Atlas Technical Consultants Acquisition By GI Partners – Merger Arbitrage Mondays

It turned out to be an interesting week on the M&A front with a new merger announced at a whopping 124% premium and a surprisingly large number of potential deal rumors. Merger Arbitrage activity increased last week with four new deals announced, six deals closing and one deal terminated. Six new potential deals in the works were announced last week.

Atlas Technical Consultants (ATCX)

Headquartered in Austin, Texas, Atlas Technical Consultants provides testing, inspection, and certification services, across various end markets.

Atlas Technical Consultants was formed in 2017 by Bernhard Capital through the acquisition of three leading infrastructure management companies: Moreland Altobelli Associates, PAVETEX Engineering, and Engineering Testing Services.

The company’s service line includes: Testing, Inspection and Certification (TIC), Environmental Solutions (ENV), Engineering and Design (E&D), and Program, Construction and Quality Management (PCQM). Quality control and materials testing services at the Golden Gate Bridge in San Francisco, is one of the projects undertaken by Atlas.

On January 31, 2023, Atlas entered into a definitive agreement to be acquired by San Francisco based private investment firm GI Partners in an all-cash transaction valued at approximately $1.05 billion, or $12.25 per share in cash. The offer represents a premium of approximately 124% over the company’s closing price of $5.47 on January 30, 2023.

The current spread on the deal is 0.57% or 1.45% annualized if the deal closes by the second quarter of 2023.

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:

New Merger Arbitrage Deals:

1. The acquisition of Atlas Technical Consultants (ATCX) by GI Partners for $1.05 billion or $12.25 per share in cash.
2. The acquisition of Chembio Diagnostic (CEMI) by Biosynex SA for $17.2 million or $0.45 per share in cash.
3. The acquisition of Sisecam Resources (SIRE) by Sisecam Chemicals Wyoming LLC for $811.78 million or $25.00 per share in cash. We added SIRE as a potential deal to the Deals in the Works section on July 6, 2022, and the price after the news of the potential deal came out was $17.90.
4. The acquisition of AlerisLife (ALR) by ABP Acquisition LLC for $33.35 million or $1.31 per share in cash.

Deal Updates:

1. On January 30, 2023, Rogers Communications (RCI) and Shaw Communications (SJR) extended the outside date of their proposed merger to February 17, 2023.
2. On January 30, 2023, MoneyGram International (MGI) and Madison Dearborn Partners announced that the final regulatory approval for their merger agreement is to be issued by the Reserve Bank of India. As a result, they have extended the End Date beyond February 14, 2023, to May 14, 2023 and now expect to close the transaction either late in the first quarter or early in the second quarter of 2023.
3. On January 30, 2023, Aerojet Rocketdyne Holdings (AJRD) and L3Harris (LHX) filed their respective notification and report forms with the Antitrust Division and the U.S. Federal Trade Commission. The applicable waiting period will expire on February 9, 2023.
4. On January 31, 2023, F-star Therapeutics (FSTX) and invoX Pharma extended the End Date of the Merger Agreement to February 8, 2023, in order to provide additional time for the parties to complete negotiations with CFIUS.
5. On February 1, 2023, Ouster (OUST) and Velodyne Lidar (VLDR) announced the proposed designations for the Board of Directors of the Combined Company, subject to approval by the Ouster Board of Directors and closing the proposed merger of equals.
6. On February 2, 2023, Sun Pharmaceutical Industries Limited launched its tender offer for Concert Pharmaceuticals (CNCE). The tender offer will expire on March 3, 2023.
7. February 2, 2023: The UK’s Competition and Markets Authority is expected to release its findings on the purchase of Activision Blizzard (ATVI) by Microsoft Corporation (MSFT) in a week’s time.

