Merger Arbitrage Mondays – November 08, 2010

Merger activity remained steady last week with six new deals announced and three closing. You can find all the deals listed below in our Merger Arbitrage Tool that automatically updates itself during market hours.

Deal Statistics:

Total Number of Deals Closed in 2010 97
Total Number of Deals That Did Not Complete in 2010 6
Total Number of Pending Deals
Cash Deals 60
Stock Deals 15
Stock & Cash Deals 12
Total Number of Pending Deals 87

New Deals:

  1. The acquisition of EXCO Resources (XCO) by the Chairman & CEO of EXCO Resources for $4.4 billion or $20.50 per share in cash. This is a going private transaction and is awaiting board approval. Hence it is not yet included in our table below. Almost every deal that is announced these days is followed by a string of lawsuits or “investigations” by law firms. I found it very interesting that even before the board started considering this offer, a law firm had already launched an investigation into “whether the EXCO Board of Directors breached their fiduciary duties to EXCO stockholders by failing to adequately shop the Company before entering into this transaction”.
  2. The acquisition of Art Technology Group (ARTG) by Oracle (ORCL) for $1 billion or $6.00 per share in cash
  3. The acquisition of TechTeam Global (TEAM) by Brazil's Stefanini International Holdings Ltd for $93.4 million or $8.35 per share in cash
  4. The acquisition of Wilmington Trust Corporation (WL) by M & T Bank Corporation (MTB) for $351 million or 0.051372 shares of M&T Bank common stock
  5. The acquisition of Comforce Corp (CFS) by an affiliate of ABRY Partners for $84.8 million or $2.50 per share in cash
  6. The acquisition of Tongjitang Chinese Medicines (TCM) by Hanmax Investment Limited, Fosun Industrial Company Limited and Tonsun International Company Limited for $4.50 per American Depositary Share in cash.

Modified Deals:

  1. The stock symbol and closing price of Majestic Capital have been updated to reflect a 1:10 reverse stock split, effective as of close of business on Nov 4, 2010. The closing price was updated from $0.45 to $4.50 and the stock symbol was changed from MAJC to MAJCD, which will be effective for a period of 20 days to reflect the split.
  2. The closing price of the AirTran (AAI) – Southwest (LUV) merger has been changed to $7.75 to reflect a clause in the deal that states, “The number of shares to be issued by Southwest Airlines is subject to adjustment if the average of Southwest Airlines closing prices for the 20 trading days ending three trading days prior to closing is below $10.90 or above $12.46. This adjustment mechanism is intended to provide at least $7.25 in value and up to $7.75 in value per share of AirTran common stock. If the average closing price noted above exceeds $12.46, the value will be $7.75 with fewer shares of Southwest common stock issued. If the average closing price noted above is less than $10.90, the value will be $7.25 with additional shares of Southwest common stock issued. Additionally, Southwest Airlines has the option of substituting cash in lieu of issuing incremental shares if the average closing stock price is less than $10.90.”
  3. Phoenix (PTEC) receives definitive offer from the Gores Group to acquire the company for $4.20 per share in cash. In accordance with the terms of the merger agreement between Phoenix and affiliates of Marlin Equity Partners dated August 17, 2010, the board of directors of Phoenix has determined that the definitive offer from Gores constitutes a Superior Proposal, and written notification of the board's determination has been provided to Marlin.

Closed Deals:

  1. The acquisition of Actel Corporation (ACTL) by Microsemi Corporation (MSCC) on November 02, 2010
  2. The acquisition of Diamond Management and Technology Consultants (DTPI) by PwC US on November 02, 2010
  3. The acquisition of Penwest Pharmaceuticals (PPCO) by Endo Pharmaceuticals (ENDP) on November 04, 2010

Top 10 Deals with largest spreads:

Symbol Announced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
Profit Annu.
Profit
TLCR 06/07/2010 Grifols (GRF.MC) $28.09 $23.48 12/31/2010 19.62% 135.08%
DTG 04/26/2010 Avis (CAR) $54.81 $48.13 12/31/2010 13.88% 95.62%
MROE 10/06/2010 Old National Bancorp (ONB) $13.17 $11.733 03/31/2011 12.25% 31.28%
SSE 02/23/2010 Naugatuck Valley Financial Corp (NVSL) $6.75 $6.05 12/31/2010 11.57% 79.68%
ATBC 05/10/2010 Jacksonville Bancorp (JAXB) $2.31 $2.175 12/31/2010 6.21% 42.75%
CRXL 10/06/2010 Johnson & Johnson (JNJ) $34.40 $32.50 03/31/2011 5.85% 14.92%
ADAM 08/30/2010 Ebix Inc. (EBIX) $7.86 $7.44 12/31/2010 5.66% 38.99%
SHMR 10/15/2010 Essilor (N/A) $14.50 $13.87 06/30/2011 4.54% 7.09%
Q 04/22/2010 Century Link (CTL) $7.08 $6.80 04/21/2011 4.17% 9.28%
TCM 11/01/2010 Hanmax Investment Limited (N/A) $4.50 $4.33 03/31/2011 3.93% 10.02%

