Merger Arbitrage Mondays – March 22, 2010

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March 21, 2010 | Merger Arbitrage | | Author Asif

Last week was very active with new mergers and acquisitions announced, rumors of deals for some very well know names like Harley-Davidson (HOG) and Polycom (PLCM) and the successful completion of two acquisitions. Polycom, widely recognized for its Klingon starship shaped conference phones, had an interesting ride last week with the stock jumping more than 10% from Tuesday’s close of $30.44 to an intraday high of $34.14 on Wednesday on nearly 10 times average daily volume on speculation that investment firm Apax Partners has been in negotiations with the company since November to take it private at $37 per share. A couple of valuation related downgrades later, oddly enough the stock closed the week at $31.34, just a little higher from where it had started the week.

SINLetter pick Teva Pharmaceutical (TEVA) and Pfizer (PFE) also duked it out for German generic drug manufacturer Ratiopharm and it looks like Teva won this $5 billion round, much to the delight of Teva investors who bid the stock up 3% last week. Since we don’t include international deals or rumors in the Merger Arbitrage Mondays list, you will not see these deals in the table below. You will however find the newly announced acquisitions of Orchard Enterprises (ORCD), Chordiant Software (CHRD), Sport Supply Group (RBI) and Sterling Banks (STBK). The acquisitions of Bare Escentuals (BARE) and Home Diagnostics (HDIX) completed last week and hence they have been removed from the Merger Arbitrage list below.

Symbol Announced

Date

Acquiring Company Closing

Value

Closing

Price

Last

Price

Closing

Date

Profit Annualized

Profit

+ AYE 2/11/2010 FirstEnergy $8.5 billion 26.53 23.44 3/31/2011 13.2% 13.05%
+ SSE 2/23/2010 Naugatuck Valley Financial Corp $19.5 million 7.25 6.52 8/16/2010 11.20% 28.38%
+ STBK 3/18/2010 Roma Financial Corp $14.7 million 2.52 2.3 8/16/2010 9.57% 24.25%
+ PINN 2/24/2010 Investor Group lead by Scotia Waterous (USA) $11 million 0.34 0.3201 5/17/2010 6.22% 41.26%
+ SII 2/19/2010 Schlumberger $7.5 billion 45.84 43.31 9/30/2010 5.84% 11.34%
+ SWWC 3/3/2010 Institutional Investors $275 million 11 10.5 5/17/2010 4.76% 31.60%
+ ORCD 3/16/2010 eMusic $12.77 million 2.05 2 8/16/2010 2.50% 6.34%
+ BNE 2/24/2010 RR Donnelley $481 million 11.5 11.23 9/30/2010 2.40% 4.67%
+ MIL 3/1/2010 Merck $6 billion 107 105.25 9/30/2010 1.66% 3.23%
+ TRA 3/12/2010 CF Industries Holdings, Inc. $4.7 billion 46.37 45.7 4/12/2010 1.47% 26.76%
+ SKIL 2/12/2010 consortium of private equity funds $1.1 billion 10.8 10.65 5/31/2010 1.41% 7.45%
+ MAM 3/12/2010 Emera Inc. $75.7 million 45 44.5 12/31/2010 1.12% 1.47%
+ ZRBA 1/11/2010 Woodstream Corp $23 million 9 8.91 3/31/2010 1.01% 40.97%
+ IUSA 3/8/2010 CCMP $460 million 8 7.93 6/30/2010 0.88% 3.29%
+ CITP 2/2/2010 Manpower $375.8 million 17.65 17.5 4/2/2010 0.86% 31.29%
+ CFL 1/18/2010 Tyco International $2.9 billion 42.5 42.16 6/26/2010 0.81% 3.13%
+ RISK 3/1/2010 MSCI $1.55 billion 22.4 22.26 7/16/2010 0.63% 2.01%
+ ADG 1/19/2010 Chemring Group Plc $59 million 7.25 7.22 4/19/2010 0.42%
+ PRPX 2/17/2010 L.B. Foster Co. $112 million 11.71 11.67 6/30/2010 0.34% 1.28%
+ KTII 1/11/2010 Hillenbrand Inc Common Stock $435 million 150 149.89 3/31/2010 0.07% 2.98%
+ FACT 3/9/2010 Abbot $450 million 27 27.01 5/17/2010 -0.04% -0.25%
+ RBI 3/15/2010 affiliate of Oncap Management Partners L.P. 13.55 13.56 8/16/2010 -0.07% -0.19%
+ RCNI 3/5/2010 Abry $1.2 billion 15 15.08 9/30/2010 -0.53% -1.03%
+ ZNT 2/18/2010 Fairfax Financial Holdings $I.4 billion 38 38.34 5/17/2010 -0.89% -5.89%
+ CHRD 3/15/2010 Pegasystems $161.5 million 5 5.07 5/17/2010 -1.38% -9.16%
+ LGN 1/22/2010 Lone Star Funds $270 million 2.5 2.54 5/17/2010 -1.57% -10.45%
+ CKR 3/1/2010 Thomas H. Lee $928 million 11.05 11.41 5/17/2010 -3.16% -20.94%
+ PIII 2/18/2010 Lineage $16.7 million 5.26 5.81 5/17/2010 -9.47% -62.82%
+ JSDA 3/9/2010 Reeds Inc. $9.7 million 0.4 0.54 -25.93% 0.24%
+ CCE 2/25/2010 The Coca-Cola Company $12.3 billion 26.96 10/1/2010



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Comments

  1. Howard Pan
    March 24th, 2010

    I believe your table has the wrong value for AYE-FE merger. FE trades at ~40.20. The transaction swaps 0.667 shares of FE for 1 share of AYE which gives AYE a value of 0.667 * 40.20 or 26.81. AYE is currently trading at 23.80 so it is trading at a discount rather than a premium as your table indicates. Please verify if I am wrong.

  2. Asif
    March 24th, 2010

    Thanks for catching that Pan. We had the deal listed correctly in the details section (clicking on the + sign) but not in the table. I have updated the table.

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