Approvals

1. On January 31, 2023, Yamana Gold (AUY) announced that its shareholders approved the previously announced acquisition by Pan American Silver Corp. (PAAS) and to Agnico Eagle Mines Limited (AEM).
2. January 31, 2023: According to Bloomberg, Eagle Asset Management and Independent Franchise Partners, which owns about 4.8% of Ritchie shares (RBA), plans to vote in favor of RBA’s proposed acquisition of IAA Inc. (IAA).
3. On January 31, 2023, Maxar Technologies (MAXR) and Advent International announced that the initial waiting period under the HSR Act expired on January 30, 2023.
4. Apollo Endosurgery (APEN) and Boston Scientific Corporation (BSX) announced that the initial waiting period under the HSR Act expired on January 19, 2023.
5. On February 1, 2023, Provident Financial Services (PFS) and Lakeland Bancorp (LBAI) announced the receipt of their respective stockholder and shareholder approvals in connection with the proposed merger of Lakeland with and into Provident.
6. Shareholders of O2Micro International Limited (OIIM) approved the company’s merger with FNOF Precious Honour Limited at a special meeting of shareholders.
7. On February 2, 2023, Atlas Corp. (ATCO) received regulatory confirmation for its transaction with Poseidon Acquisition Corp., from Brazil’s Administrative Council for Economic Defence, Turkey’s Competition Authority and Australia’s Competition and Consumer Commission.

Hurdles:

1. On January 30, 2023, Ritchie Bros. (RBA) holder Janus Henderson wrote in a letter that it is against the company’s planned acquisition of IAA Inc. (IAA) and plans to vote against it.
2. On January 31, 2023, Horizon (HZNP) and Amgen (AMGN) each received a request for additional information and documentary materials from the U.S. Federal Trade Commission in connection with the FTC’s review of Amgen’s proposed acquisition of Horizon.
3. On January 31, 2023, two investors sued KnowBe4 (KNBE) over fears that its planned sale to a private equity consortium led by Vista Equity Partners, which received preliminary shareholder approval Tuesday, would rip off public investors in a business exceeding its forecasts.
4. On January 31, 2023, the EC suspended the deadline of the review of Broadcom’s (AVGO) acquisition of VMware (VMW) under Article 11(3) with effect from 24 January.
5. February 4, 2023: According To Reuters, a private lawsuit filed in California seeks to stop Kroger’s (KR) planned purchase of Albertsons Companies (ACI), a deal that state attorneys general, consumer groups and some U.S. lawmakers have questioned as harmful to competition in the grocery market.
6. February 4, 2023: Deep Field Asset Management, a California-based investment adviser of funds that beneficially own 200,000 shares of Ritchie Bros. Auctioneers (RBA) issued a letter urging RBA shareholders to reject RBA’s ill-conceived merger with IAA Inc. (IAA).
7. February 4, 2023: Reuters reported that according to the European Commission, the EU antitrust regulators have paused their investigation into Broadcom’s (AVGO) bid for VMware (VMW) while waiting for the U.S. chipmaker to provide requested data.
8. February 4, 2023: According to Bloomberg, the US Federal Trade Commission is preparing a possible lawsuit against Amazon (AMZN) that could be filed as soon as this spring.
9. February 4, 2023: According to The Wall Street Journal, Activision Blizzard (ATVI) agreed to pay $35 million to settle regulatory claims tied to its process for deciding how its disclosures to investors should reflect employee complaints about workplace misconduct.

Shareholders Meeting Schedule:

1. On February 3, 2023, Velodyne Lidar (VLDR) announced that the special meeting of stockholders has been reconvened to February 10, 2023.

Closed Deals:

1. The acquisition of Micro Focus International (MFGP) by OpenText (OTEX) on January 31, 2023. It took 159 days for this deal to be completed.
2. The acquisition of Professional Holding Corp. (PFHD) by Seacoast Banking Corporation of Florida (SBCF) on January 31, 2023. It took 176 days for this deal to be completed.
3. The acquisition of Meridian Bioscience (VIVO) by SD Biosensor and SJL Partners on January 31, 2023. It took 208 days for this deal to be completed.
4. The acquisition of KnowBe4 (KNBE) by Vista Equity Partners on February 1, 2023. It took 112 days for this deal to be completed.
5. The acquisition of South Jersey Industries (SJI) by Infrastructure Investments Fund on February 1, 2023. It took 342 days for this deal to be completed.
6. The acquisition of STORE Capital Corporation (STOR) by GIC and Oak Street on February 3, 2023. It took 141 days for this deal to be completed.

