Merger activity decreased last week with four new deals announced and one deal completed. One of the four deals announced was a potential deal in the works.
The largest deal announced last week was the acquisition of American Campus Communities by Blackstone (NYSE:BX) for nearly $13 billion. Headquartered in Bee Cave, Texas, American Campus Communities is the largest developer, owner and manager of student housing communities in the United States. ACC became the first publicly-traded student housing company in the country after its IPO in 2004. ACC's portfolio consists of 166 owned properties in 71 leading university markets including the University of Texas at Austin, the University of California-Berkeley, Arizona State University, and Florida State University, among others.
Blackstone will buy American Campus Communities for $12.8 billion including debt as it bets that rents will continue to rise with colleges reopening in the US and students returning to campus. The deal represents a premium of 30% over the closing stock price of February 16, 2022, the date immediately prior to the company disclosing receipt from Land & Buildings of an indication of willingness to offer to acquire the Company.
ACC also has a 'Cut-Off' time until May 28, 2022, during which it can enter into a definitive agreement with other interested parties. According to the Merger Agreement, American Campus will have to pay a termination fee of $278 million to Blackstone if it terminates this agreement. However, if ACC terminates the agreement prior to the 'Cut-Off' time, the termination fee will be $139 million. The termination fee to be paid by Blackstone to American Campus, if Blackstone terminates the agreement will be $832 million.
Bill Bayless, ACC co-founder and CEO, said the transaction marked the culmination of a "pioneering quest to transform the student housing sector into a mainstream, institutional asset class within the commercial real estate sector."
This is Blackstone's second acquisition of a public company in four months after it agreed to buy Bluerock Residential Growth REIT (BRG) in a $3.6 billion deal in December last year.
There was one new SPAC IPOs filed and three new SPAC combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.
The table below shows weekly spread changes between April 15 and April 22, 2022.
|Symbol||Quote||Acquiring Company||Acquiring Company Quote||Current Spread||Last Week Spread||Spread Change Weekly||Deal Type|
|VWTR||15.87||D.R. Horton, Inc. (DHI)||71.35||-0.76%||-8.22%||7.46%||All Cash|
|AZPN||156.91||Emerson Electric Co. (EMR)||93.6||1.97%||-1.20%||3.17%||Special Conditions|
|NP||39||Schweitzer-Mauduit International, Inc. (SWM)||26.63||-7.27%||-9.89%||2.62%||All Stock|
|MGI||10.36||Madison Dearborn Partners, LLC (N/A)||6.18%||3.58%||2.60%||All Cash|
|TEN||17.65||Apollo Global Management, Inc. (APO)||53.93||13.31%||10.80%||2.51%||All Cash|
|MILE||1.00||Lemonade (LMND)||20.12||5.83%||6.86%||-1.03%||All Stock|
|COHR||269.17||II-VI Incorporated (IIVI)||62.12||2.73%||4.03%||-1.30%||Cash Plus Stock|
|NSEC||16.3||VR Insurance Holdings, Inc. (N/A)||0.31%||1.62%||-1.31%||All Cash|
|CCMP||179.7||Entegris, Inc. (ENTG)||112.67||2.26%||3.64%||-1.38%||Cash Plus Stock|
|SAVE||26.04||Frontier Group Holdings, Inc. (ULCC)||11.38||-8.24%||-3.12%||-5.12%||Cash Plus Stock|
|Total Number of Deals Closed in 2022||60|
|Total Number of Deals Not Completed in 2022||4|
|Total Number of Pending Deals|
|Stock & Cash Deals||9|
|Total Number of Pending Deals||79|
|Aggregate Deal Consideration||$739.92 billion|
Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as "special situation" deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.
|Symbol||Announced Date||Acquiring Company||Closing Price||Last Price||Closing Date||Profit||Annualized Profit|
|ATVI||01/18/2022||Microsoft Corporation (MSFT)||$95.00||$78.61||06/30/2023||20.85%||17.66%|
|CHNG||01/06/2021||UnitedHealth Group Incorporated (UNH)||$27.75||$23.65||12/31/2022||17.34%||25.31%|
|MBII||03/16/2022||Bioceres Crop Solutions Corp. (BIOX)||$1.05||$0.9108||09/30/2022||14.98%||34.60%|
|TEN||02/23/2022||Apollo Global Management, Inc. (APO)||$20.00||$17.65||12/31/2022||13.31%||19.44%|
|WLL||03/07/2022||Oasis Petroleum Inc. (OAS)||$85.48||$75.71||12/31/2022||12.91%||18.84%|
|BRG||12/20/2021||Blackstone Real Estate (N/A)||$29.85||$26.57||06/30/2022||12.34%||68.27%|
|ZNGA||01/10/2022||Take-Two Interactive Software, Inc. (TTWO)||$9.86||$8.9||06/30/2022||10.79%||59.65%|
|TSEM||02/15/2022||Intel Corporation (INTC)||$53.00||$48.3||02/15/2023||9.73%||12.00%|
|FHN||02/28/2022||The Toronto-Dominion Bank (TD)||$25.00||$22.89||11/27/2022||9.22%||15.58%|
|SAFM||08/09/2021||Cargill and Continental Grain Company (N/A)||$203.00||$189.03||06/30/2022||7.39%||40.87%|
Challenges and regulatory hurdles continue to affect some of the active deals. The FTC asked Prince International and Ferro (FOE) to divest facilities in order to protect competition, Mandiant (MNDT) and Google (GOOG) received a request for additional information from the DOJ, and The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against MoneyGram International (MGI).
On the SPAC front, business combinations picked up with three SPACs entering into definitive agreements. There have been multiple SPAC business combination terminations since the SEC began its scrutinization of SPACs by bolstering disclosure requirements. The SEC cited concerns that projections for SPAC-target private companies "have appeared to be unreasonable, unfounded or potentially misleading."
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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.
Disclosure: I/we have a beneficial long position in the shares of FHN, TSEM, HTA, TGNA, BRG either through stock ownership, options, or other derivatives. 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: Disclaimer: I have long positions in First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). 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.