List of all Pending Deals:

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

Profit

+ TLCR 06/07/2010 Grifols (GRF.MC) $3.4 billion $28.09 $23.48 12/31/2010 19.62% 135.08%
+ DTG 04/26/2010 Avis (CAR) $1.56 billion $54.81 $48.13 12/31/2010 13.88% 95.62%
+ MROE 10/06/2010 Old National Bancorp (ONB) $83.5 million $13.17 $11.733 03/31/2011 12.25% 31.28%
+ SSE 02/23/2010 Naugatuck Valley Financial Corp (NVSL) $19.5 million $6.75 $6.05 12/31/2010 11.57% 79.68%
+ ATBC 05/10/2010 Jacksonville Bancorp (JAXB) N/A $2.31 $2.175 12/31/2010 6.21% 42.75%
+ CRXL 10/06/2010 Johnson & Johnson (JNJ) $2.41 billion $34.40 $32.50 03/31/2011 5.85% 14.92%
+ ADAM 08/30/2010 Ebix Inc. (EBIX) $66 million $7.86 $7.44 12/31/2010 5.66% 38.99%
+ SHMR 10/15/2010 Essilor (N/A) $130 million $14.50 $13.87 06/30/2011 4.54% 7.09%
+ Q 04/22/2010 Century Link (CTL) $10.6 billion $7.08 $6.80 04/21/2011 4.17% 9.28%
+ TCM 11/01/2010 Hanmax Investment Limited (N/A) N/A $4.50 $4.33 03/31/2011 3.93% 10.02%
+ MAJCD 09/21/2010 Bayside Capital Partners (N/A) $7.8 million $4.50 $4.33 03/31/2011 3.93% 10.02%
+ PVG 09/21/2010 Penn Virginia Resource Partners (PVR) $954 million $27.34 $26.34 12/31/2010 3.80% 26.20%
+ AAI 09/27/2010 Southwest Airlines (LUV) $1.4 billion $7.75 $7.47 03/31/2011 3.75% 9.57%
+ BGH 06/11/2010 Buckeye Partners LP (BPL) $1.14 billion $46.15 $45.05 12/31/2010 2.44% 16.80%
+ NHWK 09/27/2010 Virtual Radiologic (N/A) $170 million $6.50 $6.35 03/31/2011 2.36% 6.03%
+ CCBP 08/09/2010 F.N.B. Corporation (FNB) $70 million $41.78 $40.85 12/31/2010 2.28% 15.70%
+ NAL 08/19/2010 First Niagara Financial Group (FNFG) $1.5 billion $13.68 $13.39 05/15/2011 2.20% 4.26%
+ SVR 10/28/2010 Carlyle (N/A) $2.6 billion $31.00 $30.41 03/31/2011 1.94% 4.95%
+ OCNW 09/16/2010 Calix Inc. (CALX) $171 million $7.48 $7.34 12/31/2010 1.88% 12.97%
+ ID 09/20/2010 Safran (N/A) $1.1 billion $12.00 $11.78 03/31/2011 1.87% 4.77%
+ BJGP 10/28/2010 Sanofi – aventis (N/A) $520.6 million $10.00 $9.82 03/31/2011 1.83% 4.68%
+ SMTB 07/15/2010 People's United Financial Inc. (PBCT) $60 million $3.81 $3.75 12/31/2010 1.72% 11.88%
+ AYE 02/11/2010 FirstEnergy (FE) $8.5 billion $23.94 $23.55 03/31/2011 1.65% 4.21%
+ PRPX 02/17/2010 L.B. Foster Co. (FSTR) $112 million $11.80 $11.62 12/30/2010 1.55% 10.87%
+ BNE 02/23/2010 RR Donnelley (RRD) $481 million $11.50 $11.33 12/31/2010 1.50% 10.33%
+ MFE 08/19/2010 Intel Corporation (INTC) $7.68 billion $48.00 $47.32 06/30/2011 1.44% 2.24%
+ CSCX 10/19/2010 Opto Circuits (N/A) N/A $2.30 $2.27 12/31/2010 1.32% 9.10%
+ FMR 10/28/2010 Fairfax Financial Holdings (FRFHF.PK) $294 million $16.50 $16.29 03/31/2011 1.29% 3.29%
+ TTES 10/06/2010 Robbins & Myers Inc. (RBN) $422 million $35.06 $34.63 12/31/2010 1.23% 8.47%
