Merger Arbitrage Mondays - April 1, 2019

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Includes: AMNB, BBX, BHBK, BMY, BXG, CELG, CNC, CSFL, CUZ, ESV, FNF, FNSR, GG, GNW, HMTA, IDTI, IIVI, ILMN, INDB, INUV, LKSD, MLNX, MXWL, NCOM, NEM, NVDA, ON, ORM, PACB, QTNA, QUAD, RC, RDC, S, STC, TIER, TMUS, TSLA, ULTI, VSM, WBC, WCG
by: Asif Suria
Summary

Merger activity increased last week with four new deals announced.

The acquisition of WellCare Health Plans by Centene Corporation.

The acquisition of WABCO Holdings by ZF Friedrichshafen AG.

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

Deal Statistics

Total Number of Deals Closed in 2019 58
Total Number of Deals Not Completed in 2019 2
Total Number of Pending Deals
Cash Deals 31
Stock Deals 17
Stock & Cash Deals 11
Special Conditions 4
Total Number of Pending Deals 63
Total Deal Size $771.99 billion

New Deals

  1. The acquisition of TIER REIT (NYSE:TIER) by Cousins Properties Incorporated (NYSE:CUZ) for $2.38 billion in an all stock deal. Under the terms of the agreement, Cousins will issue 2.98 shares of newly issued common stock in exchange for each share of TIER stock.
  2. The acquisition of WellCare Health Plans (NYSE:WCG) by Centene Corporation (NYSE:CNC) for $17.3 billion in a cash plus stock deal. Under the terms of the merger agreement, WellCare shareholders will receive a fixed exchange ratio of 3.38 shares of Centene common stock and $120 in cash for each share of WellCare common stock.
  3. The acquisition of Quantenna Communications (NASDAQ:QTNA) by ON Semiconductor Corporation (NASDAQ:ON) for $936 million or $24.50 per share in cash.
  4. The acquisition of WABCO Holdings (NYSE:WBC) by ZF Friedrichshafen AG for $7.29 billion or $136.50 per share in cash. We added WBC as a potential deal to the Deals in the Works section on February 27, 2019, and the price after the news of the potential deal came out was $130.49.

Deal Updates

  1. On March 25, 2019, Newmont (NYSE:NEM) received Mexican Anti-Trust approval for its pending acquisition of Goldcorp (NYSE:GG). Newmont also announced that its Board of Directors declared a one-time special dividend of $0.88 per share of common stock, conditional upon approval of the Goldcorp transaction. After promising a special dividend to its investors, Newmont has won over the support of Paulson, VanEck and ISS.
  2. On March 25, 2019, BBX Capital Corporation (NYSE:BBX) announced that Bluegreen Vacations Corporation (NYSE:BXG) had received a formal notice from Bass Pro and Big Cedar notifying Bluegreen that Bass Pro intends to cancel Bluegreen's access to the Bass Pro marketing channels and advertising materials 30 days from the date of the notice unless Bluegreen cures certain alleged breaches to Bass Pro's satisfaction.
  3. On March 25, 2019, Bristol-Myers Squibb (NYSE:BMY) and Celgene (NASDAQ:CELG) each received a request for additional information and documentary materials from the FTC in connection with the FTC’s review of the Merger. On March 29, 2019, Activist hedge fund Starboard Value abandoned a campaign to convince Bristol-Myers Squibb shareholders to vote down the proposed takeover of Celgene after the two leading proxy advisory firms (Institutional Shareholder Services (ISS) and Glass Lewis) backed the deal.
  4. On March 26, 2019, Merck KGaA (OTCPK:MKGAY) launched a full takeover bid for Versum Materials (NYSE:VSM) for $48 per share.
  5. On March 26, 2019, the Ultimate Software Group (NASDAQ:ULTI) announced the expiration of the 50-day “go shop” period under the previously announced Agreement and Plan of Merger.
  6. On March 26, 2019, Shareholders of II-VI Incorporated (NASDAQ:IIVI) and Finisar Corporation (NASDAQ:FNSR) overwhelmingly voted to approve proposals related to II-VI’s acquisition of Finisar at special meetings held today by the respective companies.
  7. On March 27, 2019, Rowan Companies (NYSE:RDC) announced that it has received clearance from the General Authority for Competition in the Kingdom of Saudi Arabia for its pending combination with Ensco (NYSE:ESV).
  8. March 29, 2019: According to Reuters, Versum Materials urged its shareholders to reject a hostile bid from Merck KGaA.

Closed Deals

  1. The acquisition of Owens Realty Mortgage (NYSEMKT:ORM) by Ready Capital Corporation (NYSE:RC) on March 29, 2019. It took 142 days for this deal to be completed.
  2. The acquisition of Integrated Device Technology (NASDAQ:IDTI) by Renesas Electronics Corporation on March 29, 2019. It took 200 days for this deal to be completed.
  3. The acquisition of HomeTown Bankshares Corporation (OTC:HMTA) by American National Bankshares (NASDAQ:AMNB) on March 29, 2019. It took 179 days for this deal to be completed.
  4. The acquisition of National Commerce Corporation (NASDAQ:NCOM) by CenterState Bank Corporation (NASDAQ:CSFL) on March 29, 2019. It took 123 days for this deal to be completed.
  5. The acquisition of Blue Hills Bancorp (NASDAQ:BHBK) by Independent Bank (NASDAQ:INDB) on March 29, 2019. It took 190 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced Date Acquiring Company Closing Price Last Price Closing Date Profit Annualized Profit
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.24 06/30/2019 79.03% 320.52%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.83 04/30/2019 41.78% 525.79%
S 04/29/2018 T-Mobile US, Inc. (NASDAQ:TMUS) $7.09 $5.65 06/30/2019 25.43% 103.14%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $7.44 $6.53 06/30/2019 13.90% 56.36%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $48.48 $42.69 06/30/2019 13.57% 55.04%
WCG 03/27/2019 Centene Corporation (CNC) $299.48 $269.75 06/30/2020 11.02% 8.82%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.23 06/30/2019 10.65% 43.19%
BXG 03/04/2019 BBX Capital Corporation (BBX) $16.00 $14.86 05/15/2019 7.67% 63.64%
MXWL 02/04/2019 Tesla, Inc. (NASDAQ:TSLA) $4.75 $4.47 06/30/2019 6.26% 25.40%
MLNX 03/11/2019 NVIDIA Corporation (NASDAQ:NVDA) $125.00 $118.36 12/31/2019 5.61% 7.47%

Disclosure: I am/we are long CELG,BMY,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: Disclaimer: I hold long positions in Celgene, Bristol-Myers Squibb and Finisar. 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.