Merger Arbitrage Mondays – June 2, 2014

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June 2, 2014 | Merger Arbitrage | | Author Asif

Merger Activity declined last week with one new merger announced and two deals closing.

We have made a change to the way we classify deals in our articles and the Merger Arbitrage Tool. We used to have four types of deals listed including,

  1. cash only deals
  2. stock only deals
  3. cash plus stock deals
  4. special conditions

The special conditions deals were the ones that had collars where the number of shares in a stock only deal could vary based on the closing price of the acquiring company. Our system was set up to handle two collars. Recently we came across a deal that had three collars defined in the deal and we have also come across several deals that did not fit any of the four types mentioned above. These were deals that included contingent value rights (CVRs) and other conditions. We have usually treated those types of deals as “cash only deals” and have mentioned the special circumstances of the deal in our write-ups.

Going forward, we are going to classify these types of deals (the ones with CVRs and other conditions) as “special conditions” and are going to classify deals with two collars as “collars”. Hopefully this will help make things easier for those of you that prefer to focus on cash only deals and will make the tool more useful. As always we love to hear feedback on how we can improve this product.

You can find all the active deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 2014 68
Total Number of Pending Deals
Cash Deals 28
Stock Deals 17
Stock & Cash Deals 10
Special Conditions 9
Total Number of Pending Deals 64
Total Deal Size $302.86 billion

New Deals:

  1. The acquisition of PetroLogistics (PDH) by Flint Hills Resources, LLC for $2.1 billion or $14.00 per share in cash.

Deal Updates:

  1. On May 30, 2014, WSP Holdings (WH) announced that it has terminated its previously announced merger agreement for a going private transaction with Wuxi Heavy Industries, Ltd. (“Parent”), WHI Acquisitions, Ltd. (“Merger Sub”) and General Transactions, Inc.
  2. Hillshire Brands (HSH) received two buyout offers from Tyson Foods (TSN) and Pilgrim’s Pride (PPC) last week. These two companies might not want Hillshire to go forward with its acquisition of Pinnacle Foods (PF) and that’s the reason why the spread for Pinnacle Foods is very high this week.

Closed Deals:

  1. The acquisition of Zale Corporation (ZLC) by Signet Jewelers Limited (SIG) on May 29, 2014. It took 99 days for this deal to be completed.
  2. The acquisition of ArthroCare Corporation (ARTC) by Smith & Nephew on May 29, 2014. It took 115 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced

Date

Acquiring

Company

Closing

Price

Last

Price

Closing

Date

Profit Annualized

Profit

PF 05/12/2014 The Hillshire Brands Company (HSH) $44.64 $31.31 09/30/2014 42.57% 129.50%
CHTP 05/08/2014 H. Lundbeck A/S (N/A) $7.94 $6.53 09/30/2014 21.59% 65.68%
TWGP 01/06/2014 ACP Re Ltd. (N/A) $2.50 $2.15 11/15/2014 16.28% 35.79%
DTV 05/18/2014 AT&T, Inc. (T) $95.00 $82.44 05/31/2015 15.24% 15.32%
EDS 12/02/2013 Pan Long Company Limited (N/A) $1.78 $1.60 03/31/2014 11.25% -65.18%
OVRL 05/15/2014 Sphere 3D Corporation (SPIHF) $4.29 $3.86 09/30/2014 11.11% 33.80%
SYNM 12/17/2013 Renewable Energy Group, Inc. (REGI) $3.77 $3.40 03/31/2014 10.80% -62.55%
FFKY 04/22/2014 Community Bank Shares of Indiana Inc. (CBIN) $3.93 $3.55 12/31/2014 10.76% 18.53%
QCOR 04/07/2014 Mallinckrodt plc (MNK) $99.75 $90.13 09/30/2014 10.67% 32.47%
LIN 03/22/2014 Media General, Inc. (MEG) $27.82 $25.14 03/31/2015 10.66% 12.88%

List of all pending deals:

Symbol Announced

Date

Acquiring

Company

Deal

Type

Closing

Value

Closing

Price

Last

Price

Volume Closing

Date

Profit Annu.

