Seeking Alpha

Merger Arbitrage Mondays - July 8, 2019

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Includes: ABBV, ABCB, AGN, AMBR, BIP, BRSS, CZFC, DISH, FNF, GABC, GNW, GWR, HF, HPJ, ILMN, JLL, LABL, LION, LKSD, LLL, MLNX, NRE, NVDA, OMN, ONCE, PACB, QUAD, RHHBY, S, STC, TMUS
by: Asif Suria
Summary

Merger activity decreased last week.

The acquisition of Genesee & Wyoming by affiliates of Brookfield Infrastructure and GIC.

T-Mobile U.S. is on the cusp of securing U.S. Justice Department approval for its merger with Sprint.

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

Deal Statistics:

Total Number of Deals Closed in 2019 100
Total Number of Deals Not Completed in 2019 7
Total Number of Pending Deals
Cash Deals 43
Stock Deals 16
Stock & Cash Deals 13
Special Conditions 3
Total Number of Pending Deals 75
Total Deal Size $1.09 trillion

New Deals:

  1. The acquisition of Genesee & Wyoming (NYSE:GWR) by affiliates of Brookfield Infrastructure and GIC (NYSE:BIP) for $8.4 billion or $112.00 per share in cash. We added GWR as a potential deal to the Deals in the Works section on May 23, 2019 and the price after the news of the potential deal came out was $93.95.
  2. The acquisition of OMNOVA Solutions (NYSE:OMN) by Synthomer for $909.23 million or $10.15 per share in cash.
  3. The acquisition of Northstar Realty Europe (NYSE:NRE) by AXA Investment Managers for $1.08 billion or an estimated price of $17.03 per share in cash. The estimated price is based on three month forward foreign exchange rates for the Euro and GBP and likely to change based on the exchange rate at the time the deal closes.

Deal Updates:

  1. On July 1, 2019, Genworth Financial (NYSE:GNW) and China Oceanwide Holdings 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 extends the previous deadline of June 30, 2019 to November 30, 2019 in consideration of pending regulatory reviews.
  2. On July 1, 2019, The Committee on Foreign Investment in the United States (CFIUS) concluded its review of the acquisition of Global Brass and Copper Holdings (NYSE:BRSS) by Wieland-Werke AG and determined that there are no unresolved national security concerns.
  3. July 3, 2019: According to Bloomberg, T-Mobile U.S. (NASDAQ:TMUS) is on the cusp of securing U.S. Justice Department approval for its merger with Sprint (NYSE:S), after establishing the general outlines of asset sales to DISH Network (NASDAQ:DISH).

Closed Deals:

  1. The acquisition of L3 Technologies (NYSE:LLL) by Harris Corporation (HRS) on July 1, 2019. It took 260 days for this deal to be completed.
  2. The acquisition of Fidelity Southern Corporation (NASDAQ:LION) by Ameris Bancorp (NASDAQ:ABCB) on July 1, 2019. It took 196 days for this deal to be completed.
  3. The acquisition of HFF, Inc. (NYSE:HF) by Jones Lang LaSalle Incorporated (NYSE:JLL) on July 1, 2019. It took 104 days for this deal to be completed.
  4. The acquisition of Multi-Color Corporation (NASDAQ:LABL) by an affiliate of Platinum Equity LLC on July 1, 2019. It took 126 days for this deal to be completed.
  5. The acquisition of Citizens First Corporation (NASDAQ:CZFC) by German American Bancorp (NASDAQ:GABC) on July 1, 2019. It took 130 days for this deal to be completed.
  6. The acquisition of Amber Road (AMBR) by E2open on July 2, 2019. It took 50 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 $3.8 11/30/2019 42.89% 107.98%
LKSD 10/31/2018 Quad/Graphics, Inc. (NYSE:QUAD) $4.83 $3.62 06/30/2019 33.46% -1526.61%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $6.11 12/31/2019 30.93% 64.15%
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $51.34 $39.78 09/30/2019 29.07% 126.30%
AVP 05/22/2019 Natura Cosméticos S.A. (NATU3.SA) $4.52 $4.0400 01/31/2020 11.95% 21.07%
MLNX 03/11/2019 Nvidia Corporation (NASDAQ:NVDA) $125.00 $112.16 12/31/2019 11.45% 23.74%
ONCE 02/25/2019 Roche Holding AG (OTCQX:RHHBY) $114.50 $103.07 07/31/2019 11.09% 175.99%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.82 $7.04 07/29/2019 11.05% 192.12%
AGN 06/25/2019 AbbVie Inc. (NYSE:ABBV) $183.51 $167.69 03/31/2020 9.43% 12.90%
HPJ 06/28/2019 HPJ Parent Limited (N/A) $4.80 $4.4700 09/30/2019 7.38% 32.08%

Disclosure: I am/we are long PACB, RHT, FNSR, CELG, BMY. 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 long positions in Pacific Biosciences of California (PACB), 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.