+ CFS 11/02/2010 affiliate of ABRY Partners (N/A) $84.8 million $2.50 $2.47 12/31/2010 1.21% 8.36%
+ RSCR 09/07/2010 Onex Corp (N/A) $390 million $13.25 $13.10 12/31/2010 1.15% 7.89%
+ ROAC 10/18/2010 Swenson Granite Co. (N/A) $39 million $5.25 $5.20 03/31/2011 0.96% 2.45%
+ NCOC 09/28/2010 Ranger Energy Investments (N/A) $8.6 million $1.00 $0.991 12/15/2010 0.91% 8.96%
+ LSBX 07/15/2010 People's United Financial Inc. (PBCT) $96 million $21.00 $20.83 12/31/2010 0.82% 5.62%
+ DDMX 10/01/2010 Greenbriar Equity Group (N/A) $210 million $21.25 $21.08 02/15/2011 0.81% 2.97%
+ TEAM 11/02/2010 fanini International Holdings Ltd for $93.4 million (N/A) $93.4 million $8.35 $8.29 12/31/2010 0.72% 4.98%
+ ROME 10/12/2010 Berkshire Hills Bancorp (BHLB) $74 million $11.13 $11.05 03/31/2011 0.72% 1.83%
+ PZZ 08/16/2010 Leonard Green & Partners (N/A) $363 million $8.50 $8.44 12/31/2010 0.71% 4.90%
+ KG 10/12/2010 Pfizer Inc. (PFE) $3.6 billion $14.25 $14.15 12/31/2010 0.71% 4.87%
+ TUNE 09/08/2010 Zoran Corporation (ZRAN) $84 million $2.92 $2.90 12/31/2010 0.69% 4.75%
+ ADCT 07/13/2010 Tyco Electronics (TEL) $1.24 billion $12.75 $12.675 12/31/2010 0.59% 4.08%
+ ARTG 11/02/2010 Oracle (ORCL) $1 billion $6.00 $5.97 03/31/2011 0.50% 1.28%
+ ACV 09/27/2010 Unilever PLC (N/A) $3.7 billion $37.50 $37.32 12/31/2010 0.48% 3.32%
+ NUHC 09/20/2010 Arrow Electronics (ARW) $130 million $7.00 $6.97 12/31/2010 0.43% 2.96%
+ ALOY 06/24/2010 ZelnickMedia (N/A) $126.5 million $9.80 $9.76 12/31/2010 0.41% 2.82%
+ CLRT 10/22/2010 GE Healthcare (GE) $580 million $5.00 $4.98 01/31/2011 0.40% 1.75%
+ AEZ 07/28/2010 Hess Corp (HES) $450 million $9.61 $9.57 12/31/2010 0.40% 2.75%
+ INET 09/20/2010 an affiliate of Hellman & Friedman Capital Partners (N/A) $640 million $13.35 $13.30 12/31/2010 0.38% 2.59%
+ HWK 10/15/2010 Carlisle (CSL) $413 million $50.00 $49.83 12/31/2010 0.34% 2.35%
+ EPE 09/07/2010 Enterprise Products (EPD) $8 billion $66.03 $65.82 12/31/2010 0.32% 2.20%
+ GIW 10/25/2010 Community Bank System (CBU) $101.8 million $9.50 $9.47 02/15/2011 0.32% 1.17%
+ STU 09/17/2010 Discover Financial Services (N/A) N/A $30.00 $29.91 12/31/2010 0.30% 2.07%
+ XJT 08/04/2010 SkyWest (SKYW) $133 million $6.75 $6.73 12/31/2010 0.30% 2.05%
+ HBE 10/06/2010 Kratos Defense & Security Solutions (KTOS) $45 million $7.00 $6.98 12/31/2010 0.29% 1.97%
+ NYM 07/15/2010 ProSight (N/A) $230 million $25.75 $25.68 12/31/2010 0.27% 1.88%
+ WAIN 06/29/2010 Eastern Bank (N/A) $163 million $19.00 $18.95 12/31/2010 0.26% 1.82%
+ GYMB 10/11/2010 Bain Capital (N/A) $1.8 billion $65.40 $65.23 12/31/2010 0.26% 1.79%
+ PTV 08/17/2010 Reynolds Group Holdings (N/A) $6 billion $33.25 $33.19 12/31/2010 0.18% 1.24%
+ NRGP 08/09/2010 Inergy (NRGY) $2.07 billion $30.76 $30.71 12/31/2010 0.17% 1.15%
