Merger Arbitrage Mondays - New Higher Offer For Anadarko

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Includes: AMCRF, AMCRY, APC, BBX, BMS, BMY, BRK.A, BRK.B, BXG, CELG, CHFC, CNC, CVX, FIS, FNF, FNSR, GNW, GPIC, HBK, HHRBF, HWC, IBM, ILMN, INUV, LKSD, MSL, ONCE, ORRF, OXY, PACB, QUAD, RHHBY, S, STC, TCF, TMUS, TOT, WCG, WP
by: Asif Suria
Summary

Merger activity decreased last week.

Occidental revised its offer to buy Anadarko.

The acquisition of MidSouth Bancorp by Hancock Whitney Corporation.

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

Deal Statistics:

Total Number of Deals Closed in 2019 74
Total Number of Deals Not Completed in 2019 4
Total Number of Pending Deals
Cash Deals 29
Stock Deals 16
Stock & Cash Deals 11
Special Conditions 3
Total Number of Pending Deals 59
Total Deal Size $860.16 billion

New Deals:

  1. The acquisition of MidSouth Bancorp (NYSE:MSL) by Hancock Whitney Corporation (NASDAQ:HWC) for $101.79 million in an all-stock deal. Under the terms of the agreement, each share of MidSouth Bancorp, Inc. common stock will convert to the right to receive 0.2952 shares of Hancock Whitney Corporation common stock.

Deal Updates:

  1. On April 26, 2019, The Federal Trade Commission granted early termination of the Hart-Scott-Rodino Act waiting period for the review of the deal agreed to by Fidelity National Information Services (NYSE:FIS) and Worldpay (NYSE:WP).
  2. On April 29, 2019, Genworth Financial (NYSE:GNW) and China Oceanwide Holdings (OTC:HHRBF) announced that they have agreed to a tenth waiver and agreement of each party's right to terminate the previously announced merger agreement. The tenth waiver and agreement extend the previous deadline of April 30, 2019, to June 30, 2019, in consideration of pending regulatory reviews.
  3. April 29, 2019: According to Reuters, Makan Delrahim, the head of the U.S. Justice Department's Antitrust Division, said that there had been no decision made on whether to approve the merger of Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) but that meetings on the matter continued. Separately, the two companies announced that they had extended the deadline for completing the deal to July 29.
  4. April 30, 2019: According to Bloomberg, Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) disclosed plans to inject $10 billion into Occidental (NYSE:OXY) in exchange for preferred stock and warrants. The bombshell landed in the midst of Anadarko (NYSE:APC) board deliberations about whether Occidental's offer is superior to a lower but already agreed-to deal with Chevron (NYSE:CVX).
  5. On May 2, 2019, Bemis Company (NYSE:BMS) announced that its shareholders voted to approve Bemis' combination with Amcor Limited (OTCPK:AMCRF) (OTCPK:AMCRY)(AMC.AX).
  6. On May 3, 2019, Chemical Financial Corporation (NASDAQ:CHFC) and TCF Financial Corporation (NYSE:TCF) jointly announced that each company will hold its special meeting of shareholders on June 7, 2019, for the companies' respective shareholders to consider and vote on the proposals related to the definitive merger agreement.
  7. On May 5, 2019, Occidental revised its offer to buy Anadarko. Occidental is still offering $76 a share for each share of Anadarko, the same as its bid from April, but more of it is now in cash. Occidental's new bid is for $59 in cash and 0.2934 shares of Occidental common stock for each Anadarko share. Its previous bid was $38 in cash and 0.6094 shares of Occidental stock. Occidental also said that Total (NYSE:TOT) has agreed to buy Anadarko's African assets for $8.8 billion if the takeover happens.

Closed Deals:

  1. The acquisition of Gaming Partners International Corporation (GPIC) by Angel Holdings Godo Kaisha on May 1, 2019. It took 155 days for this deal to be completed.
  2. The acquisition of Hamilton Bancorp (HBK) by Orrstown Financial Services (NASDAQ:ORRF) on May 1, 2019. It took 190 days for this deal to be completed.
  3. The acquisition of The Ultimate Software Group (ULTI) by Hellman & Friedman on May 3, 2019. It took 88 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 $1.44 06/30/2019 54.17% 359.47%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.88 06/30/2019 39.95% 265.11%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.67 $5.8 07/29/2019 32.16% 139.75%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $50.39 $42.78 06/30/2019 17.79% 118.08%
WCG 03/27/2019 Centene Corporation (NYSE:CNC) $297.75 $261.5 06/30/2020 13.86% 12.02%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $7.41 06/30/2019 7.96% 52.84%
ONCE 02/25/2019 Roche Holding AG (OTCQX:RHHBY) $114.50 $108.03 06/30/2019 5.99% 39.75%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $6.97 $6.66 06/30/2019 4.64% 30.77%
BXG 03/04/2019 BBX Capital Corporation (NYSE:BBX) $16.00 $15.37 05/15/2019 4.10% 166.23%
RHT 10/28/2018 IBM (NYSE:IBM) $190.00 $182.59 12/31/2019 4.06% 6.20%

Disclaimer: I hold long positions in Red Hat, Celgene (NASDAQ:CELG), Bristol-Myers Squibb (NYSE:BMY), 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 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.