British energy company BP p.l.c. (BP) announced the acquisition of TravelCenters of America (TA) last week, at a premium of almost 74% to TA’s closing price on February 15, 2023.
Headquartered in Westlake, Ohio, TravelCenters of America is a full-service travel center operator and franchisor of the TA, Petro Stopping Centers and TA Express travel center brands. TA has travel centers in over 281 locations in 44 states. The travel centers, that average around 25 acres, offer a wide range of services and products, including diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking and other services.
Around 70% of the company’s total gross margin is generated by its convenience services business.
TA’s shares were up 70% on February 16, 2023, following the announcement of BP’s acquisition of the company. According to BP, ‘Convenience’ is one of its five strategic transition growth engines in which it aims to significantly grow investment through this decade. The deal was announced a day after the Biden administration set new standards to invest $7.5 billion, in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals, and materials along routes that TravelCenters of America operates in. TravelCenters of America and Electrify America also announced that they will offer electric vehicle charging at select Travel Centers of America and Petro locations, with a goal of installing approximately 1,000 EV chargers at 200 locations along major highways over the next five years.
Under the terms of the agreement, BP Products North America Inc., a wholly-owned indirect subsidiary of BP p.l.c. will acquire TravelCenters of America for $86 per share in cash, representing a premium of 84% to TA’s 30 day average trading price ended February 15, 2023 of $46.68.
Bernard Looney, CEO of BP, said: “This is BP’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines. This deal will grow our convenience and mobility footprint across the US and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG and later hydrogen, we can help our customers decarbonize their fleets. It’s a compelling combination.”
As part of the transaction, TA entered into amended lease agreements with Service Properties Trust. According to the press release, “Following the closing, BP will become SVC’s largest tenant, accounting for 29% of SVC’s gross assets as of December 31, 2022, with five leases for 178 travel centers. Under the amended leases, aggregate annual minimum rent will be $254.0 million, with annual 2% increases throughout the initial 10-year terms and any renewal terms. SVC also currently owns certain tradenames and trademarks associated with TA’s business and has agreed to sell those tradenames and trademarks to BP at their current book value of $89.4 million.”
The current spread on the deal is 2.11%, with an annualized return of 5.89% if the deal closes by mid-year 2023.
Merger Arbitrage activity decreased last week with one new deal announced, and one deal closing. SPAC activity increased last week, with three new SPAC IPOs filed and seven SPAC business combinations announced.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.
Total Number of Deals Closed in 2023 | 20 |
Total Number of Deals Not Completed in 2023 | 2 |
Total Number of Pending Deals | |
Cash Deals | 43 |
Stock Deals | 10 |
Stock & Cash Deals | 3 |
Special Conditions | 16 |
Total Number of Pending Deals | 72 |
Aggregate Deal Consideration | $488.29 billion |
New Merger Arbitrage Deals:
Deal Updates:
Approvals:
Hurdles:
Shareholders Meeting Schedule:
Closed Deals:
Weekly Spread Changes:
The table below shows weekly spread changes between February 10, 2023, and February 17, 2023.
Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
---|---|---|---|---|---|---|---|
GSMG | 0.85 | Cheers Inc (N/A) | 82.35% | 63.18% | 19.17% | All Cash | |
GRIN | 14.33 | Taylor Maritime Investments Limited and Good Falkirk Limited (N/A) | 46.55% | 27.43% | 19.12% | Special Conditions | |
IAA | 41.46 | Ritchie Bros. Auctioneers Incorporated (RBA) | 62.59 | 12.77% | 9.37% | 3.40% | Cash Plus Stock |
TSEM | 40.85 | Intel Corporation (INTC) | 27.61 | 29.74% | 27.47% | 2.27% | All Cash |
BKI | 63.94 | Intercontinental Exchange, Inc. (ICE) | 107.11 | 32.94% | 31.52% | 1.42% | Special Conditions |
HVBC | 32.148 | Citizens Financial Services, Inc. (CZFS) | 85.87 | 6.84% | 10.55% | -3.71% | All Stock |
FSTX | 4.98 | invoX Pharma (N/A) | 42.97% | 47.72% | -4.75% | All Cash | |
OIIM | 4.87 | FNOF Precious Honour Limited and Rim Peak Technology Limited (N/A) | 2.67% | 9.41% | -6.74% | All Cash | |
ONEM | 16.01 | Amazon (AMZN) | 97.2 | 12.43% | 19.36% | -6.93% | All Cash |
SIMO | 69.63 | MaxLinear, Inc. (MXL) | 36.74 | 54.81% | 64.10% | -9.29% | Cash Plus Stock |
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.
Symbol | Announced Date | Acquiring Company | Closing Price | Last Price | Closing Date | Profit | Annualized Profit |
---|---|---|---|---|---|---|---|
GSMG | 07/11/2022 | Cheers Inc (N/A) | $1.55 | $0.85 | 04/11/2023 | 82.35% | 589.39% |
SAVE | 07/28/2022 | JetBlue Airways Corporation (JBLU) | $31.00 | $19.19 | 06/30/2024 | 61.54% | 45.20% |
SIMO | 05/05/2022 | MaxLinear, Inc. (MXL) | $107.80 | $69.63 | 06/30/2023 | 54.81% | 152.72% |
IRBT | 08/05/2022 | Amazon (AMZN) | $61.00 | $41.19 | 08/05/2023 | 48.09% | 105.12% |
GRIN | 10/12/2022 | Taylor Maritime Investments Limited and Good Falkirk Limited (N/A) | $21.00 | $14.33 | 03/31/2023 | 46.55% | 424.73% |
FSTX | 06/23/2022 | invoX Pharma (N/A) | $7.12 | $4.98 | 01/31/2023 | 42.97% | -825.51% |
BKI | 05/04/2022 | Intercontinental Exchange, Inc. (ICE) | $85.00 | $63.94 | 05/04/2023 | 32.94% | 162.46% |
TSEM | 02/15/2022 | Intel Corporation (INTC) | $53.00 | $40.85 | 02/15/2023 | 29.74% | -2714.05% |
ACI | 10/14/2022 | The Kroger Co. (KR) | $27.25 | $21.22 | 03/31/2024 | 28.42% | 25.55% |
VMW | 05/26/2022 | Broadcom Inc. (AVGO) | $142.50 | $116.15 | 05/26/2023 | 22.69% | 86.25% |
Two new potential Merger Arbitrage deals were added to the ‘Deals In The Works‘ section last week.
Update
Potential SPAC IPO
SPAC IPO
SPAC Business Combination
Completed
Terminated
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