Merger activity decreased last week with three new deals announced and four deals completed.
Chad Williams founded QTS Realty Trust (QTS) in the year 2003 with the purchase of a data center in Kansas. The company provides data center solutions across a diverse footprint spanning more than 7 million square feet of owned data center space throughout North America and Europe. On June 7, 2021, QTS entered into a definitive agreement to be acquired by Blackstone Funds in a $10 billion transaction. Another data center REIT that we had tracked in our Merger Arbitrage Tool was the acquisition of InterXion Holding (INXN) by Digital Realty Trust (DLR). This deal was completed on March 13, 2020. Both deals were announced at a premium of over 20%. According to analysts, CyrusOne (CONE) and CoreSite (COR) could be potential M&A targets among data center REITs, following the sale of QTS.
Another highlight from last week was Magnachip (MX) receiving an unsolicited proposal from Cornucopia Investment Partners to acquire the company for $35.00. Magnachip entered into an agreement to be acquired by South Dearborn Limited for $29.00 on March 26, 2021. Shares of the company were up by 11.3% on Friday following the announcement of the rival bid. The spread on the deal, despite this new offer, is still nearly 12% or almost 22% annualized assuming the deal closes by the end of the year.
Semiconductor deals generally trade at a large spread because the wounds from failed deals like Lattice Semiconductor (LSCC) and NXP Semiconductors (NXPI) are still on the minds of arbitrageurs. The former failed because the U.S. government decided to block the deal and the latter failed because the Chinese government essentially ran out the clock on the deal. Despite these concerns, several semiconductor deals have successfully completed since the NXPI fiasco. The situation with Magnachip appears to be a little more risky to me compared to other semiconductor deals that have gone through. Magnachip (MX) is not only undergoing formal CFIUS review, there is also the risk the South Korean government might attempt to block the deal.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.