Merger Arbitrage Mondays – August 02, 2010

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August 1, 2010 | Merger Arbitrage | | Author Asif

Mergers continued to lose steam last week with only two new deals announced. However the number of deals that closed jumped up with six pending deals closing last week.

The Charles River Laboratories (CRL) and Wuxi Pharma Tech (WX) deal fell apart last week following opposition from investors like hedge fund Jana Partners and proxy advisory firms. The New York Times has a good obituary of this troubled deal including links to the letter Jana Partners wrote to Charles River. The fact that Wuxi was trading at pre-merger prices for a few weeks now and the huge spread on the deal indicated market skepticism about the deal closing and the market was right this time.

Rental car company Avis is at war with Hertz to acquire Dollar Thrifty (DTG) with an offer than values DTG at $46.50 when compared to the Hertz (HTZ) deal that values DTG under $41. Dollar Thrifty closed at $49.87 on Friday, reflecting optimism that the deal value is likely to head higher before one of these companies emerges the winner. Since DTG’s board is yet accept the offer by Avis (CAR), the merger arbitrage table still includes the details of the Hertz deal. We will update the Merger Arbitrage Tool as we get additional information.

LB Foster (FSTR) extended its tender offer for Portec Rail Products (PRPX) through August 16 as only 64.41% of outstanding PRPX shares were tendered as of the previous deadline of July 29. The stock inched closer to the $11.70 tender price and closed trading on Friday at $11.61.

The new deals announced last week include the acquisition of Health Grades (HGRD) by an affiliate of the private equity firm Vestar Capital for $8.20 per share in cash and the acquisition of American Oil & Gas (AEZ) by Hess Corp. (HES) in an all-stock deal, where Hess will issue 0.1373 shares of its stock for each outstanding share of American Oil & Gas.

The deals that closed include,

  1. The acquisition of database software company Sybase by Germany’s SAP on July 30, 2010
  2. The acquisition of Interactive Data by Silver Lake and Warburg Pincus on July 29, 2010
  3. The acquisition of National Dentex by GDC Holdings (PDF) on July 29, 2010
  4. The acquisition of Somanetics Corporation (SMTS) by Covidien (COV) on July 28, 2010
  5. The acquisition of American Italian Pasta Company by Ralcorp Holdings (RAH) on July 28, 2010
  6. The acquisition of Santander BanCorp by Banco Santander unit ABLASA on July 29, 2010.


  Symbol Announced
Date
Acquiring
Company
Closing
Value
Closing
Price
Last
Price
Closing
Date
Profit Annu.

