Merger Arbitrage Mondays - October 1, 2018


  • Merger activity decreased last week with four new deals announced.
  • Aetna sells its Medicare Part D prescription drug plan business to obtain U.S. approval for its planned deal to merge with CVS Health Corp.
  • Sirius XM Holdings stock drops after deal to acquire Pandora Media.
  • PHH Corporation and Ocwen Financial Corporation received all state regulatory and governmental entity consents with respect to their merger.

Merger activity decreased last week with four new deals announced and two pending deals closing. You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 2018 115
Total Number of Deals Not Completed in 2018 13
Total Number of Pending Deals
Cash Deals 47
Stock Deals 21
Stock & Cash Deals 16
Special Conditions 4
Total Number of Pending Deals 88
Total Deal Size $1.18 trillion

New Deals:

  1. The acquisition of Randgold Resources Limited (GOLD) by Barrick Gold Corporation (ABX) for $5.68 billion in an all-stock deal. Under the terms of the agreement, shareholders of Randgold Resources will get 6.128 new Barrick shares for each Randgold share they hold.
  2. The acquisition of Pandora Media (P) by Sirius XM Holdings (SIRI) for $3.5 billion in an all-stock deal. Under the terms of the agreement, the owners of the outstanding shares in Pandora that SiriusXM does not currently own will receive a fixed exchange ratio of 1.44 newly issued SiriusXM shares for each share of Pandora they hold.
  3. The acquisition of XO Group (XOXO) by WeddingWire for $933 million, or $35.00 per share in cash.
  4. The acquisition of Sonic (SONC) by Inspire Brands for $2.3 billion, or $43.50 per share in cash.

Deal Updates:

  1. On September 24, 2018, shareholders of both Marathon Petroleum (MPC) and Andeavor (ANDV) voted to approve the strategic combination of MPC and Andeavor. MPC and Andeavor expect the closing of the transaction to occur on October 1, 2018.
  2. On November 25, 2018, The Navigators Group (NAVG) announced the expiration of the 30-day “go-shop” period provided for under the terms of the previously announced definitive merger agreement, pursuant to which Navigators will be acquired by The Hartford Financial Services Group (HIG).
  3. On September 25, 2018, Dun & Bradstreet (DNB) announced that it has established a meeting date of November 7, 2018, for a special meeting of shareholders of record as of September 28, 2018, to, among other things, consider and vote on a proposal to adopt the previously announced agreement and plan of merger.
  4. On September 26, 2018, USG Corporation (USG) announced that its stockholders voted to adopt the Agreement and Plan of Merger with Gebr. Knauf KG.
  5. On September 26, 2018, AV Homes (AVHI) announced that AV Homes stockholders approved the acquisition of AV Homes by Taylor Morrison Home Corporation (TMHC).
  6. On September 26, 2018, FS Bancorp (FSBW) and Anchor Bancorp (ANCB) jointly announced that the required regulatory approvals have been received from the Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation in connection with the proposed merger of Anchor with and into FS Bancorp. Anchor's special meeting of shareholders is scheduled for November 13, 2018.
  7. On September 26, 2018, stockholders of First Connecticut Bancorp (FBNK) approved the proposed merger of First Connecticut and People's United Financial (PBCT). The merger remains subject to customary closing conditions and is expected to close on October 1, 2018.
  8. On September 26, 2018, 21st Century Fox (21CF) announced that it intends to either accept the recommended revised cash offer by Comcast Corporation (CMCSA) for the entire issued and to be issued share capital of Sky plc (OTCPK:SKYAY) at a price of £17.28 for each Sky share in respect of the 21CF’s (FOX) existing stake or sell 21CF’s existing stake to Comcast at the Comcast Offer price. Disney (DIS) has consented to 21CF’s decision to either accept the Comcast Offer in respect of 21CF’s existing stake or sell its existing stake to Comcast.
  9. On September 27, 2018, Aetna (AET) said that it would sell its Medicare Part D prescription drug plan business to WellCare Health Plans to obtain U.S. approval for its planned deal to merge with CVS Health Corp. (CVS).
  10. September 28, 2018: According to Reuters, the European Commission said that EU antitrust regulators will decide by November 6 whether to allow Takeda Pharmaceutical's (OTCPK:TKPHF) takeover of Shire (SHPG).
  11. September 28, 2018: Andeavor announced the preliminary results of the stockholder election consideration related to the acquisition by Marathon Petroleum Corporation (MPC). Based on preliminary information received from the exchange agent for the Merger, (i) election forms were received with respect to approximately 104,722,352 shares of Andeavor common stock in the aggregate, and (ii) the cash election option was selected with respect to approximately 4,257,779 shares of Andeavor common stock, which is less than the Cash Election Number in the Merger Agreement.
  12. On September 28, 2018, PHH Corporation (PHH) announced an update on its proposed merger with Ocwen Financial Corporation (OCN), stating that the parties have now received all state regulatory and governmental entity consents in order to be in a position to close and intend to consummate the merger within the next 10 days.

Closed Deals:

  1. The acquisition of RMG Networks Holding Corporation (RMGN) by SCG Digital on September 28, 2018. It took 178 days for this deal to be completed.
  2. The acquisition of CoBiz Financial (COBZ) by BOK Financial Corporation (BOKF) on September 28, 2018. It took 102 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced
Profit Annualized
AKRX 04/24/2017 Fresenius Kabi (N/A) $34.00 $12.98 09/30/2018 161.94% 0.00%
SIR 09/17/2018 Government Properties Income Trust (GOV) $29.26 $21.94 01/31/2019 33.36% 99.01%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (OTC:HHRBF) $5.43 $4.17 12/01/2018 30.22% 177.88%
SCG 01/03/2018 Dominion Energy, Inc. (D) $47.02 $38.89 12/31/2018 20.90% 82.91%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $11.35 09/30/2018 18.94% 0.00%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $18.1 10/31/2018 13.81% 162.63%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $50.28 $45.01 06/30/2019 11.71% 15.66%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.20 $6.54 06/30/2019 10.06% 13.44%
EGC 06/18/2018 Cox Oil affiliate (N/A) $9.10 $8.36 10/10/2018 8.85% 323.09%
ORBK 03/19/2018 KLA-Tencor Corporation (KLAC) $64.29 $59.44 12/31/2018 8.16% 32.36%

Disclaimer: I hold positions in Rockwell Collins (COL), United Technologies (UTX), Pandora, RadiSys Corp. (RSYS) and magicJack VocalTec (CALL). 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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

This article was written by

Asif Suria profile picture
Comprehensive tools and detailed analysis for event-driven investors

I am an entrepreneur and investor with a focus on event driven strategies including merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. I was one of the earliest contributors on Seeking Alpha and started publishing here in 2005. For more than a decade I have been writing every week about M&A and interesting insider transactions. My work has been mentioned in Barron's, Dow Jones, BNN Bloomberg and other publications.  

I have been an active investor for more than two decades and my background in technology has helped me built tools that inform my investing process, especially as it relates to event-driven strategies that require updated data and processes. The focus on my Inside Arbitrage service is to provide investors with the right combination of tools and analysis to help them take advantage of strategies that can perform well across market cycles.  

Disclosure: I am/we are long COL, UTX, P, RSYS, CALL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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