Business Combination

  1. On November 21, 2022, NEXT Renewable Fuels and Industrial Tech Acquisitions II, Inc. (ITAQ) announced the signing of a business combination agreement expected to result in a newly combined company to be known as NXTCLEAN Fuels, Inc.
  2. On November 22, 2022, Hyperloop Transportation Technologies and Forest Road Acquisition Corp. II (FRXBentered into a definitive merger agreement that is expected to result in HyperloopTT becoming a publicly listed company.
  3. On November 22, 2022, CIIG Capital Partners II, Inc. (CIIG) and Zapp Electric Vehicles Limited entered into a definitive business combination agreement.
  4. On November 22, 2022, Able View Inc. entered into a definitive business combination agreement with Hainan Manaslu Acquisition Corp. (HMAC).
  5. On November 22, 2022, Cycurion and Western Acquisition Ventures Corp. (WAVSentered into a definitive business combination agreement.

Completed

  1. On November 22, 2022, Tempo Automation (TMPOcompleted its business combination with ACE Convergence Acquisition (ACEV).
  2. On November 22, 2022, NewAmsterdam Pharma Holding (NAMScompleted its business combination with Frazier Lifesciences Acquisition Corp. (FLAC).

List of all pending deals:

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

TargetAnnounced
Date
AcquirerDeal
Type
Closing
Value
Deal
Price
Last
Price
Target VolumeEstimated
Closing Date
ReturnAnnualized
Return
+SIMO5/05/22MaxLinear, Inc. (MXL)Cash Plus Stock$8 B$107.41$61.25253,6516/30/2375.37%128.55%
+SAVE7/28/22JetBlue Airways Corporation (JBLU)All Cash$7.6 B$31.00$21.72196,6106/30/2442.73%26.89%
+BKI5/04/22Intercontinental Exchange, Inc. (ICE)Special Conditions$16 B$85.00$62.69405,9695/04/2335.59%82.74%
+ACI10/14/22The Kroger Co. (KR)Special Conditions$24.6 B$27.25$20.67906,0843/31/2431.83%23.76%
+ATVI1/18/22Microsoft Corporation (MSFT)All Cash$68.7 B$95.00$73.479,172,6756/30/2329.30%49.98%
+TGNA2/22/22Standard General L.P. (N/A)Special Conditions$8.6 B$24.00$19.65232,99312/31/2222.14%244.85%
+FSTX6/23/22invoX Pharma (N/A)All Cash$161 M$7.12$5.8545,16712/31/2221.71%240.12%
+TSEM2/15/22Intel Corporation (INTC)All Cash$5.4 B$53.00$44.15173,9202/15/2320.05%92.61%
+VMW5/26/22Broadcom Inc. (AVGO)Special Conditions$69 B$142.50$119.26451,5254/30/2319.49%46.49%
+IRBT8/05/22Amazon (AMZN)All Cash$1.7 B$61.00$52.2161,08412/31/2216.86%186.46%
+OIIM9/30/22FNOF Precious Honour Limited and Rim Peak Technology Limited (N/A)All Cash$73.94 M$5.00$4.434,2993/31/2312.87%38.18%
+IAA11/07/22Ritchie Bros. Auctioneers Incorporated (RBA)Cash Plus Stock$7.3 B$41.59$37943,4206/30/2312.41%21.16%
+LOTZ8/09/22Shift Technologies, Inc. (SFT)All Stock-$12.88 M$0.20$0.1801659,86812/31/2212.11%133.90%
+HVBC10/19/22Citizens Financial Services, Inc. (CZFS)All Stock$67.4 M$29.05$26.021,6466/30/2311.64%19.85%
+SJR3/15/21Rogers Communications Inc. (RCI)Special Conditions$26 B$30.13$27.4596,16212/31/229.76%107.90%