Profit

+ EMMS 05/25/2010 JS Acquisition and Alden Global Capital (N/A) $3 billion $2.40 $1.96 09/30/2010 22.45% 138.88%
+ TLCR 06/07/2010 Grifols (GRF.MC) $3.4 billion $26.17 $22.03 12/31/2010 18.79% 45.41%
+ SSE 02/23/2010 Naugatuck Valley Financial Corp (NVSL) $19.5 million $7.25 $6.47 08/16/2010 12.06% 314.31%
+ AYE 02/11/2010 FirstEnergy (FE) $8.5 billion $25.15 $22.80 03/31/2011 10.29% 15.58%
+ BGH 06/11/2010 Buckeye Partners LP (BPL) $1.14 billion $44.75 $41.96 12/31/2010 6.64% 16.05%
+ ATBC 05/10/2010 Jacksonville Bancorp (JAXB) N/A $2.45 $2.31 09/30/2010 6.06% 37.49%
+ PINN 02/24/2010 Investor Group lead by Scotia Waterous (USA) (N/A) $11 million $0.34 $0.3215 08/21/2010 5.75% 110.54%
+ Q 04/22/2010 Century Link (CTL) $10.6 billion $5.93 $5.66 04/21/2011 4.72% 6.58%
+ ATAC 07/19/2010 Genco Distribution System Inc. (N/A) $513 million $25.00 $23.98 12/31/2010 4.25% 10.28%
+ TTIL 06/09/2010 Teoco Corp. (N/A) $58 million $3.00 $2.89 09/30/2010 3.81% 23.55%
+ ALOY 06/24/2010 ZelnickMedia (N/A) $126.5 million $9.80 $9.49 12/31/2010 3.27% 7.90%
+ PMACA 06/10/2010 Old Republic International (ORI) $228 million $6.88 $6.71 09/30/2010 2.54% 15.72%
+ DIVX 06/02/2010 Sonic Solutions (SNIC) $323 million $7.80 $7.61 09/30/2010 2.43% 15.05%
+ OMNI 06/04/2010 Wellspring Capital Management (N/A) $122 million $2.75 $2.69 11/15/2010 2.23% 7.75%
+ MIR 04/12/2010 RRI Energy In. (RRI) $1.6 billion $11.20 $10.97 12/31/2010 2.08% 5.03%
+ WMZ 05/24/2010 Williams Partners L.P. (WPZ) $35.14 $34.43 09/30/2010 2.07% 12.83%
+ NTY 07/15/2010 The Carlyle Group (N/A) $3.8 billion $55.00 $53.89 12/31/2010 2.06% 4.98%
+ GLG 05/17/2010 Man Group (N/A) $1.6 billion $4.50 $4.41 09/30/2010 2.04% 12.63%
+ PSYS 05/17/2010 Universal Health (N/A) $3.1 billion $33.75 $33.14 12/31/2010 1.84% 4.45%
+ BNE 02/24/2010 RR Donnelley (RRD) $481 million $11.50 $11.31 09/30/2010 1.68% 10.39%
+ ACF 07/22/2010 General Motors Co. (N/A) $3.5 billion $24.50 $24.11 12/31/2010 1.62% 3.91%
+ ECLP 06/09/2010 Allscripts-Misys Healthcare (MDRX) $1.3 billion $20.03 $19.71 11/15/2010 1.61% 5.61%
+ WAIN 06/29/2010 Eastern Bank (N/A) $163 million $19.00 $18.7201 12/31/2010 1.50% 3.61%
+ VETS 06/02/2010 VCA Antech Inc (WOOF) $41.25 million $0.34 $0.335 09/30/2010 1.49% 9.23%
+ SWWC 03/03/2010 Institutional Investors (N/A) $275 million $11.00 $10.85 03/31/2011 1.38% 2.09%
+ ACAP 07/08/2010 The Doctors Company (N/A) $386 million $41.50 $40.95 12/31/2010 1.34% 3.25%
+ STBK 03/18/2010 Roma Financial Corp (ROMA) $14.7 million $2.52 $2.49 08/16/2010 1.20% 31.41%
+ PFWD 04/16/2010 Oracle Corp. (ORCL) $685 million $17.00 $16.80 06/30/2010 1.19% 0.00%
+ LSBX 07/15/2010 People's United Financial Inc. (PBCT) $96 million $21.00 $20.79 12/31/2010 1.01% 2.44%
+ NYM 07/15/2010 ProSight (N/A) $230 million $25.75 $25.50 12/31/2010 0.98% 2.37%
+ HEW 07/12/2010 Aon Corp (AON) $4.9 billion $49.58 $49.10 11/15/2010 0.97% 3.37%
+ MAM 03/12/2010 Emera Inc (N/A) $75.7 million $45.00 $44.60 12/31/2010 0.90% 2.17%
+ ODSY 05/24/2010 Gentiva Health Services (GTIV) $1.0 billion $27.00 $26.76 09/30/2010 0.90% 5.55%
+ TSFG 05/17/2010 TD Bank Financial Group (N/A) $61 million $0.28 $0.2776 09/30/2010 0.86% 5.35%
