Merger Arbitrage Mondays - February 25, 2019

|
Includes: ATTU, BMY, CELG, CZFC, DIS, EHIC, ESV, FMS, FOX, GABC, GG, IMDZ, INUV, KLAC, MOC, MRK, NEM, NXTM, ONCE, ORBK, ORM, PAAS, RC, RDC, REN, RHHBY, TAHO, UWN, XEC
by: Asif Suria
Summary

Merger activity increased last week with four new deals announced.

The acquisition of Spark Therapeutics by Roche for $4.8 billion.

The acquisition of Attunity by Qlik.

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

Deal Statistics:

Total Number of Deals Closed in 2019 38
Total Number of Deals Not Completed in 2019 1
Total Number of Pending Deals
Cash Deals 30
Stock Deals 21
Stock & Cash Deals 15
Special Conditions 4
Total Number of Pending Deals 70
Total Deal Size $684.69 billion

New Deals:

  1. The acquisition of Immune Design (NASDAQ:IMDZ) by Merck (NYSE:MRK) for $300 million or $5.85 per share in cash.
  2. The acquisition of Citizens First Corporation (NASDAQ:CZFC) by German American Bancorp (NASDAQ:GABC) for $69.51 million in a cash plus stock deal. Under the terms of the definitive agreement, Citizens First common shareholders (excluding 401(k) shareholders) will receive a fixed exchange ratio of 0.6629 shares of German American common stock for each share of Citizens First in a tax-free exchange, and a cash payment of $5.80 per Citizens First share.
  3. The acquisition of Attunity (NASDAQ:ATTU) by Qlik for $560 million or $23.50 per share in cash.
  4. The acquisition of Spark Therapeutics (NASDAQ:ONCE) by Roche (OTCQX:RHHBY) for $4.8 billion or $114.50 per share in cash.

Deal Updates:

  1. On February 18, 2019, Newmont Mining Corporation (NYSE:NEM) announced that the Canadian Competition Bureau issued a "no action" letter clearing Newmont's previously announced transaction with Goldcorp (NYSE:GG) under Canadian competition law. On February 22, 2019, Newmont Mining Corporation and Goldcorp announced that Goldcorp has obtained an interim order from the Ontario Superior Court of Justice in connection with the previously announced statutory arrangement. Receipt of the interim order allows Goldcorp to hold its shareholder meeting on April 4, 2019, and is a necessary step toward obtaining a final order from the Court that is a condition to closing the acquisition.
  2. On February 19, 2019, Inuvo (NYSEMKT:INUV) and ConversionPoint Technologies announced an update on various matters relating to the pending acquisition of Inuvo. Due to the delay caused by the government shutdown, ConversionPoint Holdings only recently received comments from the SEC, and ConversionPoint Holdings expects to file an amendment to the registration statement on Form S-4 in early March 2019. The companies currently expect to close the transaction in Q2 2019.
  3. On February 19, 2019, eHi Car Services Limited (NYSE:EHIC) announced that it has entered into an Amended and Restated Agreement and Plan of Merger with Teamsport Parent Limited. Under the Amended Merger Agreement, eHi shareholders will receive cash consideration equal to US$6.125 per common share of the Company (each, a "Share") or US$12.25 per American depositary share of the Company (each, an "ADS").
  4. On February 19, 2019, the U.S. Federal Trade Commission gave Germany's Fresenius Medical Care AG (NYSE:FMS) and NxStage Medical (NASDAQ:NXTM) antitrust approval for their merger.
  5. On February 20, 2019, Bristol-Myers Squibb (NYSE:BMY) said that activist hedge fund Starboard Value LP intends to nominate five directors to the U.S. drugmaker's board, one month after it announced a deal to acquire peer Celgene (NASDAQ:CELG).
  6. On February 21, 2019, The Walt Disney Company (NYSE:DIS) announced the extension of the expiration date of the offers to exchange any and all outstanding notes issued by 21st Century Fox America (NASDAQ:FOX) from February 26, 2019, to March 5, 2019.
  7. On February 21, 2019, Rowan Companies (NYSE:RDC) and Ensco (NYSE:ESV) jointly announced that both companies' shareholders voted to approve the pending all-stock transaction.
  8. On February 22, 2019, Nevada Gold & Casinos (NYSEMKT:UWN) announced that its shareholders have voted to approve the Merger Agreement with Maverick Casinos.
  9. On February 22, 2019, Ready Capital Corporation (NYSE:RC) and Owens Realty Mortgage (NYSEMKT:ORM) jointly announced that they have determined the final exchange ratio in accordance with the terms of the Agreement and Plan of Merger. There is no change to the final exchange ratio based on the determination date of January 31, 2019, from the base exchange ratio of 1.441 that was set out in the joint proxy statement/prospectus.
  10. On February 22, 2019, Resolute Energy Corporation (NYSE:REN) announced that at a special meeting of stockholders, its stockholders voted to approve the adoption of the merger agreement between Resolute and Cimarex Energy (NYSE:XEC). With the receipt of the required stockholder approval, Resolute and Cimarex expect to close the transaction on March 1, 2019.

Closed Deals

  1. The acquisition of Orbotech (NASDAQ:ORBK) by KLA-Tencor Corporation (NASDAQ:KLAC) on February 20, 2019. It took 338 days for this deal to be completed.
  2. The acquisition of NxStage Medical by Fresenius Medical Care on February 22, 2019. It took 564 days for this deal to be completed.
  3. The acquisition of Tahoe Resources (NYSE:TAHO) by Pan American Silver (NASDAQ:PAAS) on February 22, 2019. It took 100 days for this deal to be completed.
  4. The acquisition of Command Security Corporation (NYSEMKT:MOC) by Prosegur Compañía de Seguridad S.A. on February 22, 2019. It took 157 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol AnnouncedDate AcquiringCompany ClosingPrice LastPrice ClosingDate Profit AnnualizedProfit
ONCE 02/25/2019 Roche (N/A) $114.50 $51.56 06/30/2019 122.07% 356.45%
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.29 06/30/2019 72.09% 210.51%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $4.3 03/15/2019 26.28% 532.88%
S 04/29/2018 T-Mobile US, Inc. (NASDAQ:TMUS) $7.51 $6.44 06/30/2019 16.57% 48.40%
CELG 01/03/2019 Bristol-Myers Squibb Company (BMY) $100.98 $89.14 09/30/2019 13.28% 22.34%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $47.57 $43.17 06/30/2019 10.19% 29.77%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.37 06/30/2019 8.55% 24.96%
GG 01/14/2019 Newmont Mining Corporation (NEM) $11.99 $11.13 12/31/2019 7.69% 9.08%
OTC:HMTA 10/01/2018 American National Bankshares Inc. (NASDAQ:AMNB) $15.09 $14.04 03/31/2019 7.44% 79.92%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $9.84 $9.27 06/30/2019 6.12% 17.88%

Disclosure: I am/we are long 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.

Additional disclosure: I hold a long position in Finisar (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.