Merger Arbitrage Mondays - April 29, 2019

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Includes: AMCR, AMCRF, APC, CVX, ELAN, ENFC, FCNCA, FRSH, JEC, KEYW, MTYFF, OXY, PETX, S, SMBK, TMUS, USG
by: Asif Suria
Summary

Merger activity decreased last week.

Entegra Financial announced that its board determined that the cash consideration offer of $30.18 from First Citizens Bank was a superior proposal to the agreement with SmartFinancial.

Occidental Petroleum made public a $38 billion offer to buy Anadarko Petroleum, seeking to break up a proposed takeover by Chevron.

Merger activity decreased last week with three new deals announced and one pending deal closing.

Deal Statistics:

Total Number of Deals Closed in 2019 71
Total Number of Deals Not Completed in 2019 4
Total Number of Pending Deals
Cash Deals 31
Stock Deals 15
Stock & Cash Deals 12
Special Conditions 3
Total Number of Pending Deals 61
Total Deal Size $860.06 billion

New Deals

  1. The acquisition of The KeyW Holding Corporation (NASDAQ:KEYW) by Jacobs Engineering Group (NYSE:JEC) for $815 million or $11.25 per share in cash.
  2. The acquisition of Entegra Financial (NASDAQ:ENFC) by First Citizens BancShares (NASDAQ:FCNCA) for $219.8 million or $30.18 per share in cash.
  3. The acquisition of Aratana Therapeutics (NASDAQ:PETX) by Elanco Animal Health Incorporated (NYSE:ELAN) for $245 million in an all-stock deal. Under the terms of the agreement, upon the closing of the transaction, Aratana stockholders will receive 0.1481 share of Elanco common stock and one contingent value right (CVR) for each share of Aratana common stock. The CVR of $0.25 in cash per Aratana share shall be granted to Aratana stockholders as of the closing date and paid if capromorelin achieves certain sales levels on or before the end of 2021.

Deal Updates

  1. On April 19, 2019, the FTC granted antitrust clearance for MTY Food Group's (OTC:MTYFF) acquisition of Papa Murphy's (NASDAQ:FRSH).
  2. April 22, 2019: In order to resolve certain specific antitrust concerns raised in the US associated with the proposed combination of Amcor (OTCPK:AMCRF) [AMC.AX] and Bemis (BMS), Amcor has now entered into a binding agreement with Tekni-Plex, Inc. (Tekni-Plex) for the sale of Amcor plants in Milwaukee (WI), Ashland (MA) and part of the Madison (WI) plant for a cash consideration of USD215 million.
  3. On April 23, 2019, UQM Technologies (NYSEMKT:UQM) announced that its shareholders approved the merger of UQM with Danfoss Power Solutions Company.
  4. On April 24, 2019, Entegra Financial announced that its board determined that the cash consideration offer of $30.18 from First Citizens Bank was a superior proposal to the agreement with SmartFinancial (NASDAQ:SMBK).
  5. On April 24, 2019, Occidental Petroleum (NYSE:OXY) made public a $38 billion offer to buy Anadarko Petroleum (NYSE:APC) seeking to break up a proposed takeover by Chevron (NYSE:CVX).
  6. April 25, 2019: According to a filing, T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) executives this week urged senior U.S. regulators to approve the proposed tie-up, saying the combined company would have the incentive to slash prices.

Closed Deals

  1. The acquisition of USG Corporation (NYSE:USG) by Knauf on April 24, 2019. It took 317 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
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.83 04/30/2019 41.78% 15248.04%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.48 $5.54 06/30/2019 34.99% 206.01%
INUV 11/05/2018 ConversionPoint Technologies, Inc. (N/A) $2.22 $1.66 06/30/2019 33.73% 198.60%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $51.05 $42.58 06/30/2019 19.88% 117.06%
MXWL 02/04/2019 Tesla, Inc. (NASDAQ:TSLA) $4.75 $4.2 06/30/2019 13.10% 77.09%
WCG 03/27/2019 Centene Corporation (NYSE:CNC) $297.89 $264.87 06/30/2020 12.47% 10.63%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $7.50 $6.87 06/30/2019 9.17% 53.99%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.35 06/30/2019 8.84% 52.06%
ONCE 02/25/2019 Roche Holding AG (OTCQX:RHHBY) $114.50 $107.87 06/30/2019 6.15% 36.18%
BXG 03/04/2019 BBX Capital Corporation (NYSE:BBX) $16.00 $15.17 05/15/2019 5.47% 124.81%

Disclosure: I am/we are long RHT, 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 Red Hat (RHT), Celgene (CELG), Bristol-Myers Squibb (BMY) and 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.