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Merger Arbitrage Mondays - Spread On The Taubman Centers Deal Narrows Significantly



  • Merger activity continued to remain lackluster last week.
  • Evans Bancorp completes the acquisition of FSB Bancorp.
  • The spread for the acquisition of the retail REIT Taubman Centers by Simon Property Group narrowed considerably.

Merger activity continued to remain lackluster last week with no new deals announced and four deals closing. There were only two new deals announced in the month of April, the lowest we have seen since we started tracking M&A data more than 10 years ago. I expect May to remain a low volume month but expect a big uptick in smaller acquisitions later this year as the survivors of the crisis start accessing cheap capital for tuck-in acquisitions.

We changed the formula for the spread on the acquisition of FGL Holdings (FG) by Fidelity National Financial, Inc. (FNF) to reflect the fact that at this point most shareholders are likely to receive approximately $7.50 in cash and a stock portion that translates into roughly 0.103 shares of Fidelity National Financial, Inc. We had this deal listed as a "special conditions" kind of deal and have now changed it to a "cash plus stock" type of deal. We appreciate the feedback and collaboration we received from subscribers in adjusting the formula for this deal.

The spread for the acquisition of the retail REIT Taubman Centers (TCO) by Simon Property Group (SPG) narrowed considerably last week after Taubman filed a proxy statement with no changes to the cash consideration of the deal. Some arbitrageurs were concerned that the deal might get renegotiated to a lower price and the filing of the proxy statement appears to have put those fears temporarily to rest.

Weekly Spread Changes

The table below shows weekly spread changes between April 25, 2020, and May 1, 2020.

Symbol Quote AcquiringCompany AcquiringCompany Quote CurrentSpread Last WeekSpread Spread ChangeWeekly DealType
RESI 10.83 Amherst Residential, LLC (N/A) 0.00 15.42% 1.46% 13.96% All Cash
LACQ 10.41 GTWY Holdings Limited (N/A) 10.47% 0.97% 9.50% Special Conditions
YTRA 1.31 Ebix, Inc. (

This article was written by

Asif Suria profile picture

Asif Suria is an entrepreneur and investor with a professional background in technology and a focus on event driven strategies including: merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. Asif has been actively investing for over 20 years and sharing his ideas for the past 10.

He is the leader of the investing group Inside Arbitrage where he shares investment ideas rarely found in mainstream financial press. Inside Arbitrage provides access to six different event-driven strategies to expand your investing toolbox, special situations focused tools, qualitative writeups of ideas through weekly articles, and a comprehensive monthly newsletter. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

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Comments (4)

The acquisition of FSB Bancorp (FSBC) by Evans Bancorp (NYSEMKT:EVBN) was a 50% cash and 50% stock deal. the spread is not as big as 40%. More like a few % points.
Agreed. Why was the author selling this as an arbittage opportunity. It?'s $17.80 cash for those that tendered for cash, but it was too late to tender for cash. If you purchased recently you were getting 0.4398 shares of evans, which is about $11
Asif Suria profile picture
Yes we adjusted it last week and wrote the following in last week's post:

I have also received several emails about the acquisition of FSB Bancorp by Evans Bancorp (NYSEMKT:EVBN) and the large and growing spread on that deal. This is a cash or stock kind of deal. At this point the cash election is probably oversubscribed and hence most shareholders are likely to receive Evans Bancorp shares, which means the merger consideration received is likely to be well below the all cash consideration of $17.80. We are going to update our Merger Arbitrage Tool to reflect this and convert this deal from a cash deal to an all-stock deal.
Front Yard Residential (RESI -22.2%) plunges as Amherst terminates its $2.3B deal to buy company.
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SymbolLast Price% Chg
Carolina Financial Corporation
Delphi Technologies PLC
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FGL Holdings
Fidelity National Financial, Inc.

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