Merger Arbitrage Mondays: SPAC IPOs Set A New Record
Summary
- Merger activity increased last week.
- Six multi-billion-dollar deals announced.
- SPAC frenzy hits a new record.
Merger activity increased last week with six new multi-billion-dollar deals announced and four deals completed.
The total value of the 19 deals announced in February was over $66 billion. The month of February also saw a new record set for SPAC IPOs filed with 96 SPAC IPOs raising over $30 billion.
The largest deal announced in the month of February was the acquisition of PRA Health Sciences (PRAH) by ICON Public Limited Company (ICLR) for $12 billion. Headquartered in Raleigh, North Carolina, PRA Health Sciences is a contract research organization that operates through two segments - Clinical Research and Data Solutions. The company provides outsourced clinical development and data solution services to the biotechnology and pharmaceutical industries across the world. Headquartered in Dublin, ICON Public Limited Company is a clinical research organization. On February 24, 2021, ICLR announced that it is acquiring PRA Health Sciences in a cash plus stock deal at a premium of approximately 30% to PRA's closing price as of February 23, 2021.
SPAC Arbitrage
There were 27 new SPAC IPOs and 12 new SPAC business combinations announced.
- Cyxtera Technologies and Starboard Value Acquisition (SVAC) announced the signing of a definitive business combination agreement today.
- Fortress Value Acquisition Corp. II (FAII) and ATI Physical Therapy have entered into a definitive merger agreement.
- Apex Clearing Holdings LLC and Northern Star Investment Corp. II (NSTB) have entered into a definitive merger agreement.
- Enovix Corporation and Rodgers Silicon Valley Acquisition Corp. (RSVA) have entered into a definitive agreement and plan of merger for a business combination that will result in Enovix becoming a publicly listed company.
- Xos, Inc. and NextGen Acquisition Corp. (NGAC) have entered into a definitive business combination agreement that will result in Xos becoming a publicly listed company.
- Trident Acquisitions Corp. (TDAC) and AutoLotto have entered into a definitive agreement for a business combination that would result in Lottery.com becoming a publicly listed company.
- Lucid Motors and Churchill Capital Corp IV (CCIV) have entered into a definitive merger agreement. CCIV and Lucid are combining at a transaction equity value of $11.75 billion.
- Ardagh Group S.A. (ARD) and Gores Holdings V, Inc. (GRSV) entered into a definitive business combination agreement under which Gores Holdings V will combine with Ardagh's metal packaging business that will be held by Ardagh Metal Packaging S.A. to create an independent public company.
- Berkshire Grey, a developer of integrated artificial intelligence and robotic solutions for e-commerce, retail replenishment, and logistics, entered into a definitive agreement with Revolution Acceleration Acquisition Corp (RAAC), to create a leading publicly listed robotics and automation solutions company.
- Joby Aviation, a transportation company developing an all-electric, vertical take-off and landing aircraft that it intends to operate as a commercial passenger aircraft beginning in 2024, has entered into a definitive business combination agreement with Reinvent Technology Partners (RTP).
- ReNew Power Private Limited and RMG Acquisition Corporation II (RMGB) announced the execution of a definitive agreement for a business combination that would result in ReNew becoming a publicly listed company on the NASDAQ.
- Markforged, creator of an integrated metal and carbon fiber additive manufacturing platform, The Digital Forge entered into a definitive agreement to merge with One (AONE).
Weekly Spread Changes
The table below shows weekly spread changes between February 19, 2021, and February 26, 2021.
| Symbol | Quote | AcquiringCompany | AcquiringCompany Quote | CurrentSpread | Last WeekSpread | Spread ChangeWeekly | DealType |
|---|---|---|---|---|---|---|---|
| NEWA | 3.5 | Crouching Tiger Holding Limited (N/A) | 4.29% | -6.89% | 11.18% | All Cash | |
| NEOS | 0.8521 | Aytu BioScience, Inc. (AYTU) | 7.67 | -2.07% | -13.07% | 11.00% | All Stock |
| HPR | 10.08 | Bonanza Creek Energy, Inc. (BCEI) | 31.93 | -63.89% | -72.06% | 8.17% | All Stock |
| FBSS | 20.12 | Virginia National Bankshares Corporation (VABK) | 31.99 | 7.32% | 2.27% | 5.05% | All Stock |
| CLGX | 84.66 | Stone Point Capital and Insight Partners (N/A) | -5.50% | -10.33% | 4.83% | All Cash | |
| RUHN | 3.43 | RUNION Holding Limited (N/A) | 0.00 | 2.04% | 3.55% | -1.51% | All Cash |
| NMCI | 6.78 | Navios Maritime Partners L.P. (NMM) | 17.2 | -1.06% | 0.64% | -1.70% | All Stock |
| BPFH | 13.76 | SVB Financial Group (SIVB) | 505.36 | -1.00% | 0.85% | -1.85% | Cash Plus Stock |
| HCAP | 8.2 | Portman Ridge Finance Corporation (PTMN) | 2.02 | 4.97% | 7.09% | -2.12% | Cash Plus Stock |
| APHA | 17.84 | Tilray, Inc. (TLRY) | 24.36 | 14.44% | 20.89% | -6.45% | All Stock |
Deal Statistics
| Total Number of Deals Closed in 2021 | 26 |
| Total Number of Deals Not Completed in 2021 | 1 |
| Total Number of Pending Deals | |
| Cash Deals | 53 |
| Stock Deals | 18 |
| Stock & Cash Deals | 12 |
| Special Conditions | 2 |
| Total Number of Pending Deals | 85 |
| Aggregate Deal Consideration | $501.38 billion |
New Deals
- The acquisition of GasLog (GLOG) by BlackRock's Global Energy & Power Infrastructure team for $5.91 billion or $5.80 per share in cash.
