×

Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

Battle for Amedisys – Merger Arbitrage Mondays

  • June 12, 2023

Key Highlights

  1. Amedisys (AMED) receives an unsolicited proposal from Optum. Board of Amedisys considers it a superior offer.
  2. Chinook Therapeutics (KDNY) enters into an agreement to be acquired by Novartis AG for $40 per share in cash, with the potential to receive up to an additional $4 per share in cash through contingent value rights.
  3. Citizens Financial Services (CZFS) revises the exchange ratio for the pending merger with HV Bancorp (HVBC), to reflect the 1% stock dividend declared by CZFS.
  4. The U.S. District Court for the Northern District of Illinois grants approval for the Revised Stipulated TRO (temporary restraining order), which prohibits the acquisition of Horizon (HZNP) by Amgen (AMGN).

Amedisys (AMED)

Amedisys is a healthcare services company that focuses on providing clinically distinct care that is tailored to the individual needs of patients, whether it be for recovery and rehabilitation at home or for chronic disease management.

A month after agreeing to be bought by Option Care Health (OPCH) in an all stock deal, Amedisys received an unsolicited all-cash offer from UnitedHealth Group’s health services company Optum, for $100 per share. The company’s shares were over 15% higher at $91.74 following the announcement last Monday.

The merger with Option Care Health values Amedisys at about $92.57 per share, as of Friday, June 9.

Amedisys Spread History

According to the press release,

On May 27, 2023, the Board determined that the unsolicited proposal received from Optum could reasonably be expected to result in an “Amedisys Superior Proposal” as defined in Amedisys’ merger agreement with Option Care Health. As permitted by the terms of Amedisys’ merger agreement with Option Care Health, Amedisys entered into a confidentiality agreement with Optum on May 30, 2023, and is currently engaging in exploratory discussions with Optum with respect to Optum’s proposal.

If Amedisys accepts Optum’s offer, the agreement would lead to an expansion of UnitedHealth’s footprint in the home healthcare sector. This move comes after UnitedHealth solidified its position in the industry earlier this year with the acquisition of Amedisys’ competitor, LHC Group, in a deal valued at $6.2 billion.

Several analysts have expressed concerns about the potential scrutiny that a UnitedHealth deal would likely face from the FTC due to UnitedHealth’s existing presence in the home health sector.

Option Care Health has the possibility to consider increasing its merger consideration for Amedisys. If the current merger agreement is terminated, Amedisys will have to pay Option a termination fee of $106 million, which does not seem to be a big hurdle in light of the sweetened bid by UnitedHealth.


Merger Arbitrage activity increased last week with three new deals announced and one deal closing.

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 202375
Total Number of Deals Not Completed in 20235
Total Number of Pending Deals
Cash Deals45
Stock Deals20
Stock & Cash Deals5
Special Conditions4
Total Number of Pending Deals74
Aggregate Deal Consideration$692.72 billion

New Merger Arbitrage Deals:

  1. The acquisition of CIRCOR International (CIR) by investment funds managed by KKR for $1.6 billion or $49 per share in cash.
  2. The acquisition of Paratek Pharmaceuticals (PRTK) by Gurnet Point Capital and Novo Holdings for $462 million. Under the terms of the merger agreement, Gurnet Point will acquire all outstanding shares of Paratek for $2.15 per share in cash, plus a CVR of $0.85 per share payable upon the achievement of $320 million in U.S. NUZYRA net sales in any calendar year ending on or prior to December 31, 2026.
  3. The acquisition of Chinook Therapeutics (KDNY) by Novartis AG for $3.2 billion. Under the terms of the agreement, shareholders of Chinook Therapeutics will receive $40 per share in cash, with the potential to receive up to an additional $4 per share in cash through contingent value rights.

Deal Updates:

