Merger Arbitrage Mondays – April 19, 2010

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April 18, 2010 | Merger Arbitrage | | Author Asif

Merger and acquisition activity continues to heat up with 5 new mergers announced last week and two deals closing. The pace of merger activity over the last few weeks combined with an uptick in IPOs (5 new offerings were filed last week) and heavy insider selling have me very worried about this market.

On a positive note, Carl Icahn raised his offering price for SINLetter model portfolio holding Lions Gate Entertainment (LGF) from $6 to $7/share. In an interesting twist another billionaire Mark Cuban disclosed a 5.4% stake in Lions Gate. It remains to be seen if Mr. Cuban plans on making a rival bid for Lions Gate given his interest in the film and media business through stakes in Landmark Theatres and HDNet.

The five new deals include the acquisition of DynCorp International (DCP) by Cerberus Capital Management for $17.55 in cash per share, the acquisition of Mariner Energy (ME) by Apache Corporation for $25.77 per share in a cash plus stock deal, the acquisition of Phase Forward (PFWD) for $17 in cash per share by Oracle, the acquisition of Dialysis Corporation of America (DCAI) for $11.25 in cash per share by U.S. Renal Care and the acquisition of Mirant Corporation (MIR) for $11.71 per share in an all stock transaction by RRI Energy to form GenOn Energy.

The two deals that closed last week include the acquisition of Terra Industries (TRA) by CF Industries Holdings and the acquisition of Peco II Inc. (PIII) by Lineage Power Holdings Inc.

  Symbol Announced
Date
Acquiring
Company
Closing
Value
Closing
Price
Last
Price
Closing
Date
Profit Annu.
Profit
+ RCNI 3/5/2010 Abry $1.2 billion 15 14.78 9/30/2010 1.49% 3.37%
+ ADG 1/19/2010 Chemring Group Plc $59 million 7.25 6.32 4/19/2010 14.72% 14.72%
+ AYE 2/11/2010 FirstEnergy $8.5 billion 25.25 22.27 3/31/2011 13.38% 14.28%
+ SSE 2/23/2010 Naugatuck Valley Financial Corp $19.5 million 7.25 6.67 8/16/2010 8.70% 27.13%
+ STBK 3/18/2010 Roma Financial Corp $14.7 million 2.52 2.377 8/16/2010 6.02% 18.77%
+ ARD 4/4/2010 SandRidge Energy Inc. $1.6 billion 36.85 35.18 9/30/2010 4.75% 10.76%
+ SWWC 3/3/2010 Institutional Investors $275 million 11 10.55 5/17/2010 4.27% 55.60%
+ SII 2/19/2010 Schlumberger $7.5 billion 45.84 44.37 9/30/2010 3.31% 7.51%
+ BNE 2/24/2010 RR Donnelley $481 million 11.5 11.14 9/30/2010 3.23% 7.33%
+ MAM 3/12/2010 Emera Inc. $75.7 million 45 43.638 12/31/2010 3.12% 4.52%
+ ORCD 3/16/2010 eMusic $12.77 million 2.05 2 8/16/2010 2.50% 7.80%
+ WEL 4/9/2010 Halliburton Company $240 million 3 2.94 9/30/2010 2.04% 4.63%
+ PINN 2/24/2010 Investor Group lead by Scotia Waterous (USA) $11 million 0.34 0.334 5/17/2010 1.80% 23.42%
+ DCP 4/12/2010 Cerberus Capital Management $1.5 billion 17.55 17.29 11/15/2010 1.50% 2.66%
+ ME 4/15/2010 Apache $2.7 billion 25.77 25.45 9/30/2010 1.26% 2.85%
+ PFWD 4/16/2010 Oracle Corp. $685 million 17 16.8 6/30/2010 1.19% 6.12%
+ RISK 3/1/2010 MSCI $1.55 billion 23.06 22.82 7/16/2010 1.05% 4.41%
+ RBI 3/15/2010 affiliate of Oncap Management Partners L.P.   13.55 13.42 8/16/10 0.97% 3.02%
+ MIL 3/1/2010 Merck $6 billion 107 106 9/30/2010 0.94% 2.14%
+ PRPX 2/17/2010 L.B. Foster Co. $112 million 11.71 11.61 6/30/2010 0.86% 4.43%
+ SKIL 2/12/2010 consortium of private equity funds $1.2 billion 11.25 11.17 5/31/2010 0.72% 6.22%
+ NADX 4/5/2010 GDC Holdings Inc. $100 million 17 16.951 6/30/2010 0.29% 1.49%
+ BELM 3/29/2010 Avnet $252 million 7 6.98 6/30/2010 0.29% 1.47%
+ DCAI 4/14/2010 U.S. Renal Care $112 million 11.25 11.22 5/31/2010 0.27% 2.32%
+ CXG 3/22/2010 Consol Energy Inc. $363 million 38.25 38.16 5/5/2010 0.24% 5.38%
+ CHRD 3/15/2010 Pegasystems $161.5 million 5 4.99 5/17/2010 0.20% 2.61%
+ FACT 3/9/2010 Abbot $450 million 27 26.99 5/17/2010 0.04% 0.48%
+ BWY 3/29/2010 Madison Dearborn Partners, LLC ("MDP") $915 million 20 20 8/16/2010 0.00% 0.00%
+ IUSA 3/8/2010 CCMP $460 million 8 8 6/30/2010 0.00% 0.00%
+ TWLL 3/22/2010 Intersil Corp. $400 million 18.5 18.55 5/17/2010 -0.27% -3.51%
+ LGN 1/22/2010 Lone Star Funds $270 million 2.5 2.51 5/17/2010 -0.40% -5.19%
+ WEDC 3/30/2010 Microsemi Corporation $100 million 7 7.03 6/27/2010 -0.43% -2.29%
+ CFL 1/18/2010 Tyco International $2.9 billion 42.5 42.81 6/26/2010 -0.72% -3.94%
+ ZNT 2/18/2010 Fairfax Financial Holdings $I.4 billion 38 38.36 5/17/2010 -0.94% -12.23%
+ NGA 4/1/2010 AZZ Inc. $125.6 million 7.5 7.6 8/31/2010 -1.32% -3.64%
+ SMMX 4/5/2010 Accelrys Inc. $186 million 5.59 5.67 6/30/2010 -1.41% -7.25%
+ MIR 4/12/2010 RRI Energy In. $1.6 billion 11.71 11.99 12/31/2010 -2.34% -3.38%
+ TUTR 3/26/2010 Thoma Brava $141 million 5.6 5.76 7/31/2010 -2.78% -9.94%
+ CKR 3/1/2010 Thomas H. Lee $928 million 11.05 11.97 5/17/2010 -7.69% -100.19%
+ CCE 2/25/2010 The Coca-Cola Company $12.3 billion   28.37 10/1/2010 -100.00% -225.31%



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