+ ME 04/15/2010 Apache (APA) $2.7 billion $26.32 $26.28 12/31/2010 0.17% 1.15%
+ CLU 09/16/2010 Clearwater Paper Corporation (CLW) $247 million $12.00 $11.98 12/31/2010 0.17% 1.15%
+ CTV 10/25/2010 Carlyle (N/A) $3 billion $31.50 $31.45 03/31/2011 0.16% 0.41%
+ ULCM 10/12/2010 affiliates of Platinum Equity (N/A) N/A $8.07 $8.06 12/31/2010 0.12% 0.85%
+ AMPH 09/01/2010 ProAssuarance (PRA) $233 million $32.50 $32.46 12/31/2010 0.12% 0.85%
+ MIR 04/12/2010 RRI Energy In. (RRI) $1.6 billion $10.94 $10.93 12/31/2010 0.12% 0.83%
+ PSYS 05/17/2010 Universal Health (N/A) $3.1 billion $33.75 $33.71 12/31/2010 0.12% 0.82%
+ MAM 03/12/2010 Emera Inc (N/A) $75.7 million $45.00 $44.95 12/31/2010 0.11% 0.77%
+ AGAM 10/18/2010 St. Jude Medical (STJ) $1.04 billion $20.80 $20.78 12/31/2010 0.10% 0.66%
+ COGT 08/30/2010 3M Co. (MMM) $943 million $10.50 $10.49 12/31/2010 0.10% 0.66%
+ NZ 09/20/2010 International Business Machines (IBM) $1.7 billion $27.00 $26.99 12/31/2010 0.04% 0.26%
+ RAE 09/20/2010 Battery Ventures (N/A) $95 million $1.60 $1.60 12/31/2010 0.00% 0.00%
+ THMD 10/05/2010 Irving Place Capital (N/A) $422 million $15.00 $15.00 12/31/2010 0.00% 0.00%
+ OSTE 08/17/2010 Medtronic (MDT) $123 million $6.50 $6.50 12/31/2010 0.00% 0.00%
+ KEI 09/28/2010 Danaher Corporation (DHR) $340 million $21.60 $21.60 12/31/2010 0.00% 0.00%
+ OICO 09/14/2010 ITT Corporation (ITT) $29 million $12.50 $12.52 12/31/2010 -0.16% -1.10%
+ ACTI 10/11/2010 Assa Abloy (N/A) $162 million $3.25 $3.26 12/31/2010 -0.31% -2.11%
+ CGC 10/01/2010 Gammon Gold (GRS) $288 million $4.49 $4.53 12/31/2010 -0.80% -5.53%
+ WL 11/01/2010 M & T Bank Corporation (MTB) $351 million $4.25 $4.31 06/30/2011 -1.43% -2.23%
+ ACLI 10/18/2010 Affiliates of Platinum Equity (N/A) $777 million $33.00 $33.63 12/31/2010 -1.87% -12.90%
+ NST 10/18/2010 Northeast Utilities (NU) $4.17 billion $41.66 $42.57 09/30/2011 -2.15% -2.40%
+ DVD 09/27/2010 )–Dover Downs Gaming & Entertainment Inc (DDE) N/A $1.73 $1.8401 12/31/2010 -6.07% -41.79%
+ CADE 10/06/2010 Community Bancorp LLC (N/A) $38 million $2.25 $2.44 03/31/2011 -7.93% -20.24%
+ PTEC 08/17/2010 Marlin Equity Partners (N/A) $139 million $3.85 $4.25 12/31/2010 -9.41% -64.82%
+ PTEC 08/17/2010 Marlin Equity Partners (N/A) $139 million $3.85 $4.25 12/31/2010 -9.41% -64.82%
+ OTIX 09/13/2010 William Demant (N/A) $50 million $8.60 $10.98 12/31/2010 -21.68% -149.28%
+ ALY 08/12/2010 Seawell (N/A) $890 million $4.25 $5.53 12/31/2010 -23.15% -159.40%
+ DYN 08/13/2010 Blackstone Group (BX) $4.7 billion $4.50 $ 12/31/2010 0.00% 0.00%

Voluntary Disclosure: I have a long position in AAI and a short position in LUV. I also have a long position in FNFG.

Contributing Author: Ann Kumar

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