M&A Updates: Sibanye/Lonmin Conditional Approval By Tribunal

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Includes: AET, CI, CVS, ESRX, LNMIF, PDS, SBGL, SHPG, TAK, TDGCF
by: Special Situation Investor
Summary

Takeda/Shire cleared their last regulatory hurdle.

CVS/Aetna near the finish line.

Despite workers protests, Sibanye/Lonmin deal should close.

After Ensign Energy move, PDS does not have time to wait until their stock recovers.

As expected, international pharma merger between Takeda(OTCPK:TKPYY)/Shire(SHPG) has received the green light from EU, which was the last regulatory requirement. Now the eyes are set on the Takeda’s shareholder meeting that is planned on the 5th of December. Takeda is positive on getting the required votes and now that Glass Lewis and ISS have also backed this transaction, it seems like a done deal. Closing is expected in January 2019, the spread is still at 6%.

CVS(CVS)/Aetna(AET) deal should close after Thanksgiving. According to their recent filing, two more states out of 28 are left to give their consents. One of them is New York, which previously has threatened to partially block the deal. Nonetheless, CVS says that they are confident on getting all the approvals. Spread is less than 2%

A similar merger between Cigna(CI)/Express Scripts(ESRX) is taking a longer time, despite being a smaller transaction and receiving DOJ approval earlier. The companies have recently extended the deadline to June 2019, although it seems that much less time will actually be needed as only 3 state consents are left to get. New York hearing is scheduled on the 7th of the December and I think most likely this deal will close at the end of this year or January 2019. Spread is at 7%.

As expected, the deal to create worlds 2nd largest platinum miner between Sibanye(SBGL)/Lonmin(OTC:LNMIF) has received a conditional blessing from South Africa’s Competition Tribunal. The condition is to postpone the layoffs by half a year. These job cuts (over 12,000) are the main concern of this deal and earlier this month it has sparked another opposition. This time it is from a workers union AMCU, which represents 43% of Sibanye’s workforce. They have previously asked the Competition Tribunal to limit the lay-offs to 10,000, and threatened to widen their protests if the deal goes through. Now that, the deal did get the approval it is not yet known what will be the answer of the opposition, but Sibanye might be able to settle with them by increasing their wages, which seems that could have been the initial drive of this opposition. In regards to approvals, only both company's shareholder and UK courts consents are needed. I believe there won’t be a problem with that as both Lonmin and Sibanye have 30% (here and here) secured already. The spread has widened from 0% to 2.4% since the last time I wrote about his deal, which is a result of the AMCU protests.

Precision Drilling (PDS) ambition to become a third largest drilling company by acquiring Trinidad Drilling (OTCPK:TDGCF) is in danger now more than ever. Due to the stock sell off their offer of 0.445 PDS/share fell from $2 to current C$1.50 and is still considerably smaller than Ensign Energy’s C$1.68 in cash (see previous post). Ensign Energy decided to not to increase their offer, however they took advantage of the timing and shortened their tender offer deadline by more than two weeks to 27th of November. Now Trinidad’s shareholders are in a tight spot and must choose between Ensign's cash offer, which was way inferior in the beginning of October and PDS all-stock offer, which is already accepted by Trinidad’s board. Ensign currently owns almost 10% of Trinidad and even if their tender is not successful they can still gather enough shares to create a strong opposition to PDS offer in an upcoming Trinidad’s shareholder meeting set on the 11th of December. Despite that, PDS is confident, as their CEO has said before that their offer will let shareholders participate in the next upswing of the cycle and most of them that he has spoken to prefer this kind of a deal. This might be true, however even to simply match Ensign’s offer PDS shares still have to go up at least 10% more.

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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