M&A Updates: Patience Is The Key For Digirad/Aetrium Deal

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Includes: AET, AMZN, ATRM, BOJA, CI, CVS, DRAD, ESRX, HUSKF, LGF.A, MEGEF, SHPG, WCG
by: Special Situation Investor
Summary

Digirad to acquire ATRM.

FCC extended deadline for Sprint/T-mobile.

Husky Energy has an upper hand, because of its partnership with Chinese oil giant.

Take a look at Digirad/ATRM deal, which I’ve also added to my followed deals. It is a super small transaction as ATRM’s market cap is only $1.3m (as at October 4), so it is surprising that it is a public company in the first place. Both stocks are illiquid, however I believe a nice position can be obtained.

Also keep an eye on Bojangles and Husky/MEG situations as I think they might develop into interesting and profitable deals.

Digirad (DRAD) - ATRM (OTC:ATRM) Acquisition

Spread: 4% Expected closing: Q1 2019

An interesting nano cap deal where ATRM holdings is being acquired by Digirad Corporation to help. This acquisition is supposed to be a “kick off” to make DRAD into a diversified holdings company and to lay a ground for future acquisitions. Both companies have the same chairman/CEO (Jeff Eberwein). I expect that there should not be any problems with neither company’s shareholder approval. Both stocks are illiquid and since the announcement the spread has moved from 4% to 20% a number of times. I think with time and persistence a well sized position can be taken. Merger consideration: 0.4 DRAD shares. There is a significant downside risk, as up until the announcement ATRM was trading around $0.2.

FCC has extended the deadline for Sprint - T-mobile deal from October 9th to October 31st. Previously the commission has stopped it’s 180-day clock to review the recently submitted modelings of the deal. On September 28th companies informed that they have completed the submissions, so now they will take to address the questions from FCC until October 31st.

After getting a major blessing from DOJ, Cigna (CI) has announced a new management of the merged company, which will be formed after the acquisition of Express Scripts (ESRX) is completed. A similar deal between CVS(CVS)/Aetna(AET) is still waiting for the DOJ green light after agreeing to sell the required divestments to WellCare(WCG).

First Midwest Bancorp - Northern States merger is getting ready to take another big step as the deal is approaching NSFC shareholder meeting on October 4th. The approval should be granted as I previously wrote, because large part of NSFC is likely to be owned by 2014 private placement participants who acquired the shares with a huge discount to the current offer price.

Takeda Pharmaceuticals has announced a record date of 19th October for the upcoming EGM, where the vote for Takeda (TKPHF)/Shire(SHPG) deal is going to take place. The actual EGM is going to be held in 3 months after the record date and in case it does not happen, a new record date is going to be set.

It is rumored that restaurant operator Bojangles (BOJA) has hired Bank of America to explore strategic options including a sale. The company has been having troubles with the sales and announced the closing of 10 restaurants and about re-franchising about 30 others. Moreover company’s CEO has resigned earlier this year too. More than the half of the company is owned by private Advent International, which took the company public in 2015 and after the apparent struggles could be pushing for a sale now. BOJA is currently up 16% since the announcement.

The 4th largest Lions Gate (LGF.A) investor raises hopes, that company’s current partnership with Amazon (AMZN) could lead to takeover.

After being turned down in August, Husky Energy (OTCPK:HUSKF) made a hostile offer to acquire oil sands company MEG Energy (OTCPK:MEGEF) at C$11 or 0.485 Husky shares. Currently the spread is consumed, which indicates expected upcoming bid. Potential companies that might be interested in MEG Energy include Canadian Natural Resources, Imperial Oil and Suncor Energy, however Husky has an advantage of being a partner of MEG’s largest shareholder Chinese oil giant CNOOC.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

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