- The acquisition of People's United Financial (PBCT) by M&T Bank Corporation (MTB) for $7.6 billion in an all stock deal. Under the terms of the agreement, People's United shareholders will receive 0.118 of a share of M&T common stock for each People's United share they own.
- The acquisition of Cooper Tire & Rubber Company (CTB) by The Goodyear Tire & Rubber Company (GT) for $2.5 billion in a cash plus stock deal. Under the terms of the transaction, which has been approved by the Boards of Directors of both companies, Cooper shareholders will receive $41.75 per share in cash and a fixed exchange ratio of 0.907 shares of Goodyear common stock per Cooper share.
- The acquisition of Forterra (FRTA) by Quikrete Holdings for $2.74 billion or $24 per share in cash.
- The acquisition of PRA Health Sciences (PRAH) by ICON Public Limited Company (ICLR) for $12 billion in a cash plus stock deal. Under the terms of the transaction, PRA shareholders will receive per share, $80 in cash and 0.4125 shares of ICON stock.
- The acquisition of Pandion Therapeutics (PAND) by Merck (MRK) for $1.15 billion or $60 per share in cash.
Deal Updates
- On February 22, 2021, shareholders of Gridsum Holding (GSUM) approved the company's merger with Gridsum Corporation at a special meeting of shareholders.
- On February 25, 2021, The European Union's antitrust authority set a deadline of March 31 for its phase 1 review of Analog Devices' (ADI)) planned acquisition of Maxim Integrated (MXIM).
- On February 25, 2021, the HSR Waiting Period applicable to the consummation of the Merger between SMTC Corporation (SMTX) and H.I.G. Capital expired on February 25, 2021.
- On February 26, 2021, Shareholders of China Distance Education Holdings Limited (DL) approved the company's merger with Champion Distance Education Investments Limited and China Distance Learning Investments Limited at a special meeting of shareholders.
- On February 26, 2021, shareholders of TC PipeLines (TCP) approved the company's merger with TC Energy Corporation (TRP) at a special meeting of shareholders.
- February 26, 2021: According to Reuters, CoreLogic (CLGX) has asked peer CoStar Group (CSGP) for more assurances that it can complete their combination should it attract antitrust scrutiny.
Closed Deals
- The acquisition of ZAGG (ZAGG) by Evercel on February 22, 2021. It took 73 days for this deal to be completed.
- The acquisition of National Holdings Corporation (NHLD) by B. Riley Financial (RILY) on February 25, 2021. It took 45 days for this deal to be completed.
- The acquisition of Sirius International Insurance Group (SG) by Third Point Reinsurance (TPRE) on February 26, 2021. It took 203 days for this deal to be completed.
- The acquisition of CounterPath Corporation (CPAH) by Alianza on February 26, 2021. It took 81 days for this deal to be completed.
Top 10 deals with largest spreads
| Symbol | AnnouncedDate | AcquiringCompany | ClosingPrice | LastPrice | ClosingDate | Profit | AnnualizedProfit |
|---|---|---|---|---|---|---|---|
| DOYU | 10/12/2020 | HUYA Inc. (HUYA) | $19.24 | $14.34 | 06/30/2021 | 34.14% | 102.98% |
| APHA | 12/16/2020 | Tilray, Inc. (TLRY) | $20.42 | $17.84 | 06/30/2021 | 14.44% | 43.56% |
| CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $22.87 | 12/31/2021 | 12.59% | 15.07% |
| XLNX | 10/27/2020 | Advanced Micro Devices, Inc. (AMD) | $145.64 | $130.3 | 12/31/2021 | 11.78% | 14.09% |
| WLTW | 03/09/2020 | Aon plc (AON) | $245.93 | $220.64 | 06/30/2021 | 11.46% | 34.57% |
| AJRD | 12/20/2020 | Lockheed Martin Corporation (LMT) | $56.00 | $51.27 | 12/31/2021 | 9.23% | 11.04% |
| IPHI | 10/29/2020 | Marvell Technology Group Ltd. (MRVL) | $178.15 | $164.59 | 12/31/2021 | 8.24% | 9.86% |
| SOGO | 09/29/2020 | Tencent Parties (N/A) | $8.95 | $8.26 | 07/31/2021 | 7.75% | 18.61% |
| FBSS | 10/01/2020 | Virginia National Bankshares Corporation (VABK) | $21.59 | $20.12 | 06/30/2021 | 7.32% | 22.09% |
| OTC:CXDC | 06/15/2020 | Faith Dawn Limited and Faith Horizon (N/A) | $1.20 | $1.12 | 05/10/2021 | 7.14% | 37.24% |
Conclusion
There have been a total of 34 new deals announced this year, with a total value of over $116 billion. The SPAC frenzy accelerated with 96 new SPAC IPOs and 42 SPAC Business Combinations announced in the month of February. There have been reports of signs showing cracks in the SPAC bubble. We can only wait and watch in the next few weeks and see whether the SPAC mania continues or fizzles out.
This article was written by
I am an entrepreneur and investor with a focus on event driven strategies including merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. I was one of the earliest contributors on Seeking Alpha and started publishing here in 2005. For more than a decade I have been writing every week about M&A and interesting insider transactions. My work has been mentioned in Barron's, Dow Jones, BNN Bloomberg and other publications.
I have been an active investor for more than two decades and my background in technology has helped me built tools that inform my investing process, especially as it relates to event-driven strategies that require updated data and processes. The focus on my Inside Arbitrage service is to provide investors with the right combination of tools and analysis to help them take advantage of strategies that can perform well across market cycles.
Analyst’s Disclosure: I am/we are long OTEL, ZAGG. 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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