Icahn Flips XO To Verizon

| About: Verizon Communications (VZ)


Icahn pitches his fiber optic network.

Honeywell maintains its high antitrust pain threshold.

Time wants Yahoo!

Welcome to the Fiber Optic issue of M&A Daily


Verizon (NYSE:VZ) paid $1.8 billion for Carl Icahn's XO Communications' fiber optics network. The deal will probably close in the first half of next year. Verizon will also lease available XO wireless spectrum with an option to buy the spectrum unit by the end of 2018. Citigroup (NYSE:C) advised Verizon on the deal.

Around this time last year, Icahn's Icahn Enterprises (IEP) was riding high, priced at almost $100 per share which was over a 40% premium to its NAV. Investing talent is rare. Even when it can be found, it is not worth overpaying for.

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United Technologies (NYSE:UTX) shot down a $108 per share cash and stock offer from Honeywell (NYSE:HON) on antitrust grounds. The UTX board is right to predict substantial regulatory risk.


MKS (NASDAQ:MKSI) agreed to acquire Newport (NASDAQ:NEWP) in a $980 million cash deal. NEWP holders get $23 per share. The premium was over 50%. Financing is committed. It is expected to be accretive to free cash flow within a year.


Western Digital (NYSE:WDC) terminated its deal with Unisplendor following a decision by CFIUS to carry out an investigation on the deal. WDC management is committed to its acquisition of SanDisk (SNDK), now using the terms of $67.50 per share in cash and 0.2387 in stock. WDC owners are not so sure. The WDC shareholder vote on this deal will be dicey. Some holders have announced their opposition; others will join them.


Time (NYSE:TIME) is interested in merging with Yahoo! (NASDAQ:YHOO).


The preliminary S-4 has been filed for the Shire (NASDAQ:SHPG) acquisition of Baxalta (BXLT). The $2.82 net arbitrage spread offers a 16% annual return if the deal closes by August.

Office Depot

Office Depot (NYSE:ODP) management say that they are looking forward to presenting their case in the US federal district court over its acquisition by Staples (NASDAQ:SPLS). They shouldn't be. They expect a resolution by May 10.


The Airgas (ARG) shareholder vote is at 11 AM ET today for its acquisition by Air Liquide (OTCPK:AIQUY). It is reasonable to expect approval.


Allergan (NYSE:AGN) CEO Brent Saunders discussed the company's acquisition by Pfizer (NYSE:PFE) on his quarterly conference call,

In late November, we announced with Pfizer the proposed combination of our businesses, bringing together two successful pharmaceutical companies to create a premier global biopharmaceutical leader, with the resources and capabilities to bring more medicines to more people around the world.

Together, we will leverage the best of both organizations, matching Pfizer's strong infrastructure, broad portfolio and global reach, with Allergan's operating agility, growth profile and new therapeutic areas. We will have breadth and depth in key therapeutic areas, strengthened by an expanded global footprint, allowing Allergan brands to reach more patients in more markets more quickly, including two of the world's largest pharmaceutical markets in Japan and China.

We will have an innovative R&D pipeline, consisting of projects sourced from strong internal science and Open Science to fuel our future growth. We're two months into the planning for this combination and I'm already pleased to see early progress on our integration planning efforts, such as the announcement of our proposed executive team.

Both teams are hard at work planning for the integration for what will be the premier biopharmaceutical Company in the world. We continue to expect the combination with Pfizer to close in the second half of 2016.

The $43.40 net arbitrage spread offers an 18% annual return if the deal closes by yearend.

Done deal(s).

  • Mellanox (NASDAQ:MLNX) completed its acquisition of Ezchip (EZCH).
  • Activision (NASDAQ:ATVI) completed its acquisition of King (BATS:KING).

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Disclosure: I am/we are long YHOO, BXLT, AGN, BHI, KMI, BRK.A, BRK.B.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

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