M&A Updates: CVC Capital Is Interested In French Insurer April SA

by: Special Situation Investor

Pan American Silver/Tahoe Resources received shareholder approvals.

Owens Realty Mortgage/Realty Capital will hold shareholder meeting on the 28th of Feb.

CVC Capital is interested in French insurer April SA.

  • Mid Atlantic Dental Partners have closed the acquisition of Birner Dental(OTC:BDMS) and brought 4.6% profit in 2 months + 1% still potentially coming from the CVR.

  • Another mining deal (previous article) between Pan American Silver(PAAS)/Tahoe Resources(TAHO) has also received both companies’ shareholder approvals. This, however is a more tricky deal as the spread is only positive (16%) considering that the CVR of 0.0497 PAAS, which is conditioned on restarting of the main Tahoe’s asset Escobal mine, will be successfully paid out. Although, 4 months have passed since the court has ordered to carry out a consultation with the Xinca tribe (to lift the mine suspension), PAAS CEO has commented that they are still very early in the process and it will take a lot of time. Approval of British Columbia is also expected shortly, so I think deal is most likely done. However, the risk with the CVR is considerable.

  • Keppel Corp (OTCPK:KPELF) and Singapore Press Holdings (T39.SI) pre-conditional offer (initial post) to acquire remaining shares of the smallest Singaporean network provider M1 (B2F.SI) was followed by a conditional voluntary offer. The price is the same and although it is expected that M1’s largest shareholder Axiata Group (owns 28% and has expressed disappointment with the offer) will top the bid, nothing has yet been announced. So far the spread remains negative.

  • Both Owens Realty Mortgage (ORM) and Realty Capital (RC) will hold a special meeting on the 28th of February to vote on their transaction (see previous post). I expect that ORM shareholders should definitely vote in favour, however I can’t say much about RC shareholders. So far, in a month the spread has shrunk from 8% to 4%.

  • Washington won’t reconsider Hydro One/Avista deal, now killing it completely.

  • Partial US government shutdown will affect numerous deals such as CVS(CVS)/Aetna’s(AET) court review and will further prolong T-mobile (TMUS)/Sprint’s(S) FCC approval that is final major hurdle and might negatively impact the whole timeline of the deal.

  • Takeda(OTCPK:TKPHF) has finally became a top 10 drugmaker by completing a largest international merger in the history of Japan with Shire(SHPG). This year already two big pharma deals have been announced. One of them (Eli Lilly/Loxo) is not that interesting for us as the spread is only 1%, however another one is.

Bristol Myers Squibb (BMY) - Celgene (CELG)

Spread: 22% (with CVR). Closing:

A first huge ($90bn including debt) deal of the year in the pharmacy sector. It is already quite well covered and given its size I think the spread should reflect the risk pretty well. Merger consideration is: 50$ in cash + 1 BMY share + CVR worth 9$. CVR is conditioned on three milestones, which are U.S. FDA approval for 3 products with the latest deadline being in 2021. Without the CVR the spread stands at 12%, so it is quite a substantial difference. The deal is subject to majority of Celgene and BMY shareholders approval and various regulatory blessings. Financing is secured with Morgan Stanley and MUFG lending $33.5bn, which will be one of the biggest bridge loans ever. Apparently BMY shareholders were not very satisfied with this deal as after the announcement the shares have dropped 15%. It is also interesting that certain analysts are guessing that due to shareholders disapproval BMY might become a target for a hostile takeover with the potential buyers being Pfizer, AbbVie and Amgen.

CVC Capital - April SA (APR.PA) Potential Tender Offer

Spread: 7%

French insurer April SA has drawn the interest of private equity firm CVC. The largest shareholder Evolem (holds 65%, has the same president and founder - Bruno Rousset) has entered into exclusive negotiations with CVC to transfer their ownership at a price of 22 EUR/share. After that the company will conduct a tender offer for the minority shareholders at the same price. Nonetheless, the offer price is subject to adjustment of any dividends paid before the closing and another adjustment related to the tax issue (expected value = 0.12 EUR). So even if we take the offer price at 21.88 EUR, it still leaves 6.7% spread. Overall, the buyer is credible, so this is definitely a situation worth tracking.

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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