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. (EBIX) | 19.09 | 45.73% | 37.17% | 8.56% | All Stock |
| TCBI | 27.65 | Independent Bank Group, Inc. (IBTX) | 29.95 | 11.69% | 5.33% | 6.36% | All Stock |
| CORV | 0.39 | ADVANZ PHARMA (N/A) | 7.69% | 1.82% | 5.87% | Special Conditions | |
| WEBK | 30.69 | Cambridge Bancorp (OTC:CATC) | 54.29 | 2.60% | 8.03% | -5.43% | All Stock |
| TSG | 29.11 | Flutter Entertainment PLC (OTC:PDYPF) | 118.62001 | -8.19% | -0.14% | -8.05% | All Stock |
| TCO | 41.97 | Simon Property Group, Inc. (SPG) | 63.2 | 25.09% | 40.26% | -15.17% | All Cash |
| FG | 10.27 | Fidelity National Financial, Inc. (FNF) | 26.01 | -0.89% | 21.95% | -22.84% | Cash Plus Stock |
| DLPH | 9.56 | BorgWarner Inc. (BWA) | 27.16 | 28.81% | 53.67% | -24.86% | All Stock |
Deal Statistics
| Total Number of Deals Closed in 2020 | 54 |
| Total Number of Deals Not Completed in 2020 | 5 |
| Total Number of Pending Deals | |
| Cash Deals | 25 |
| Stock Deals | 23 |
| Stock & Cash Deals | 6 |
| Special Conditions | 3 |
| Total Number of Pending Deals | 57 |
| Total Deal Size | $531.19 billion |
Deal Updates
- On April 29, 2020, KEMET Corporation (KEM) announced that, in connection with the pending acquisition of KEMET by Yageo Corporation, the parties received a notice from the Anti-Monopoly Bureau of the State Administration for Market Regulation in China (SAMR) of its unconditional approval of the pending acquisition of KEMET by Yageo under the Anti-Monopoly Law of China.
- On April 30, 2020, The Federal Reserve announced that it was extending the comment period on Morgan Stanley's (MS) proposed acquisition of E*Trade Financial (ETFC) to June 4 in response to the novel coronavirus pandemic.
- On April 30, 2020, The Stars Group (TSG) announced that it expects to complete the pending combination with Flutter Entertainment on May 5, 2020, subject to customary closing conditions.
Closed Deals
- The acquisition of Mellanox Technologies (MLNX) by Nvidia Corporation (NVDA) on April 27, 2020. It took 413 days for this deal to be completed.
- The acquisition of PB Bancorp (PBBI) by Centreville Bank on April 30, 2020. It took 191 days for this deal to be completed.
- The acquisition of FSB Bancorp (FSBC) by Evans Bancorp (EVBN) on April 30, 2020. It took 133 days for this deal to be completed.
- The acquisition of Carolina Financial Corporation (CARO) by United Bankshares (UBSI) on May 1, 2020. It took 165 days for this deal to be completed.
Top 10 deals with largest spreads
| Symbol | AnnouncedDate | AcquiringCompany | ClosingPrice | LastPrice | ClosingDate | Profit | AnnualizedProfit |
|---|---|---|---|---|---|---|---|
| CDOR | 07/22/2019 | NexPoint Hospitality Trust (N/A) | $11.10 | $3.68 | 06/30/2020 | 201.63% | 1268.88% |
| GNW | 10/23/2016 | China Oceanwide Holdings Group Co., Ltd. (N/A) | $5.43 | $3.39 | 06/30/2020 | 60.18% | 378.70% |
| YTRA | 07/17/2019 | Ebix, Inc. (EBIX) | $1.91 | $1.31 | 06/30/2020 | 45.73% | 287.75% |
| DLPH | 01/28/2020 | BorgWarner Inc. (BWA) | $12.31 | $9.56 | 12/31/2020 | 28.81% | 43.45% |
| TCO | 02/10/2020 | Simon Property Group, Inc. (SPG) | $52.50 | $41.97 | 06/30/2020 | 25.09% | 157.89% |
| RESI | 02/18/2020 | Amherst Residential, LLC (N/A) | $12.50 | $10.83 | 06/30/2020 | 15.42% | 97.04% |
| CETV | 10/27/2019 | PPF Group N.V. (N/A) | $4.58 | $4.01 | 06/30/2020 | 14.21% | 89.45% |
| TCBI | 12/09/2019 | Independent Bank Group, Inc. (IBTX) | $30.88 | $27.65 | 06/30/2020 | 11.69% | 73.55% |
| LACQ | 12/30/2019 | GTWY Holdings Limited (N/A) | $11.50 | $10.41 | 06/30/2020 | 10.47% | 65.89% |
| BREW | 11/12/2019 | Anheuser-Busch (N/A) | $16.50 | $15.04 | 06/30/2020 | 9.71% | 61.09% |
5 deals in our list of Top 10 active deals trade with spreads over 20%. Evans Bancorp completed the acquisition of FSB Bancorp that was trading with a spread of over 44% last week.