Profit

+ PF 05/12/2014 The Hillshire Brands Company (HSH) Cash Plus Stock $4.3 billion $44.64 $31.31 949,253 09/30/2014 42.57% 129.50%
+ CHTP 05/08/2014 H. Lundbeck A/S (N/A) Special Conditions $658 million $7.94 $6.53 1,717,010 09/30/2014 21.59% 65.68%
+ TWGP 01/06/2014 ACP Re Ltd. (N/A) All Cash $172.1 $2.50 $2.15 954,958 11/15/2014 16.28% 35.79%
+ DTV 05/18/2014 AT&T, Inc. (T) Special Conditions $48.5 billion $95.00 $82.44 8,259,134 05/31/2015 15.24% 15.32%
+ EDS 12/02/2013 Pan Long Company Limited (N/A) All Cash $60.1 million $1.78 $1.60 39,354 03/31/2014 11.25% 0.00%
+ OVRL 05/15/2014 Sphere 3D Corporation (SPIHF) All Stock $81.13 million $4.29 $3.86 33,417 09/30/2014 11.11% 33.80%
+ SYNM 12/17/2013 Renewable Energy Group, Inc. (REGI) All Stock N/A $3.77 $3.40 68,405 03/31/2014 10.80% 0.00%
+ FFKY 04/22/2014 Community Bank Shares of Indiana Inc. (CBIN) All Stock $17.9 million $3.93 $3.55 343 12/31/2014 10.76% 18.53%
+ QCOR 04/07/2014 Mallinckrodt plc (MNK) Cash Plus Stock $5.6 billion $99.75 $90.13 1,548,219 09/30/2014 10.67% 32.47%
+ LIN 03/22/2014 Media General, Inc. (MEG) Special Conditions $2.6 billion $27.82 $25.14 115,569 03/31/2015 10.66% 12.88%
+ NICK 12/18/2013 an indirect wholly-owned subsidiary of Prospect Capital Corporation (“Prospect”) (N/A) All Cash $340 million $16.00 $14.58 22,634 06/12/2014 9.74% 355.49%
+ RDA 11/11/2013 Tsinghua Unigroup Ltd. (N/A) All Cash $910 million $18.50 $16.93 344,767 06/30/2014 9.27% 120.89%
+ TWC 02/13/2014 Comcast Corporation (CMCSA) All Stock $45.2 billion $150.08 $141.16 844,811 12/31/2014 6.32% 10.87%
+ DCIN 05/15/2014 Carmike Cinemas Inc. (CKEC) All Stock N/A $6.11 $5.77 118,440 09/30/2014 5.82% 17.71%
+ SWY 03/06/2014 AB Acquisition LLC (N/A) Special Conditions N/A $36.15 $34.34 2,667,210 12/31/2014 5.27% 9.07%
+ CHRM 05/19/2014 Engadin Parent Limited (N/A) Special Conditions N/A $4.70 $4.50 598 09/30/2014 4.44% 13.52%
+ HCBK 08/27/2012 M&T Bank Corporation (MTB) All Stock $3.7 billion $10.20 $9.77 4,317,104 12/31/2014 4.39% 7.56%
+ NINE 01/29/2014 Ninetowns Holdings Limited (“Parent”) (N/A) All Cash N/A $1.80 $1.74 N/A 06/30/2014 3.45% 44.95%
+ FUBC 05/08/2014 Valley National Bancorp (VLY) All Stock $312 million $8.62 $8.35 84,151 10/31/2014 3.28% 7.93%
+ NED 04/02/2014 Rainbow Education Holding Limited (N/A) All Cash N/A $2.85 $2.76 6,725 08/15/2014 3.26% 16.08%
+ OBAF 04/08/2014 F.N.B. Corporation (FNB) All Stock $94 million $21.80 $21.15 12,750 09/30/2014 3.07% 9.34%
+ EQU 12/09/2013 Petroflow Energy Corporation (N/A) All Cash $230 million $5.43 $5.27 222,134 07/31/2014 3.04% 18.78%
+ SUSS 04/28/2014 Energy Transfer Partners, L.P. (ETP) All Stock $1.8 billion $81.70 $79.31 555,196 09/30/2014 3.01% 9.16%
