Merger Arbitrage Mondays - Tax Preparation Company Gets Into The Vitamins Business

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Includes: ABBV, AGN, APC, AVDR, AVP, BKS, BMY, CBM, CVRS, EMCI, EXTR, FNF, GCI, GKOS, GNW, HHRBF, HIVE, ILMN, MLNX, NANO, NEWM, NVDA, OCFC, OHAI, ONCE, OXY, PACB, PTMN, RHHBY, RTEC, S, SEMHF, STC, TAXA, TMUS, TRCB, TST, VSI, WAIR
by: Asif Suria
Summary

Merger activity increased last week.

The acquisition of Gannett by New Media Investment Group.

The acquisition of Vitamin Shoppe by Liberty Tax.

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

In the context of the merger of Sprint (NYSE:S) with T-Mobile (NASDAQ:TMUS), it was interesting to see a large insider purchase by the Chairman of DISH Network (NASDAQ:DISH).

Deal Statistics:

Total Number of Deals Closed in 2019 120
Total Number of Deals Not Completed in 2019 8
Total Number of Pending Deals
Cash Deals 45
Stock Deals 15
Stock & Cash Deals 14
Special Conditions 3
Total Number of Pending Deals 77
Total Deal Size $1.12 trillion

New Deals:

  1. The acquisition of Gannett (NYSE:GCI) by New Media Investment Group (NYSE:NEWM) for $1.94 billion in an all-stock deal. Under the terms of the Merger Agreement, shareholders of Gannett will receive $6.25 in cash and 0.5427 of a New Media share for each Gannett share they hold. We added GCI as a potential deal to the Deals in the Works section on May 30, 2019, and the price after the news of the potential deal came out was $7.6.
  2. The acquisition of Cambrex Corporation (NYSE:CBM) by an affiliate of the Permira funds for $2.4 billion or $60.00 per share in cash.
  3. The acquisition of Corindus Vascular Robotics (NYSEMKT:CVRS) by Siemens Healthineers AG (OTC:SEMHF) for $1.1 billion or $4.28 per share in cash.
  4. The acquisition of Vitamin Shoppe (NYSE:VSI) by Liberty Tax (OTCPK:TAXA) for $208 million or $6.50 per share in cash. Liberty Tax also acquired Buddy's Home Furnishings and plans to change its name to Franchise Group, Inc. in Q3 or Q4 of 2019 to more accurately reflect its new business model.
  5. The acquisition of Avedro (NASDAQ:AVDR) by Glaukos Corporation (NYSE:GKOS) for $386.92 million in an all-stock deal. Under the terms of the merger agreement, for each share of Avedro common stock they own, Avedro shareholders will receive an exchange ratio equivalent of 0.365 shares of Glaukos stock.
  6. The acquisition of Wesco Aircraft Holdings (NYSE:WAIR) by an affiliate of Platinum Equity for $1.9 billion or $11.05 per share in cash.
  7. The acquisition of Two River Bancorp (NASDAQ:TRCB) by OceanFirst Financial (NASDAQ:OCFC) for $182.8 million in a cash plus stock deal. Under the terms of the merger agreement, upon completion of the merger, shareholders of Two River will be entitled to receive 0.6663 shares of OceanFirst common stock and $5.375 in cash for each outstanding share of Two River common stock.

Deal Updates:

  1. On August 6, 2019, Occidental Petroleum (NYSE:OXY) sold $13 billion of debt to help finance its acquisition of Anadarko Petroleum (NYSE:APC) after receiving over $75 billion in orders for the deal at the peak.
  2. On August 8, 2019, EMC Insurance Group (NASDAQ:EMCI) announced that the EMCI Special Meeting of Shareholders to vote on the transaction with Employers Mutual Casualty Company is scheduled to take place on September 18, 2019.

Closed Deals:

  1. The acquisition of Barnes & Noble (NYSE:BKS) by funds advised by Elliott Advisors (UK) Limited on August 7, 2019. It took 61 days for this deal to be completed.
  2. The acquisition of TheStreet (NASDAQ:TST) by TheMaven on August 8, 2019. It took 57 days for this deal to be completed.
  3. The acquisition of Anadarko Petroleum Corporation by Occidental Petroleum Corporation on August 8, 2019. It took 91 days for this deal to be completed.
  4. The acquisition of Aerohive Networks (NYSE:HIVE) by Extreme Networks (NASDAQ:EXTR) on August 9, 2019. It took 44 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
STC 03/19/2018 Fidelity National Financial, Inc. (NYSE:FNF) $53.30 $37.09 09/30/2019 43.71% 325.60%
PACB 11/01/2018 Illumina, Inc. (NASDAQ:ILMN) $8.00 $5.68 12/31/2019 40.85% 105.73%
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (OTC:HHRBF) $5.43 $3.92 11/30/2019 38.52% 127.82%
S 04/29/2018 T-Mobile US, Inc. (TMUS) $7.95 $6.81 08/31/2019 16.75% 321.71%
MLNX 03/11/2019 NVIDIA Corporation (NASDAQ:NVDA) $125.00 $107.58 12/31/2019 16.19% 41.92%
RTEC 06/24/2019 Nanometrics Incorporated (NASDAQ:NANO) $27.16 $23.49 12/31/2019 15.62% 40.44%
OHAI 08/01/2019 Portman Ridge Finance Corporation (NASDAQ:PTMN) $1.46 $1.27 12/31/2019 14.96% 38.73%
AVP 05/22/2019 Natura Cosméticos S.A. (NATU3.SA) $5.02 $4.4 01/31/2020 13.99% 29.68%
ONCE 02/25/2019 Roche Holding AG (OTCQX:RHHBY) $114.50 $100.83 04/30/2020 13.56% 18.89%
AGN 06/25/2019 AbbVie Inc. (NYSE:ABBV) $177.09 $159.84 03/31/2020 10.79% 16.98%

Disclaimer: I hold long positions in Mellanox Technologies, Pacific Biosciences of California, Celgene, 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 MLNX, PACB, 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.