Merger Arbitrage Mondays - January 21, 2018

Jan. 21, 2019 8:06 AM ETNEM, ENFC, SMBK, FISV, CVRR, CVI, GNW, AUB, ANCX, AVA, RHT, IBM, IDTI, BHBK, INDB, DNB, CNP, VVC, RDC, VAL, TLP, EGL, SAIC, HQCL, KANG, INUV, EHIC, CELG, BMY, S, TMUS, TAHO, PAAS, PACB, ILMN, STC, FNF2 Comments5 Likes

Summary

  • Merger activity increased last week with four new deals announced.
  • The acquisition of Goldcorp by Newmont Mining Corporation for $10 billion.
  • The acquisition of First Data Corporation by Fiserv for $22 billion.

Merger activity increased last week with four new deals announced and three pending deals closing.

Deal Statistics:

Total Number of Deals Closed in 2019 16
Total Number of Pending Deals
Cash Deals 36
Stock Deals 23
Stock & Cash Deals 16
Special Conditions 4
Total Number of Pending Deals 79
Total Deal Size $591.68 billion

New Deals:

  1. The acquisition of Goldcorp (GG) by Newmont Mining Corporation (NEM) for $10 billion in an all-stock deal. Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share and $0.02 for each Goldcorp share. We are tracking this as a cash plus stock deal in our Merger Arbitrage Tool (MAT) to calculate the spread accurately on account of the $0.02 cash portion of the deal.
  2. The acquisition of Entegra Financial (ENFC) by SmartFinancial (SMBK) for $158.2 million in an all-stock deal. Under the terms of the merger agreement, each share of Entegra common stock outstanding immediately prior to the merger will be converted into the right to receive 1.215 shares of SmartFinancial common stock. In addition to the stated merger consideration, Entegra shareholders will receive one non-transferrable contingent value right (“CVR”) for each share of Entegra common stock held. This CVR is related to an ongoing dispute between Entegra and certain unrelated third-parties.
  3. The acquisition of First Data Corporation (FDC) by Fiserv (FISV) for $22 billion in an all-stock deal. Under the terms of the agreement, First Data shareholders will receive a fixed exchange ratio of 0.303 Fiserv shares for each share of First Data common stock they own.
  4. The acquisition of CVR Refining (CVRR) by CVR Energy (CVI) for $241 million, or $10.50 per share, in cash.

Deal Updates:

  1. On January 13, 2019, Genworth Financial (GNW) and China Oceanwide Holdings Group announced that the New York State Department of Financial Services has approved the proposed acquisition of control of New York-domiciled Genworth Life Insurance Company of New York by entities affiliated with Oceanwide in connection with the merger of Oceanwide and Genworth.
  2. On January 15, 2019, shareholders of both Union Bankshares Corporation (UBSH) and Access National Corporation (ANCX) approved the previously announced merger of Access with and into Union.
  3. On January 15, 2019, Hydro One and Avista (AVA) received notice of abeyance by the Oregon Public Utility Commission (“OPUC”).
  4. On January 16, 2019, Red Hat (RHT) shareholders vote to approve the merger with IBM (IBM).
  5. On January 16, 2019, Integrated Device Technology (IDTI) shareholders vote to approve the merger with Renesas Electronics Corporation.
  6. On January 16, 2019, stockholders of Blue Hills Bancorp (BHBK) approved the proposed merger of Blue Hills Bancorp and Independent Bancorp (INDB).
  7. On January 17, 2019, Dun & Bradstreet (DNB) announced that the United Kingdom Financial Conduct Authority (the “FCA”) approved the change in control of Dun & Bradstreet Limited applicable to the company’s proposed merger transaction with an investor group led by CC Capital, Cannae Holdings, Bilcar, LLC, Black Knight, Inc. and funds affiliated with Thomas H. Lee Partners, L.P.
  8. On January 17, 2019, CenterPoint Energy (CNP) announced the receipt of the final nod for its pending merger with Vectren (VVC) from the Indiana Utility Regulatory Commission (IURC).
  9. On January 17, 2019, Rowan Companies (RDC) announced that it intends to convene and adjourn the company's Court and General Meetings scheduled for January 23, 2019, which were scheduled to approve resolutions relating to the transaction with Ensco (ESV).
  10. On January 18, 2019, TransMontaigne Partners (TLP) announced that it has established a record date of January 28, 2019 for a special meeting of its unitholders to be held on February 26, 2019.

Closed Deals:

  1. The acquisition of Engility Holdings (EGL) by Science Applications International (SAIC) on January 14, 2019. It took 126 days for this deal to be completed.
  2. The acquisition of Hanwha Q CELLS (HQCL) by Hanwha Solar Holdings on January 16, 2019. It took 92 days for this deal to be completed.
  3. The acquisition of iKang Healthcare Group (KANG) by IK Healthcare Investment Limited on January 18, 2019. It took 298 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol AnnouncedDate AcquiringCompany ClosingPrice LastPrice ClosingDate Profit AnnualizedProfit
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.2466 03/31/2019 78.08% 413.06%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $9.73 03/31/2019 38.75% 204.96%
AVA 07/19/2017 Hydro One Limited (N/A) $53.00 $41.3 03/29/2019 28.33% 154.33%
CELG 01/03/2019 Bristol-Myers Squibb Company (BMY) $100.12 $86.27 09/30/2019 16.05% 23.25%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $6.87 $6.07 06/30/2019 13.14% 29.97%
TAHO 11/14/2018 Pan American Silver Corp. (PAAS) $4.10 $3.65 02/26/2019 12.33% 125.00%
PACB 11/01/2018 Illumina, Inc. (ILMN) $8.00 $7.34 06/30/2019 8.99% 20.51%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $5.01 01/31/2019 8.38% 305.99%
RHT 10/28/2018 IBM (IBM) $190.00 $175.51 12/31/2019 8.26% 8.76%
STC 03/16/2018 Fidelity National Financial, Inc. (FNF) $47.12 $43.6 06/30/2019 8.08% 18.42%

Disclaimer: Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

This article was written by

Asif Suria profile picture
9.44K Followers
Comprehensive tools and detailed analysis for event-driven investors

I am an entrepreneur and investor with a focus on event driven strategies including merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. I was one of the earliest contributors on Seeking Alpha and started publishing here in 2005. For more than a decade I have been writing every week about M&A and interesting insider transactions. My work has been mentioned in Barron's, Dow Jones, BNN Bloomberg and other publications.  

I have been an active investor for more than two decades and my background in technology has helped me built tools that inform my investing process, especially as it relates to event-driven strategies that require updated data and processes. The focus on my Inside Arbitrage service is to provide investors with the right combination of tools and analysis to help them take advantage of strategies that can perform well across market cycles.  

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Disclosure: I am/we are long ATHN, FNSR, P. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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