Merger Arbitrage Mondays – May 24, 2010

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May 24, 2010 | Merger Arbitrage | | Author Asif

The slowdown in merger announcements two weeks ago appears to have only been a temporary breather. For the first time since we launched this service in mid-March, we have seen seven new mergers announced in a single week. Besides the seven new all cash deals announced last week, we had one deal that closed. The deal that closed was the acquisition of Zenith National Insurance (ZNT) by Fairfax on May 20.

The new deals include the acquisition of OSI Pharma (OSIP) by Japan’s Astellas Pharma for $57.50 per share in cash, the acquisition of The South Financial Group (TSFG) by the TD Bank Financial Group for $0.28 in cash or 0.004 shares of TD Bank for each South Financial Group common share held, the acquisition of Virtual Radiological (VRAD) by Providence Equity for $17.25 per share in cash, the acquisition of Double – Take Software (DBTK) by Vision Solutions for $10.55 per share in cash, the acquisition of EF Johnson Technologies (EFJI) by Francisco Partners for $1.05 per share in cash, the acquisition of GLG Partners (GLG) by Man Group for $4.50 per share in cash and the acquisition of Psychiatric Solutions (PSYS) by Universal Health Services for $33.75 per share in cash.

Please note that we revised the closing price of CPI International (CPII) downward to $15.59 from $16.4 last week when the merger with Comtech Telecommunications (CMTL) was announced. The reason for the downward revision was on account of the cash plus stock nature of the deal where the stock portion is determined by a ratio. As stated last week, if the merger is completed, CPI International shareholders will receive a combination of $9.00 in cash plus a fraction of Comtech common stock equal to $8.10 divided by the average closing price of Comtech common stock over a specified period of time prior to closing. The fraction shall not be greater than 0.2382 nor less than 0.2132. Using the midpoint of this range (0.2257) and multiplying by the price of Comtech as of last Friday ($29.15), the stock portion of the deal fell to $6.58 from $7.4 last week.

