Special Situation Updates And New Deals: A Death Of Odd-Lot Tenders?

by: Special Situation Investor


MYOB Group receives takeover offer from KKR.

Blue Bird has cancelled odd-lot priority.

Amcor/Bemis spread has widened more than 2.5 times.

Since the first time I’ve posted about it, a spread of a deal to create a global leader in consumer packaging industry between Amcor (OTCPK:AMCRF)/Bemis (BMS) has widened more than 2.5 times. This increase to the current 14% is puzzling to me as apparently there has been no bad news related to the merger and actually the recent Green Packaging Market Research report has outlined wonderful opportunities and substantial growth prospects for the green packaging market. Additionally, Bemis has stated that the merger is still expected to close in Q1 2019 and next month they will formalize the integration plan and the leaders.

Univar (UNVR) - Nexeo (NXEO) Part Stock Part Cash Deal

Spread: 3%. Expected closing: H1 2019

Industrial chemical and plastics distributor Nexeo is being acquired by Univar, a leading global distributor of industrial and specialty chemicals. The transaction has already been unanimously approved by the Boards of both companies and is subject to Univar and Nexeo shareholder approval as well as customary and regulatory approvals. Both companies are over 90% held by institutional investors and so far two of NXEO's biggest shareholders TPG (owns 34%) and First Pacific Advisors (28%) have agreed to vote for the transaction. Univar has also hired an external advisor to make a strategic review on Nexeo’s plastic business, where potential divestments might be required. Merger consideration: 0.305 shares of Univar + $3.29 cash.

KKR (KKR) - MYOB (MYO) Group Acquisition

Spread: 4%

Business software & accounting solutions provider got an offer from KKR to be acquired at A$3.7/share. KKR has just bought 17.6% of MYOB from the largest shareholder Bain Capital at A$3.15/share and currently owns 20% of the target company. The non-binding deal is subject to unanimous approval of MYOB’s BoD and other customary conditions such as acquiring financing at applicable terms.

Blue Bird Corporation (BLBD) Tender Offer

Spread: 13%. Expiration date: October 15th

Blue Bird Corporation has announced a buyback of $50m shares. Common shares will be cashed out at $28/share. This offer represents 6.6% of outstanding shares and is expected to be oversubscribed. Initially there was a priority for odd-lots, meaning that holders of 99 or less shares had to be accepted without proration. Nevertheless, this deal has received a lot of attention and criticism for giving out “free money”, so Blue Bird has cancelled the odd-lot. Holders of the shares can still participate in the tender or sell their shares in the market. It is interesting as it is the first time I’ve seen a cancelled odd-lot tender in years and I think from now on this kind of deal won’t be considered “risk free”, because proration/cancellation risk will always be there. I suppose that from now on there will be even less odd-lot tenders and with time they should disappear completely.

Dominion Energy (D) - Scana (SCG) merger has made a step forward by reaching an agreement with Public Staff of NCUC (North Carolina Utility Commission) to ensure rate stability. The deal has yet to be fully approved by NCUC and South Carolina regulators. So far the merger is in a tight spot after receiving a 15% or about $22 bill cut rate for SCANA’s customers from the regulators. The final rate cut decision is going to be decided by the end of the year, however Dominion has stated that if the current rate cut is going to be approved, they will walk away. This might or might not be a bluff, however the reduction is really big compared to Dominion's previous final offer of $10 cut. According to the deal SCANA’s customers, which have already paid over $2bn for a failed V.C. Summers project are going to receive about $1000 refund as well. To decide on a final rate cut public hearings are going to be held until December. The first one already happened in late September, three more are planned for the 8th, 15th of October and 1st of November. Currently the spread has shrunk to 22% from 35% when I first wrote about this deal.

Little bit of good and bad news for Sprint (S)/T-mobile (TMUS) merger.
The deal might get a positive push as cable providers have started offering wireless services and it might result in less concerns over competition for Sprint/T-mobile. FCC has asked a few cable companies for more details on the offerings, however critics claim that the companies most often offer their service only to their customers, which narrows the reach. The bad news is that The California Public Utilities Commission has set an “evidentiary hearing” to review 14 points on the merger on February and the decision might not come even until July 2019. This is a rough setback for the companies as they have been trying to get regulatory approvals as fast as possible.

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.