+ SPBC 05/05/2014 Green Bank (N/A) All Cash $46.2 million $29.55 $28.70 7,683 09/30/2014 2.96% 9.01%
+ PTEK 04/30/2014 Multimedia Games, Inc. (N/A) All Cash N/A $1.35 $1.313 69,449 12/31/2014 2.82% 4.85%
+ OABC 04/29/2014 Southside Bancshares Inc. (SBSI) Cash Plus Stock $307 million $24.64 $24.07 92,113 12/31/2014 2.36% 4.06%
+ CHC 01/13/2014 CPT Wyndham Holdings Ltd. (N/A) All Cash N/A $3.51 $3.43 13,163 06/30/2014 2.33% 30.40%
+ FFCO 04/14/2014 CB Financial Services, Inc. (CBFV) All Stock 54.5 million $22.60 $22.10 900 11/15/2014 2.26% 4.98%
+ GA 03/16/2014 Giant Investment Limited (�Parent�) and Giant Merger Limited (N/A) All Cash $3 billion $12.00 $11.76 708,669 12/31/2014 2.04% 3.51%
+ HAST 03/17/2014 Affiliate of Joel Weinshanker (N/A) All Cash $21.4 million $3.00 $2.95 7,910 06/30/2014 1.69% 22.09%
+ ICH 10/28/2013 RCS Capital Corporation (N/A) All Cash $52.5 million $7.25 $7.14 2,558 03/31/2014 1.54% 0.00%
+ DLLR 04/02/2014 affiliate of Lone Star Funds (N/A) All Cash $1.3 billion $9.50 $9.37 1,697,513 09/30/2014 1.39% 4.22%
+ TQNT 02/24/2014 RF Micro Devices Inc. (RFMD) All Stock $1.6 billion $15.76 $15.56 1,804,516 12/31/2014 1.30% 2.23%
+ FRX 02/18/2014 Actavis plc (ACT) Cash Plus Stock $25 billion $95.98 $94.78 7,025,496 06/30/2014 1.26% 16.44%
+ NOVB 01/21/2014 TriCo Bancshares (TCBK) All Stock $178.4 million $21.59 $21.34 2,617 06/30/2014 1.18% 15.40%
+ TSH 01/13/2014 IberiaBank Corp. (IBKC) All Stock $161 million $72.58 $71.82 3,959 06/30/2014 1.06% 13.77%
+ ESC 02/20/2014 Brookdale Senior Living Inc. (BKD) All Stock $2.8 billion $31.60 $31.28 239,603 09/30/2014 1.01% 3.08%
+ CBEY 04/21/2014 Birch Communications, Inc. (N/A) Special Conditions $323 million $9.97 $9.87 690,407 10/31/2014 1.01% 2.45%
+ NTS 10/21/2013 Tower Three Partners LLC (N/A) All Cash $83 million $2.00 $1.98 415,491 03/31/2014 1.01% 0.00%
+ AMAP 04/11/2014 affiliate of Alibaba Group Holding Limited (“Alibaba”) (N/A) All Cash $1.5 billion $21.00 $20.83 193,183 09/30/2014 0.82% 2.48%
+ DFZ 05/02/2014 Mill Road Capital (N/A) All Cash $215 million $19.00 $18.88 19,371 09/30/2014 0.64% 1.93%
+ YONG 04/09/2014 Full Alliance International Limited (N/A) All Cash $339 million $7.10 $7.06 189,048 09/30/2014 0.57% 1.72%
+ PACR 01/06/2014 XPO Logistics, Inc. (XPO) Special Conditions $296 million $9.00 $8.96 N/A 06/30/2014 0.45% 5.82%
+ CNOB 01/21/2014 Center Bancorp, Inc. (CNBC) All Stock $243 million $48.26 $48.06 3,948 09/30/2014 0.41% 1.24%
+ TAYC 07/15/2013 MB Financial Inc. (MBFI) Cash Plus Stock $680 million $21.26 $21.19 32,214 06/30/2014 0.34% 4.49%
+ FWLT 02/13/2014 AMEC PLC (AMCBF) Cash Plus Stock $3.3 billion $33.94 $33.86 347,456 12/31/2014 0.24% 0.42%
+ ARX 05/20/2014 Cobham plc (N/A) All Cash $1.46 billion $10.50 $10.48 359,509 09/30/2014 0.19% 0.58%