Terminated Deals:

1. On January 30, 2023, Electro-Sensors (ELSE) and Mobile X Global terminated the definitive merger agreement the parties entered into on June 10, 2022. The financing that was required to complete the merger was not available due to difficult conditions in the financial markets, including the markets for PIPE investments. Both parties were anticipating, an equity financing with minimum gross proceeds of $20.0 million, which was not met.

Weekly Spread Changes:

The table below shows weekly spread changes between January 27, 2023, and February 3, 2023.

Top 10 Merger Arbitrage 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.

Deals In The Works

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

1. On January 31, 2023, Reuters reported that Mercury Systems (MRCY) had announced the exit of finance chief Michael Ruppert and said the defense technology firm had initiated a review of strategic alternatives.
2. On January 31, 2023, Ancora Holdings Group, the second largest shareholder in Green Plains (GPRE) called for the biofuel producer to run a full sales process at a time when the company is facing increased risks and strategic buyers are eager to purchase renewable energy companies.
3. On January 31, 2023, The Wall Street Journal reported that Cvent Holding Corp. (CVT) is exploring a sale that could value the cloud-based event-software provider at upward of $4 billion. The company has attracted interest from private-equity firms including Blackstone.
4. On February 1, 2023, Reuters reported that Rapid7 (RPD), is exploring options that include a possible sale after attracting acquisition interest.
5. February 2, 2023: According to a regulatory filing, Private equity firm Clayton, Dubilier, and Rice is weighing a $4.1 billion buyout offer for investment adviser Focus Financial Partners (FOCS).
6. On February 2, 2023, Magenta Therapeutics (MGTA), a clinical-stage biotechnology company focused on improving stem cell transplantation, announced that it has completed a review of its business, including the status of its programs, resources, and capabilities. Magenta has made the determination to halt further development of its programs and conduct a comprehensive review of strategic alternatives focused on maximizing shareholder value.
7. On February 4, 2023, Bloomberg reported that Life sciences company Danaher Corp. (DHR) has expressed a takeover interest in contract manufacturer Catalent (CTLT).
8. On February 5, 2023, Public Storage (PSA), the largest U.S. operator of self-storage properties, unveiled an $11 billion hostile bid for Life Storage Inc (LSI), ratcheting up attempts to buy its smaller rival after its earlier takeover attempts were rebuffed. Under the proposed all-stock deal, Life Storage shareholders would receive 0.4192 share of Public Storage for each Life Storage share or unit, which equates to $129.3 per share based on Public Storage’s closing share price

Update

1. On January 31, 2023, Kushner Cos. reiterated its bid to purchase Veris Residential (VRE), which had been previously turned down two weeks ago for $18.50 per share.

SPAC Arbitrage

SPAC IPO

1. Cetus Capital Acquisition Corp. (CETUU) priced its $50 million IPO and its units began trading on the Nasdaq under the symbol “CETUU” on Wednesday, February 1, 2023.

SPAC Business Combination

1. On January 30, 2023, Cheche Technology and Prime Impact Acquisition I (PIAI) announced that they have entered into a definitive business combination agreement.
2. On January 31, 2023, Lotus Technology and L Catterton Asia Acquisition Corp (LCAA) entered into a definitive agreement and plan of merger.
3. On January 31, 2023, Pono Capital Two (PTWO), entered into a business combination with SBC Medical Group Holdings Incorporated.

Completed

1. On January 31, 2023, Tailwind Acquisition (TWND) and NUBURU, Inc. (BURU) announced the completion of their previously announced business combination.

Terminated

1. On February 3, 2023, Sparks Energy, Inc. and 10X Capital Venture Acquisition Corp. III (VCXB) mutually terminated their business combination.
2. On February 3, 2023, Hyperloop Transportation Technologies and Forest Road Acquisition Corp. II (FRXB) mutually agreed to terminate their previously announced business combination agreement.
3. On February 3, 2023, Viveon Health Acquisition Corp. (VHAQ) announced that it has unilaterally terminated its previously announced agreement and plan of merger with Suneva Medical, Inc.

List of all pending Merger Arbitrage deals:

Disclaimer: I have long positions in 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.