M&A Updates: The Conditions For ANTA Sports/Amer Sports Will Be Challenging

|
Includes: AET, APO, ARNC, AVA, CVS, GSK, HRNNF, ICCLF, SHPG, TAK, TSRO
by: Special Situation Investor
Summary

ANTA will have to get 90% of Amer shareholders approval.

Takeda/Shire deal is done.

Hydro One/Avista deal killed by Washington regulators.

Aurora Cannabis/ICC Labs deal brought 11% in a bit more than a month.

ANTA (ANPDY) - Amer Sports ("AMEAS") Offer

Current Spread: 4%

Finally after 2.5 months since their indication of interest (see initial post) the buyers consortium led by Chinese ANTA has made another step and brought an offer to Amer with the same price of 40eur/share. The price is 38% premium to all time high and 26x P/E and apparently 13.5% (1.4% is indirectly held by ANTA) of shareholders are already in favor of the transaction. The last time I wrote the spread was 14% and it has shrunk to 4% now. After Amer signs this deal it should shorten the spread even more. Nonetheless this is not a small merger ($5.2bn), so it will have to face some serious regulatory conditions + the approval of 90% of Amer shareholders will have to be gathered (and there are no major shareholders).

Less than 3 weeks since I commented on acquisition rumours of oncology bio-pharma company Tesaro (TSRO) it finally (after two years of resultless talks) has received $75 cash/share offer from GlaxoSmithKline (GSK). The premium is bold - 110% to 30 day WAP. The spread however, is zero.

Takeda(OTCPK:TKPYY)/Shire(SHPG) deal has received the approval of both company’s shareholders last week. It is interesting that despite the fuss caused by the opposition from Takeda’s family, as much as 88% of company’s shareholders voted in favor. Anyway, this is a done deal and it is expected to close in early January 2019. The spread is still at around 2% (meaning 12% profit since the first time I’ve posted about this deal).

Surprisingly federal judge is questioning CVS(CVS)/Aetna(AET) deal and has ordered companies to submit arguments on why he should not halt the deal by the 14th of December even after the transaction has been closed last month. It is a usual procedure that after DOJ approval it should be cleared by a judge, but it's standard that they do not question DoJ's decision. In this case, he says he is not convinced on whether the antitrust worries are cleared even after the agreement with DOJ and has pointed out certain activists’ concerns. The hearing is scheduled on the 18th of December, but experts say that the judge can not fully tank the deal and even if he decides that antitrust matters were not solved, both companies can renegotiate again with the DOJ or appeal the ruling.

After more than a month, I continue to watch lightweight metals manufacturer’s Arconic (ARNC) takeover talks situation and so far Apollo (APO) seems to be leading. This is still only talks and the terms have not been disclosed, but the rumoured price is at $23-$24 levels, providing 15%+ spread. We’ll see how this plays out.

Hydro One(OTC:HRNNF)/Avista(AVA) deal was killed by Washington regulators last week, as they claim this transaction is not in the best interest of the company and their clients. The main reason for the blow is Hydro One’s dependence on Ontario state (they hold 47% of the company), which according to Washington interfered with the firm's decisions based on political reasons. Ontario’s Premier Doug Ford has made the electricity provider’s CEO and board resign in the middle of the year, which raised concerns of the regulators and made them to postpone this deal to December, but apparently their decision is still negative after all. The companies are going to file a petition to make Washington reconsider, but it is not clear on whether it will make any difference at this point.

Aurora Cannabis has received all the regulatory approvals and completed the acquisition of ICC Labs (OTC:ICCLF) even faster than I’ve expected. Congratulations on 11% in a month.

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.

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.