+FCRD10/04/22Crescent Capital BDC, Inc. (CCAP)Special Conditions$145.6 M$4.79$4.430,0393/31/238.86%26.30%
+FORG10/11/22Thoma Bravo (N/A)All Cash$2.3 B$23.25$21.62587,6726/30/237.54%12.86%
+ONEM7/21/22Amazon (AMZN)All Cash$3.9 B$18.00$16.83378,73112/31/226.95%76.89%
+GSMG7/11/22Cheers Inc (N/A)All Cash$105.59 M$1.55$1.4511,59112/31/226.90%76.28%
+SWIR8/02/22Semtech Corporation (SMTC)All Cash$1.2 B$31.00$29.09127,1461/31/236.57%37.45%
+VIVO7/07/22SD Biosensor and SJL Partners (N/A)All Cash$1.53 B$34.00$31.9265,51612/31/226.52%72.07%
+AIMC10/27/22Regal Rexnord Corporation (RRX)All Cash$5 B$62.00$58.35545,2356/30/236.26%10.67%
+SGFY9/05/22CVS Health Corporation (CVS)All Cash$8 B$30.50$28.71859,3186/30/236.23%10.63%
+LMST10/25/22Peoples Bancorp Inc. (PEBO)All Stock$208.2 M$26.79$25.49,1326/30/235.48%9.35%
+RCOR9/20/22Rocket Pharmaceuticals, Inc. (RCKT)All Stock$53 M$3.12$2.9619,6633/31/235.32%15.78%
+MFGP8/25/22OpenText (OTEX)All Cash$6 B$6.46$6.23156,9833/31/233.63%10.77%
+PNM10/21/20Avangrid, Inc. (AGR)All Cash$8.05 B$50.30$48.76255,95612/31/223.16%34.93%
+MMX11/10/22Triple Flag Precious Metals Corp. (TFPM)All Stock$596.51 M$4.18$4.06121,7261/31/232.86%16.29%
+EURN7/11/22Frontline Ltd. (FRO)All Stock$4.08 B$19.95$19.45970,95612/31/222.58%28.55%
+SJI2/24/22Infrastructure Investments Fund (N/A)All Cash$8.1 B$36.00$35.1211,29912/31/222.56%28.36%
+AUY11/08/22Pan American Silver Corp. and Agnico Eagle Mines Limited (PAAS)Special Conditions$5.93 B$5.44$5.317,133,07512/31/222.45%27.08%
+ELVT11/16/22Park Cities Asset Management LLC (N/A)All Cash$67 M$1.87$1.83132,7713/31/232.19%6.49%
+RNWK7/28/22Greater Heights LLC (N/A)All Cash$12.65 M$0.73$0.71586,37212/31/221.98%21.94%
+MGI2/15/22Madison Dearborn Partners, LLC (N/A)All Cash$1.8 B$11.00$10.8222,39412/31/221.85%20.48%
+AAWW8/04/22Apollo (APO)All Cash$5.2 B$102.50$100.6679,9423/31/231.83%5.42%
+AGFS11/22/22Paine Schwartz Partners (N/A)All Cash$585.68 M$3.00$2.9500215,2723/31/231.69%5.03%
+PFHD8/08/22Seacoast Banking Corporation of Florida (SBCF)All Stock$488.6 M$30.30$29.824,5943/31/231.68%4.97%
+USER10/27/22Thoma Bravo and Sunstone Partners (N/A)All Cash$1.3 B$7.50$7.45,033,0656/30/231.35%2.30%
+BNFT11/01/22Voya Financial, Inc. (VOYA)All Cash$570 M$10.50$10.37187,6233/31/231.25%3.72%
+STOR9/15/22GIC and Oak Street (N/A)All Cash$14 B$32.25$31.88954,7653/31/231.16%3.44%
+LHCG3/28/22Optum (N/A)All Cash$6.2 B$170.00$168.2840,57812/31/221.02%11.31%
+IMGO11/21/22Merck & Co., Inc. (MRK)All Cash$848.46 M$36.00$35.66436,1143/31/230.95%2.83%
+TRQ9/06/22Rio Tinto (RIO)All Cash$5.63 B$31.99$31.69159,96412/31/220.94%10.39%
+FHN2/28/22The Toronto-Dominion Bank (TD)Special Conditions$13.4 B$25.00$24.772,945,35911/27/220.93%0.00%
+EVOP8/01/22Global Payments Inc. (GPN)All Cash$4 B$34.00$33.7145,2393/31/230.89%2.64%
+AVEO10/18/22LG Chem, Ltd. (N/A)All Cash$440.99 M$15.00$14.87311,1033/31/230.87%2.59%
