Merger Arbitrage Mondays - November 26, 2018

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Includes: CI, CLDR, COL, D, DIS, ESRX, ESV, FOXA, HDP, HIFR, MDT, MZOR, NSU, RDC, REN, SCG, SEND, SHPG, TWLO, UTX, XEC, ZOES
by: Asif Suria
Summary

Merger activity decreased last week with one new deal announced.

The European Commission approved the takeover of Shire by Takeda Pharmaceutical.

United Technologies received China’s approval for its takeover of Rockwell Collins.

Merger activity decreased last week with one new deal announced and one pending deal closing.

Deal Statistics:

Total Number of Deals Closed in 2018 147
Total Number of Deals Not Completed in 2018 14
Total Number of Pending Deals
Cash Deals 45
Stock Deals 32
Stock & Cash Deals 16
Special Conditions 8
Total Number of Pending Deals 101
Total Deal Size $1.35 trillion

New Deals:

  1. The acquisition of Resolute Energy Corporation (NYSE:REN) by Cimarex (NYSE:XEC) for $1.6 billion in a cash plus stock deal. Under the terms of the definitive merger agreement, Resolute shareholders will have the right to receive 0.3943 shares of Cimarex common stock, $35 per share in cash, or a combination of $14 per share in cash and 0.2366 share of common stock. The amount of stock and cash is subject to proration for total stock and cash mix of 60% and 40%, respectively.

Deal Updates:

  1. On November 19, 2018, Walt Disney (NYSE:DIS) received unconditional approval from China for its deal to buy Twenty-First Century Fox’s (NASDAQ:FOXA) entertainment assets, clearing one of the last major hurdles for the deal to go through.
  2. On November 19, 2018, the proposed combination of Dominion Energy (D) and SCANA Corporation (NYSE:SCG) received the approval of the North Carolina Utilities Commission.
  3. On November 19, 2018, Mazor Robotics (NASDAQ:MZOR) shareholders approved the previously announced definitive merger agreement with wholly-owned subsidiaries of Medtronic (NYSE:MDT).
  4. On November 19, 2018, Cloudera (NYSE:CLDR) and Hortonworks (NASDAQ:HDP) announced that the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with their previously announced merger.
  5. On November 20, 2018, Nevsun Resources (NYSEMKT:NSU) announced that it has been advised by Zijin Mining Group that Zijin has completed the Chinese State Administration of Foreign Exchange registration and received the Canadian Investment Canada Act approval for Zijin’s proposed friendly takeover bid of Nevsun. The SAFE registration is the final Chinese regulatory condition and ICA is the final Canadian regulatory condition to the Offer. Both conditions have now been met.
  6. On November 20, 2018, InfraREIT (NYSE:HIFR) announced that the 30-day “go-shop” period set forth in its previously announced definitive agreement with Oncor Electric Delivery Company expired on November 17, 2018 and also announced that it has received from a third party a preliminary and non-binding acquisition proposal that InfraREIT’s Conflicts Committee has determined is reasonably likely to lead to a “superior proposal” under the definitive agreement with Oncor.
  7. On November 20, 2018, The European Commission said that it approved the takeover of Shire (NASDAQ:SHPG) by Takeda Pharmaceutical.
  8. On November 20, 2018, Rowan Companies (NYSE:RDC) and Ensco (NYSE:ESV) jointly announced that they have received notice from the Department of Justice and the Federal Trade Commission granting early termination of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
  9. On November 20, 2018, Twilio (NYSE:TWLO) announced that SendGrid (NYSE:SEND) and Twilio received notification of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) on November 20, 2018 with respect to the proposed acquisition of SendGrid.
  10. On November 21, 2018, Cigna (NYSE:CI) and Express Scripts (NASDAQ:ESRX) extended the termination date for their merger agreement by six months to June 8, 2019, from an original December 8, 2018.
  11. On November 23, 2018, United Technologies (NYSE:UTX) received China’s approval for its takeover of Rockwell Collins (NYSE:COL).

Closed Deals:

  1. The acquisition of Zoe’s Kitchen (ZOES) by Cava Group on November 21, 2018. It took 96 days for this day to be completed.

Top 10 deals with largest spreads:

Symbol Announced Date Acquiring Company Closing Price Last Price Closing Date Profit Annualized Profit
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.16 03/31/2019 91.38% 266.83%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $10.7 12/31/2018 26.17% 272.90%
TAHO 11/14/2018 Pan American Silver Corp. (NASDAQ:PAAS) $4.10 $3.38 03/31/2019 21.30% 62.20%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.52 12/01/2018 20.13% 1469.69%
KANG 03/26/2018 IK Healthcare Investment Limited (N/A) $20.60 $17.60 12/31/2018 17.05% 177.76%
DVMT 07/02/2018 Dell (N/A) $120.00 $103.92 12/31/2018 15.47% 161.37%
ORBK 03/19/2018 KLA-Tencor Corporation (NASDAQ:KLAC) $62.44 $54.96 12/31/2018 13.61% 141.88%
NAP 10/08/2018 Navios Maritime Acquisition Corporation (NYSE:NNA) $3.04 $2.7 12/31/2018 12.47% 130.01%
RSYS 07/02/2018 Reliance Industries Limited (N/A) $1.72 $1.53 12/31/2018 12.42% 129.51%
S 04/29/2018 T-Mobile US, Inc. (NASDAQ:TMUS) $6.88 $6.12 06/30/2019 12.40% 20.95%

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