Merger Arbitrage Mondays - April 15, 2019

by: Asif Suria

Merger activity increased last week.

The acquisition of Anadarko Petroleum Corporation by Chevron Corporation for $50 billion.

Versum Materials terminated the Entegris merger agreement to enter into a definitive merger agreement with respect to Merck’s proposal.

Happy tax day and welcome to the latest edition of Merger Arbitrage Mondays. Merger activity increased last week with four new deals announced and two pending deals closing.

We made a mistake last week when we indicated that the acquisition of Versum Materials (NYSE:VSM) by Entegris (NASDAQ:ENTG) closed. As some diligent readers pointed out immediately after we published the post last week, Merck KGaA (OTCPK:MKGAF) made a hostile bid of $53/share for Versum Materials, which was above its previous bid of $48/share and Versum deemed the new bid a superior proposal. Versum abandoned its merger with Entegris as indicated in the deal updates section below and signed a definitive merger agreement with Merck KGaA last Friday.

Deal Statistics:

Total Number of Deals Closed in 2019 64
Total Number of Deals Not Completed in 2019 3
Total Number of Pending Deals
Cash Deals 31
Stock Deals 13
Stock & Cash Deals 13
Special Conditions 4
Total Number of Pending Deals 61
Total Deal Size $831.55 billion

New Deals:

  1. The acquisition of Global Brass and Copper Holdings (NYSE:BRSS) by Wieland-Werke AG for $1.2 billion, or $44.00 per share, in cash.
  2. The acquisition of Papa Murphy's Holdings (NASDAQ:FRSH) by MTY Food Group for $190 million, or $6.45 per share, in cash. We added FRSH as a potential deal to the Deals in the Works section on November 7, 2018 and the price after the news of the potential deal came out was $4.41.
  3. The acquisition of Versum Materials by Merck KGaA for $6.4 billion, or $53.00 per share, in cash.
  4. The acquisition of Anadarko Petroleum Corporation (NYSE:APC) by Chevron Corporation (NYSE:CVX) for $50 billion in a cash plus stock deal. Under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.

Deal Updates:

  1. On April 8, 2019, Versum Materials announced that it has received a revised proposal from Merck KGaA to acquire Versum for $53 per share. Versum’s Board of Directors unanimously determined that Merck’s proposal constitutes a “Superior Proposal,” and that Versum’s Board of Directors intends to terminate the Entegris merger agreement to enter into a definitive merger agreement with respect to Merck’s proposal.
  2. On April 8, 2019, Shareholders of Attunity (NASDAQ:ATTU) approved the company’s merger with Qlik at a special meeting of shareholders.
  3. On April 8, 2019, Tesla (NASDAQ:TSLA) announced that it has extended the expiration of its previously announced offer to acquire each outstanding share of common stock of Maxwell Technologies (NASDAQ:MXWL) to May 15, 2019.
  4. On April 9, 2019, shareholders of Clementia Pharmaceuticals (NASDAQ:CMTA) approved the company’s merger with Ipsen at a special meeting of shareholders.
  5. On April 10, 2019, Inuvo (NYSEMKT:INUV) announced that it has set a date for a special meeting of its stockholders to consider and vote on the Transaction with ConversionPoint Technologies. The special meeting of Inuvo stockholders will be held on May 8, 2019.
  6. On April 10, 2019, Amcor Limited (OTCPK:AMCRF) (OTCPK:AMCRY) and Bemis Company (NYSE:BMS) announced that they have received unconditional antitrust clearance with no remedial action from the Brazilian Administrative Council for Economic Defense (CADE). The transaction remains subject to regulatory approval in the United States. As previously announced, completion of the transaction is expected on 15th May 2019.
  7. On April 11, 2019, Newmont Mining (NYSE:NEM) shareholders approved the company's takeover of Goldcorp (NYSE:GG). On April 12, 2019, Goldcorp announced that Newmont Mining Corporation has received Investment Canada Act approval in connection with the previously-announced plan of arrangement.
  8. On April 11, 2019, Clementia Pharmaceuticals announced that the Québec Superior Court issued a final order approving the previously announced statutory plan of arrangement under the Canada Business Corporations Act pursuant to which a wholly-owned subsidiary of Ipsen S.A. will acquire all of the issued and outstanding common shares of Clementia.
  9. On April 12, 2019, Bristol-Myers Squibb Company (NYSE:BMY) announced that its shareholders voted to approve the issuance of shares of Bristol-Myers Squibb common stock in connection with the company’s pending merger with Celgene Corporation (NASDAQ:CELG) at the special meeting of stockholders.

Closed Deals:

  1. The acquisition of eHi Car Services Limited (NYSE:EHIC) by Teamsport Parent Limited on April 9, 2019. It took 368 days for this deal to be completed.
  2. The acquisition of Rowan Companies (NYSE:RDC) by Ensco (NYSE:ESV) on April 11, 2019. It took 185 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 $1.35 06/30/2019 64.44% 309.50%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.88 04/30/2019 39.95% 972.08%
S 04/29/2018 T-Mobile US, Inc. (NASDAQ:TMUS) $7.56 $6.1 06/30/2019 23.93% 114.92%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $49.93 $44.06 06/30/2019 13.32% 63.97%
WCG 03/27/2019 Centene Corporation (NYSE:CNC) $298.87 $270.34 06/30/2020 10.55% 8.71%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $7.94 $7.25 06/30/2019 9.57% 45.96%
MXWL 02/04/2019 Tesla, Inc. $4.75 $4.34 06/30/2019 9.45% 45.37%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.37 06/30/2019 8.55% 41.05%
GPIC 11/27/2018 Angel Holdings Godo Kaisha (N/A) $13.75 $13.04 12/31/2019 5.44% 7.64%
MLNX 03/11/2019 Nvidia Corporation (NASDAQ:NVDA) $125.00 $119.27 12/31/2019 4.80% 6.74%

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.

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.