  1. On June 5, 2023, UBS Group AG (UBS) said that it expects to complete its takeover of longtime rival Credit Suisse (CS) as early as next week.
  2. On June 5, 2023, Global Net Lease (GNL) and The Necessity Retail REIT (RTLentered into a cooperation agreement with Blackwells Capital. Under the terms of the Agreement, the Blackwells Parties will withdraw their nomination notices and proposals at both GNL and RTL and have agreed to vote in favor of the share issuances for the previously announced merger of GNL and RTL and internalization transactions at the GNL special meeting.
  3. On June 5, 2023, Flat Footed LLC, a top shareholder of Diversified Healthcare Trust (DHC) and the owner of approximately 8.4% of the outstanding common shares of the company, called on DHC’s Board of Trustees to address a series of merger-related pressing questions at the Annual Meeting of Shareholders.
  4. Franchise Group (FRG) and members of the senior management team of the company led by Brian Kahn made the required filings with the FTC and the DOJ on May 24, 2023. The initial 30-day waiting period will expire on June 23, 2023.
  5. On June 9, 2023, the ‘go-shop’ period with respect to the acquisition of Franchise Group (FRG) and members of the senior management team of the company led by Brian Kahn expired.
  6. On June 9, 2023, Citizens Financial Services (CZFS) announced that the exchange ratio for the pending merger HV Bancorp (HVBC) with and into CZFS has been finalized at 0.4040 shares of CZFS stock for each share of HVBC stock, to reflect the 1% stock dividend declared on May 30, 2023, by CZFS and payable on June 30, 2023.
  7. June 9, 2023: According to a memo seen by Bloomberg News, Credit Suisse Group (CS) Chief Executive Ulrich Koerner has indicated to employees that the bank’s takeover by UBS AG (UBSwill close on Monday.
  8. June 9, 2023: Berkshire Grey (BGRY) and SoftBank filed their notice pursuant to Section 11 of the ICA (Investment Canada Act) on April 21, 2023, and received the ICA Clearance on June 6, 2023.

Approvals:

  1. Midwest Holding (MDWT) and Antarctica Capital made the Insurance Approval Filings in accordance with the Merger Agreement. On May 14, 2023, the Vermont Department of Financial Regulation granted its approval.
  2. On June 6, 2023, shareholders of Univar Solutions (UNVRapproved the company’s merger with Apollo (APO) at a special meeting of shareholders.
  3. On June 7, 2023, shareholders of Heska Corporation (HSKAapproved the company’s merger with Mars, Incorporated at a special meeting of shareholders.
  4. On June 8, 2023, Univar Solutions (UNVR) announced that pertaining to its acquisition by funds managed by Apollo (APO), it has received antitrust regulatory approvals from various jurisdictions including the United States (HSR), Brazil, Canada, China, the European Union, and Mexico. The company has also received foreign direct investment regulatory approval from Italy. Pending regulatory approvals that still need to be secured include antitrust approval in Turkey and foreign direct investment approvals from the United States (CFIUS), France, and Spain. The transaction is expected to close around the middle of the third quarter of 2023.
  5. On June 8, 2023, shareholders of Diversey Holdings (DSEYapproved the company’s merger with Solenis at a special meeting of shareholders.

Hurdles:

  1. On June 5, 2023, Amedisys (AMED) announced that on May 26, 2023, the company received an unsolicited proposal from Optum, a diversified health services company, to acquire all of the outstanding shares of Amedisys’ common stock in an all-cash transaction for $100 per share.
  2. On June 2, 2023, the U.S. District Court for the Northern District of Illinois granted approval for the Revised Stipulated TRO (temporary restraining order), which prohibits the acquisition of Horizon (HZNP) by Amgen (AMGN). If the court rejects the FTC’s preliminary injunction request on or before October 31, 2023, or if the litigation is resolved in favor of Horizon by that date, Horizon expects its acquisition to be completed by mid-December.
  3. June 8, 2023: According to Reuters, asset manager Energy Income Partners, one of the top shareholders in Magellan Midstream Partners (MMP), said that it intends to vote against pipeline operator ONEOK ‘s (OKE) deal to buy Magellan.

Shareholders Meeting Schedule:

  1. VectivBio Holding AG (VECT) – June 26, 2023
  2. IVERIC bio (ISEE) – July 6, 2023
  3. GasLog Partners (GLOP) – July 7, 2023
  4. TESSCO Technologies Incorporated (TESS) – July 13, 2023
  5. Infinity Pharmaceuticals (INFI) – July 14, 2023
  6. Life Storage (LSI) – July 18, 2023

Closed Deals:

  1. The acquisition of Satsuma Pharmaceuticals (STSA) by Shin Nippon Biomedical Laboratories on June 8, 2023. It took 53 days for this deal to be completed.

Weekly Spread Changes:

The table below shows weekly spread changes between June 2, 2023, and June 9, 2023.

SymbolQuoteAcquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
HEXO0.8215Tilray Brands, Inc. (TLRY)1.59-15.77%-25.15%9.38%All Stock
APGN0.4749Pyxis Oncology, Inc. (PYXS)38.97%2.58%6.39%All Stock
MMP60.06ONEOK, Inc. (OKE)59.848.08%4.39%3.69%Cash Plus Stock
WWE98.54Endeavor Group Holdings, Inc. (EDR)22.337.57%4.28%3.29%Special Conditions
FORG19.44Thoma Bravo (N/A)19.60%16.54%3.06%All Cash
TSEM39.09Intel Corporation (INTC)31.3435.58%38.16%-2.58%All Cash
INFI0.1801MEI Pharma, Inc. (MEIP)7.32111.35%116.55%-5.20%All Stock
AMED91.8Option Care Health, Inc. (OPCH)30.640.84%8.58%-7.74%All Stock
SIMO71.19MaxLinear, Inc. (MXL)29.1347.27%62.47%-15.20%Cash Plus Stock
DHC2.66Office Properties Income Trust (OPI)7.89-56.40%-33.02%-23.38%All 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.