+ ZIGO 04/11/2014 AMETEK, Inc. (AME) All Cash $280 million $19.25 $19.22 142,872 06/30/2014 0.16% 2.03%
+ ANLY 08/28/2013 ACS Motion Control, Ltd. (ACSEF) All Cash $35 million $6.45 $6.44 N/A 12/31/2013 0.16% 0.00%
+ VOCS 04/07/2014 GTCR Valor Merger Sub, Inc., an affiliate of GTCR LLC (N/A) All Cash $446.5 million $18.00 $17.98 138,192 06/30/2014 0.11% 1.45%
+ TXI 01/28/2014 Martin Marietta Materials Inc. (MLM) All Stock $2.7 billion $85.96 $85.89 168,668 06/30/2014 0.08% 1.06%
+ JOSB 03/11/2014 The Men’s Wearhouse, Inc. (MW) All Cash $1.8 billion $65.00 $64.95 4,003,669 06/30/2014 0.08% 1.00%
+ MKTG 12/20/2013 Oracle Corporation (ORCL) All Cash $1.5 billion $27.00 $26.98 N/A 06/30/2014 0.07% 0.97%
+ EPL 03/12/2014 Energy XXI (Bermuda) Limited (EXXI) Cash Plus Stock $2.3 billion $37.88 $37.91 331,793 06/30/2014 -0.09% -1.14%
+ JFBI 01/23/2014 HomeTrust Bancshares, Inc. (HTBI) Special Conditions $51.2 million $8.00 $8.02 2,205 06/30/2014 -0.25% -3.25%
+ SGK 03/17/2014 Matthews International Corporation (MATW) Cash Plus Stock $577 million $20.24 $20.30 78,954 09/30/2014 -0.30% -0.92%
+ ISS 06/06/2013 Mr. Tianwen Liu, the Company’s CEO and the chairman of its Board of Directors, and ChinaAMC Capital Management Limited (N/A) All Cash N/A $5.45 $5.49 21,880 09/30/2014 -0.73% -2.22%
+ SWS 04/01/2014 Hilltop Holdings Inc. (HTH) Cash Plus Stock $260 million $7.12 $7.18 197,155 12/31/2014 -0.85% -1.46%
+ NDZ 03/28/2014 Sterigenics (N/A) All Cash $727 million $11.75 $11.95 386,462 12/31/2014 -1.67% -2.88%
+ PDH 05/28/2014 Flint Hills Resources, LLC (N/A) All Cash $2.1 billion $14.00 $14.41 898,260 12/31/2014 -2.85% -4.90%
+ VSB 01/27/2014 Yadkin Financial Corporation (YDKN) All Stock $299 million $5.89 $6.09 13,722 06/30/2014 -3.27% -42.68%
+ FURX 04/28/2014 Forest Laboratories Inc. (FRX) Special Conditions $1.1 billion $95.00 $103.36 264,746 09/30/2014 -8.09% -24.60%
+ FBMI 08/15/2013 Mercantile Bank Corp. (MBWM) Cash Plus Stock $151.5 million $19.43 $21.59 61,453 06/30/2014 -10.00% -130.42%
+ CHDX 02/17/2014 a buyer consortium (the “Buyer Consortium”) of an affiliate of TPG (together with its affiliates, “TPG”), an affiliate of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun”), and Ms. Roberta Lipson, the CEO of the Company (N/A) All Cash $369 million $19.50 $23.68 51,941 12/31/2014 -17.65% -30.39%

Voluntary Disclosure: I hold a long position in Safeway (SWY).

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria




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Comments

  1. Charles
    June 3rd, 2014

    Good idea that new category named “special conditions”. Deals with CVRs are so usual now…

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