  Symbol Anno.
Date
Acquiring
Company
Closing
Value
Closing
Price
Last
Price
Closing
Date
Profit Annu.
Profit
+ ADG 1/19/2010 Chemring Group Plc $59 million 7.25 3.64 5/31/2010 99.18% 5171.31%
+ AYE 2/11/2010 FirstEnergy $8.5 billion 23.26 19.9 3/31/2011 16.88% 20.07%
+ SSE 2/23/2010 Naugatuck Valley Financial Corp $19.5 million 7.25 6.41 8/16/2010 13.10% 58.33%
+ Q 4/22/2010 Century Link $10.6 billion 5.53 5.01 4/21/2011 10.38% 11.59%
+ PINN 2/24/2010 Investor Group lead by Scotia Waterous (USA) $11 million 0.34 0.31 6/30/2010 9.68% 98.12%
+ STBK 3/18/2010 Roma Financial Corp $14.7 million 2.52 2.3 8/16/2010 9.57% 42.58%
+ SWWC 3/3/2010 Institutional Investors $275 million 11 10.33 3/31/2011 6.49% 7.71%
+ GLG 5/17/2010 Man Group $1.6 billion 4.5 4.24 9/30/2010 6.13% 17.76%
+ ME 4/15/2010 Apache $2.7 billion 23.07 21.76 9/30/2010 6.02% 17.44%
+ VTIV 5/6/2010 Thomas H. Lee Partners $1.1 billion 26 24.71 9/30/2010 5.22% 15.12%
+ PSYS 5/17/2010 Universal Health $3.1 billion 33.75 32.14 12/31/2010 5.01% 8.43%
+ IDC 5/4/2010 Silver Lake & Warburg Pincus $3.4 billion 33.86 32.34 9/30/2010 4.70% 13.62%
+ RCNI 3/5/2010 Emera Inc. $1.2 billion 15 14.36 9/30/2010 4.46% 12.91%
+ SII 2/19/2010 Schlumberger $7.5 billion 42.14 40.36 9/30/2010 4.41% 12.78%
+ BNE 2/24/2010 RR Donnelley $481 million 11.5 11.07 9/30/2010 3.88% 11.25%
+ DCP 4/12/2010 Cerberus Capital Management $1.5 billion 17.55 16.96 11/15/2010 3.48% 7.43%
+ MAM 3/12/2010   $75.7 million 45 43.49 12/31/2010 3.47% 5.84%
+ EFJI 5/17/2010 Francisco Partners   1.05 1.02 9/30/2010 2.94% 8.52%
+ DBTK 5/17/2010 Vision Solutions $242 million 10.55 10.27 9/30/2010 2.73% 7.90%
+ PRPX 2/17/2010 L.B. Foster Co. $112 million 11.71 11.4 6/30/2010 2.72% 27.57%
+ CKR 3/1/2010 Apollo Management VII $694 million 12.55 12.22 6/30/2010 2.70% 27.38%
+ ORCD 3/16/2010 eMusic $12.77 million 2.05 2 8/16/2010 2.50% 11.13%
+ ARD 4/4/2010 SandRidge Energy Inc. $1.6 billion 30.97 30.29 9/30/2010 2.24% 6.50%
+ CPII 5/10/2010 Comtech $472.3 million 15.59 15.26 9/30/2010 2.16% 6.26%
+ BSMD 5/13/2010 Merit Medical Systems $96 million 4.38 4.29 9/30/2010 2.10% 6.08%
+ ATSI 4/29/2010 Medtronic $350 million 4 3.92 9/30/2010 2.04% 5.91%
+ SXE 5/7/2010 CGI Group $904 million 37.5 36.75 9/30/2010 2.04% 5.91%
+ BELM 3/29/2010 Avnet $252 million 7 6.87 6/30/2010 1.89% 19.19%
+ VRAD 5/17/2010 Providence Equity $294 million 17.25 16.95 9/30/2010 1.77% 5.13%
+ RBI 3/15/2010 affiliate of Oncap Management Partners L.P.   13.55 13.32 8/16/10 1.73% 7.69%
+ WEL 4/9/2010 Halliburton Company $240 million 3 2.95 9/30/2010 1.69% 4.91%
+ CRN 4/19/2010 GeoGroup $685 million 26.61 26.17 9/30/2010 1.68% 4.87%
+ SY 5/12/2010 SAP $5.8 billion 65 64.04 9/30/2010 1.50% 4.34%
+ CYBS 4/21/2010 Visa Inc. $2.0 billion 26 25.62 9/30/2010 1.48% 4.30%
+ SENO 5/5/2010 Bard $200 million 11 10.85 9/30/2010 1.38% 4.00%
+ PFWD 4/16/2010 Oracle Corp. $685 million 17 16.78 6/30/2010 1.31% 13.29%
+ HTRN 5/5/2010 Endo Pharmaceuticals $223 million 4.85 4.79 7/31/2010 1.25% 6.82%
+ BWY 3/29/2010 Madison Dearborn Partners, LLC ("MDP") $915 million 20 19.8 8/16/2010 1.01% 4.50%
+ TWPG 4/26/2010 Stifel Financial $300 million 7.19 7.12 6/30/2010 0.98% 9.97%
+ DCAI 4/14/2010 U.S. Renal Care $112 million 11.25 11.15 5/31/2010 0.90% 46.76%
+ TUTR 3/26/2010 Thoma Brava $141 million 5.6 5.56 7/31/2010 0.72% 3.92%
+ NGA 4/1/2010 AZZ Inc. $125.6 million 7.5 7.45 8/31/2010 0.67% 2.53%
+ MIL 3/1/2010 Merck $6 billion 107 106.3 9/30/2010 0.66% 1.91%
+ SKIL 2/12/2010 consortium of private equity funds $1.2 billion 11.25 11.18 5/31/2010 0.63% 32.65%
+ IUSA 3/8/2010 CCMP $460 million 8 7.96 6/30/2010 0.50% 5.09%
+ PONE 4/26/2010 GTCR $828 million 15.5 15.43 6/30/2010 0.45% 4.60%
+ NADX 4/5/2010 GDC Holdings Inc. $100 million 17 16.93 6/30/2010 0.41% 4.19%
+ RISK 3/1/2010 MSCI $1.55 billion 21.79 21.71 7/16/2010 0.37% 2.59%
+ PALM 4/28/2010 Hewlett – Packard $1.2 billion 5.7 5.68 7/31/2010 0.35% 1.92%
+ MIR 4/12/2010 RRI Energy In. $1.6 billion 11.71 11.67 12/31/2010 0.34% 0.58%
+ CXG 3/22/2010 Consol Energy Inc. $363 million 38.25 38.16 6/30/2010 0.24% 2.39%
+ OSIP 5/17/2010 Astellas Pharma $3.5 billion 57.5 57.38 6/30/2010 0.21% 2.12%
+ TSFG 5/17/2010 TD Bank Financial Group $61 million 0.28 0.2798 9/30/2010 0.07% 0.21%
+ CAL 5/3/2010 United $1.2 billion 19.46 19.45 12/31/2010 0.05% 0.09%
+ SMMX 4/5/2010 Accelrys Inc. $186 million 5.44 5.96 6/30/2010 -8.72% -88.46%
+ DTG 4/26/2010 Hertz $1.2 billion 41 45.61 12/31/2010 -10.11% -17.00%
+ ATBC 5/10/2010 Jacksonville Bancorp    2.4 2.6999 9/30/2010 -11.11% -32.18%
+ CCE 2/25/2010 The Coca-Cola Company $12.3 billion   26.57 10/1/2010 #VALUE! #VALUE!



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