+ PRPX 02/17/2010 L.B. Foster Co. (FSTR) $112 million $11.71 $11.61 08/31/2010 0.86% 10.84%
+ ME 04/15/2010 Apache (APA) $2.7 billion $24.09 $23.89 09/30/2010 0.84% 5.17%
+ BSMD 05/13/2010 Merit Medical Systems (MMSI) $96 million $4.38 $4.35 09/30/2010 0.69% 4.27%
+ EFJI 05/17/2010 Francisco Partners (N/A) N/A $1.50 $1.49 09/30/2010 0.67% 4.15%
+ WEL 04/09/2010 Halliburton Company (HAL) $240 million $3.00 $2.98 09/30/2010 0.67% 4.15%
+ HGRD 07/28/2010 an affiliate of the private equity firm Vestar Capital (N/A) $294 million $8.20 $8.15 09/30/2010 0.61% 3.80%
+ MEND 07/12/2010 Johnson & Johnson (JNJ) $480 million $23.40 $23.26 09/30/2010 0.60% 3.72%
+ AEZ 07/28/2010 Hess Corp (HES) $450 million $7.36 $7.32 12/31/2010 0.52% 1.25%
+ MDNU 06/11/2010 Danone (N/A) $62.3 million $4.00 $3.98 09/30/2010 0.50% 3.11%
+ QUOT 06/11/2010 LQ Acquisition (N/A) $19 million $4.00 $3.98 09/30/2010 0.50% 3.11%
+ ORCD 03/16/2010 eMusic (N/A) $12.77 million $2.05 $2.04 08/16/2010 0.49% 12.78%
+ CRN 04/19/2010 GeoGroup (GEO) $685 million $28.05 $27.93 09/30/2010 0.44% 2.75%
+ VIRL 06/10/2010 Synopsys (SNPS) $315 million $12.00 $11.95 12/31/2010 0.42% 1.01%
+ RCNI 03/05/2010 ABRY Partners (N/A) $536 million $15.00 $14.94 09/30/2010 0.40% 2.48%
+ SXE 05/07/2010 CGI Group (N/A) $904 million $37.50 $37.35 09/30/2010 0.40% 2.48%
+ VRAD 05/17/2010 Providence Equity (N/A) $294 million $17.25 $17.20 09/30/2010 0.29% 1.80%
+ GNA 06/02/2010 Gerdau (GGB) $1.7 billion $11.00 $10.97 08/31/2010 0.27% 3.44%
+ VTIV 05/06/2010 Thomas H. Lee Partners (N/A) $1.1 billion $26.00 $25.94 09/30/2010 0.23% 1.43%
+ SII 02/19/2010 Schlumberger (SLB) $7.5 billion $41.56 $41.48 09/30/2010 0.19% 1.18%
+ ADCT 07/13/2010 Tyco Electronics (TEL) $1.24 billion $12.75 $12.73 12/31/2010 0.16% 0.38%
+ STST 06/30/2010 Boeing (BA) $775 million $34.50 $34.47 09/30/2010 0.09% 0.54%
+ RBI 03/15/2010 affiliate of Oncap Management Partners L.P. (N/A) $13.55 $13.54 08/16/2010 0.07% 1.93%
+ ATSI 04/29/2010 Medtronic (MDT) $350 million $4.00 $4.00 09/30/2010 0.00% 0.00%
+ CAL 05/03/2010 United (UAUA) $1.2 billion $24.93 $25.02 12/31/2010 -0.37% -0.90%
+ SMTB 07/15/2010 People's United Financial Inc. (PBCT) $60 million $3.98 $4.00 12/31/2010 -0.52% -1.26%
+ VRX 06/21/2010 Biovail Corporation (BVF) $3.3 billion $55.75 $56.32 12/31/2010 -1.01% -2.43%
+ CPII 05/10/2010 Comtech (CMTL) $472.3 million $13.87 $14.07 09/30/2010 -1.43% -8.87%
+ NGA 04/01/2010 AZZ Inc. (AZZ) $125.6 million $7.50 $7.63 08/31/2010 -1.70% -21.44%
+ ABII 06/30/2010 Celgene (CELG) $2.9 billion $72.43 $75.29 12/31/2010 -3.79% -9.17%
+ BXC 07/22/2010 Cerberus Capital Management (N/A) $111.1 million $3.40 $3.71 12/31/2010 -8.36% -20.20%
+ MCCC 06/01/2010 Chief Executive Rocco Commisso (N/A) $590 million $6.00 $7.34 N/A -18.26% 0.00%
+ DTG 04/26/2010 Hertz (HTZ) $1.3 billion $40.27 $49.87 12/31/2010 -19.24% -46.51%
+ CCE 02/25/2010 The Coca-Cola Company (KO) $12.3 billion N/A $28.70 10/01/2010 N/A N/A

Voluntary Disclosure: I am long Coca-Cola Enterprises (CCE) and Portec Rail Products (PRPX).




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