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
INFI02/23/2023MEI Pharma, Inc. (MEIP)$0.38$0.180106/30/2023111.35%2139.08%
SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$15.3806/30/2024101.56%96.28%
IRBT08/05/2022Amazon (AMZN)$61.00$40.1308/05/202352.01%345.13%
SIMO05/05/2022MaxLinear, Inc. (MXL)$104.84$71.1906/30/202347.27%908.11%
TSEM02/15/2022Intel Corporation (INTC)$53.00$39.0908/15/202335.58%199.82%
BKI05/04/2022Intercontinental Exchange, Inc. (ICE)$75.50$56.1208/04/202334.53%233.41%
ACI10/14/2022The Kroger Co. (KR)$27.25$20.8103/31/202430.95%38.42%
FORG10/11/2022Thoma Bravo (N/A)$23.25$19.4406/30/202319.60%376.50%
ATVI01/18/2022Microsoft Corporation (MSFT)$95.00$80.3806/30/202318.19%349.41%
HZNP12/12/2022Amgen Inc. (AMGN)$116.50$99.2512/15/202317.38%33.92%

Deals In The Works

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

  1. On June 5, 2023, Engine Capital issued a letter to the board of directors of Avantax (AVTA) regarding the immediate need to explore strategic alternatives.
  2. On June 5, 2023, Amedisys (AMED) announced that on May 26, 2023, the company received an unsolicited proposal from Optum, a diversified health services company, to acquire all of the outstanding shares of Amedisys’ common stock in an all-cash transaction for $100 per share.
  3. On June 5, 2023, Lucy Scientific Discovery (LSDI) announced that it sent a proposal to Pasithea Therapeutics (KTTA) to acquire each share of its common stock. Under the terms of the offer, Lucy proposes to pay $0.60 in cash, and $0.25 cents in Lucy stock (LSDI) for every share of Pasithea common stock.
  4. On June 6, 2023, Check-Cap (CHEK) announced that following a review of its business, resources, and capabilities, it is exploring strategic alternatives focused on maximizing stockholder value.
  5. On June 7, 2023, Chindata Group (CD) said that investor Bain Capital (BCSF) has offered to take the Chinese data center operator private in a deal valuing the company at $2.93 billion.
  6. June 8, 2023: Kanen Wealth Management, with a 4.1% stake in Lifeway Foods (LWAY), urges the company to pursue a sale.
  7. June 9, 2023: According to Reuters, TriNet Group (TNET), an online payroll services provider is exploring a potential sale of the company.
  8. On June 9, 2023, Global Indemnity Group (GBLI) announced that multiple parties indicated a preliminary interest in exploring an acquisition of or merger with Penn-America, Global Indemnity’s insurance group, or an acquisition of or merger with Global Indemnity itself.

Updates

  1. According to Reuters, Bunge (BG) is finalizing a $30 billion-plus merger with Viterra including debt.

SPAC Arbitrage

SPAC Business Combination

  1. On June 5, 2023, CERo Therapeutics and Phoenix Biotech Acquisition Corp. (PBAXentered into a definitive business combination agreement.
  2. On June 5, 2023, Power & Digital Infrastructure Acquisition II Corp (XPDB) and Montana Technologies LLC entered into a business combination. The combined company will operate under the name of Montana Technologies.
  3. On June 6, 2023, Blue Ocean Acquisition Corp (BOCN) and TNL Mediagene announced a definitive agreement for a business combination that is expected to result in TNL Mediagene becoming a publicly traded company.

Completed

  1. On June 8, 2023, NET Power, LLC and Rice Acquisition Corp. II (RONIannounced the completion of their previously announced business combination. The combined company will start trading on the New York Stock Exchange on June 9, 2023, under the ticker symbol (NPWR).

Terminated

  1. On June 2, 2023, Artemis (ARTE) informed Novibet, Komisium and the other parties to the Merger Agreement of its decision to terminate the Merger Agreement, with immediate effect.

List of all pending Merger Arbitrage deals:

Disclaimer: I have long positions in Activision Blizzard (ATVI), Spirit Airlines (SAVE) and Tower Semiconductor (TSEM). 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.