+MYOV10/23/22Sumitovant Biopharma Ltd. (N/A)All Cash$2.9 B$27.00$26.78189,8943/31/230.82%2.44%
+KNBE10/12/22Vista Equity Partners (N/A)All Cash$4.6 B$24.90$24.71422,4466/30/230.77%1.31%
+ATCO11/01/22Poseidon Acquisition Corp. (N/A)All Cash$10.9 B$15.50$15.39219,7886/30/230.71%1.22%
+COWN8/02/22TD Bank Group (TD)All Cash$1.3 B$39.00$38.73298,7873/31/230.70%2.07%
+GRIN10/12/22Taylor Maritime Investments Limited and Good Falkirk Limited (N/A)Special Conditions$506 M$26.00$25.85241,3083/31/230.58%1.72%
+POSH10/03/22Naver Corp. (N/A)All Cash$1.2 B$17.90$17.8400,1363/31/230.56%1.67%
+BTRS9/28/22EQT (N/A)All Cash$1.4 B$9.50$9.45551,3703/31/230.53%1.57%
+ABMD11/01/22Johnson & Johnson (JNJ)Special Conditions$16.6 B$380.00$378.08257,1823/31/230.51%1.51%
+LFG10/17/22BP p.l.c. (BP)All Cash$4.1 B$26.00$25.88270,87512/31/220.46%5.13%
+HIL8/16/22Global Infrastructure Solutions Inc. (N/A)All Cash$207 M$3.40$3.3858,14012/31/220.44%4.90%
+PBFX7/28/22PBF Energy Inc. (PBF)Cash Plus Stock$1.64 B$21.58$21.55155,0763/31/230.12%0.35%
+SWCH5/11/22DigitalBridge Group, Inc. (DBRG)All Cash$11 B$34.25$34.211,393,68912/31/220.12%1.29%
+LBC11/13/22Washington Federal, Inc. (WAFD)All Stock$654 M$11.75$11.745,3156/30/230.08%0.13%
+FBC4/26/21New York Community Bancorp, Inc. (NYCB)All Stock$2.6 B$37.98$37.96123,43212/31/220.06%0.67%
+UMPQ10/12/21Columbia Banking System, Inc. (COLB)All Stock$4.5 B$20.25$20.25607,8883/31/230.01%0.02%
+SPNE10/11/22Orthofix (OFIX)All Stock$249.93 M$7.15$7.1538,1033/31/23-0.03%-0.09%
+LBAI9/27/22Provident Financial Services, Inc. (PFS)All Stock$1.3 B$18.83$18.8438,2896/30/23-0.03%-0.05%
+MNRL9/06/22Sitio Royalties Corp. (STR)All Stock$2.21 B$35.24$35.29145,3523/31/23-0.15%-0.45%
+OPNT11/14/22Indivior PLC (INDV.L)Special Conditions$145 M$20.00$20.08137,6183/31/23-0.40%-1.18%
+EMCF3/24/22Farmers National Banc Corp. (FMNB)All Stock$105 M$32.66$3322912/31/22-1.03%-11.45%
+VLDR11/07/22Ouster, Inc. (OUST)All Stock-$16.26 M$1.01$1.02414,5396/30/23-1.07%-1.82%
+ELSE6/13/22Mobile X Global, Inc. (N/A)All Cash$9.89 M$4.83$4.8917012/31/22-1.23%-13.57%
+OYST11/07/22Viatris Inc. (VTRS)Special Conditions$281 M$11.00$11.1674,6443/31/23-1.43%-4.25%
+RFP7/06/22The Paper Excellence Group (N/A)Special Conditions$2.7 B$20.50$21.18196,7316/30/23-3.21%-5.48%
+PCSB5/24/22Brookline Bancorp, Inc. (BRKL)All Stock$313 M$19.06$20.0129,81212/31/22-4.73%-52.37%
+AKUS10/18/22Eli Lilly and Company (LLY)Special Conditions$248.84 M$12.50$13.2593,67012/31/22-5.30%-58.65%
+AGTC10/23/22Syncona Limited (N/A)Special Conditions$23.5 M$0.34$0.37383,090,91412/31/22-9.04%-100.01%
+AYLA10/19/22Advaxis, Inc. (ADXS)All Stock-$4.22 M$0.32$0.59994,8133/31/23-46.89%-139.16%

Disclaimer: I have long positions in Abiomed (ABMD), Activision Blizzard (ATVI), Spirit Airlines (SAVE), Atlas Air Worldwide (AAWW), First Horizon (FHN), Tower Semiconductor (TSEM) and TEGNA (TGNA). 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.