Merger Arbitrage Mondays - February 11, 2019

by: Asif Suria

Merger activity increased last week with five new deals announced.

The acquisition of Maxwell Technologies by Tesla.

The merger of SunTrust Banks by BB&T Corporation.

Merger activity increased last week with five new deals announced, including one of the largest bank mergers we have seen and one pending deal closing.

Deal Statistics

Total Number of Deals Closed in 2019 29
Total Number of Deals Not Completed in 2019 1
Total Number of Pending Deals
Cash Deals 31
Stock Deals 22
Stock & Cash Deals 15
Special Conditions 5
Total Number of Pending Deals 73
Total Deal Size $675.16 billion

New Deals

  1. The acquisition of Maxwell Technologies (NASDAQ:MXWL) by Tesla (NASDAQ:TSLA) for $231 million or $4.75 per share in an all-stock deal. Pursuant to the offer, each share of Maxwell's common stock will be exchanged for a fraction of a share of Tesla’s common stock, equal to the quotient obtained by dividing $4.75 by a volume weighted average price of one share of Tesla’s common stock for the five consecutive trading days preceding the expiration of the offer, and which is subject to a floor that has been set at 80% of a volume weighted average price of Tesla common stock calculated prior to signing. For the purposes of our Merger Arbitrage Tool, we are treating this as a "Special Conditions" transaction.
  2. The acquisition of The Ultimate Software Group (NASDAQ:ULTI) by Hellman & Friedman for $11 billion or $331.50 per share in cash.
  3. The acquisition of Top Image Systems (NASDAQ:TISA) by Kofax, a portfolio company of Thoma Bravo, for $38.89 million or $0.86 per share in cash.
  4. The acquisition of SunCoke Energy Partners (NYSE:SXCP) by SunCoke Energy (NYSE:SXC) for $1.52 billion in an all-stock deal. Under the terms of the merger agreement, SXCP's unaffiliated common unitholders will receive 1.40 SXC common shares for each SXCP common unit.
  5. The merger of SunTrust Banks (NYSE:STI) by BB&T Corporation (NYSE:BBT) for $66 billion in an all-stock deal. Under the terms of the merger agreement, SunTrust shareholders will receive 1.295 shares of BB&T for each SunTrust share they own.

Deal Updates

  1. On February 4, 2019, T-Mobile US (NASDAQ:TMUS) told the U.S. Federal Communications Commission that it would not increase prices for three years, with few exceptions, if it gets approval to buy rival Sprint Corp. (NYSE:S).
  2. On February 4, 2019, The New York State Department of Financial Services provided written notice to Fidelity National Financial (NYSE:FNF) of its disapproval of FNF’s application to acquire control of Stewart Title Insurance Company (NYSE:STC). Stewart and FNF continue to work actively to satisfy all of the regulatory conditions to the closing of the acquisition, including with the Federal Trade Commission, the Texas Department of Insurance, and the NYDFS.
  3. February 5, 2019: According to CNBC, Liberty Media has joined the bidding for the regional sports networks that Disney (NYSE:DIS) is trying to sell to finalize a deal with Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA).
  4. On February 5, 2019, Gaming Partners International Corporation (NASDAQ:GPIC) announced that the special meeting of stockholders of Gaming Partners International Corporation will be held on March 12, 2019.
  5. On February 7, 2019, InfraREIT (NYSE:HIFR) stockholders voted to adopt the Agreement and Plan of Merger with Oncor Electric Delivery Company.
  6. On February 7, 2019, athenahealth (NASDAQ:ATHN) stockholders voted to adopt the Agreement and Plan of Merger with an affiliate of Veritas and Evergreen.
  7. On February 7, 2019, HomeTown Bankshares Corporation (NASDAQ:HMTA) and American National Bankshares (NASDAQ:AMNB) announced that the special meeting of their shareholders will be held on March 19, 2019.

Closed Deals

  1. The acquisition of The Dun & Bradstreet Corporation (DNB) by an investor group led by CC Capital, Cannae Holdings and Thomas H. Lee Partners on February 8, 2019. It took 183 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 $1.31 03/31/2019 69.47% 517.45%
EHIC 04/06/2018 Teamsport Parent Limited (N/A) $13.50 $10.33 03/31/2019 30.69% 228.59%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.01 $5.9 06/30/2019 18.87% 49.18%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.61 03/15/2019 17.79% 196.74%
CELG 01/03/2019 Bristol-Myers Squibb Company (NYSE:BMY) $100.22 $87.91 09/30/2019 14.00% 22.03%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.19 06/30/2019 11.27% 29.37%
STC 03/19/2018 Fidelity National Financial, Inc. (FNF) $47.55 $42.76 06/30/2019 11.19% 29.18%
TAHO 11/14/2018 Pan American Silver Corp. (NASDAQ:PAAS) $4.10 $3.82 02/26/2019 7.33% 167.21%
GPIC 11/27/2018 Angel Holdings Godo Kaisha (N/A) $13.75 $12.95 06/30/2019 6.18% 16.11%
PGLC 09/30/2018 Americas Silver Corporation (NYSEMKT:USAS) $1.24 $1.17 03/31/2019 6.05% 45.04%

Disclaimer: I hold positions in athenahealth (ATHN) and Finisar (NASDAQ:FNSR). 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.

Disclosure: I am/we are long ATHN, FNSR. 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.