Merger Arbitrage Mondays – September 19, 2011

112.14%

Expected to close in the third quarter of 2011 in an all-stock deal. Upon completion of the merger, Bank of Granite shareholders will receive 3.375 shares of FNB's common stock in exchange for each share of Bank of Granite common stock they own.

As part of this transaction, The Carlyle Group and Oak Hill Capital Partners, have each entered into definitive agreements with FNB United to invest $77.5 million in the common stock of FNB United subject to the conditions set forth in the agreements as part of a $310 million private placement of FNB United's common stock.

The Carlyle Group and Oak Hill Capital Partners will each receive approximately 484 million shares of common stock at the closing not to exceed 24.9 percent of the then-outstanding shares of common stock, valued at $0.16 a share.

Expected to close in the third quarter of 2011 for a closing value of $258.6 million in an all stock deal. Upon completion of the merger, Advanced Analogic Technologies shareholders will receive $3.68 in cash and 0.08725 of Skyworks Solutions common stock for each Advanced Analogic Technologies share held.

The stock component of the price has a nominal value of $2.45 for a total value of $6.13. The cash portion will be adjusted higher or reduced at closing based on the stock portion to maintain a total value of $6.13. So for all practical purposes this could be considered an all cash deal.

Expected to close in the first half of 2012 for a closing value of $29.1 billion. Upon completion of the merger, Medco shareholders will receive $28.80 in cash and 0.81 shares for each Medco share they own.

19.94%

Expected to close in the fourth quarter of 2011. Upon completion of the merger, Harbin Electric shareholders will receive $24.00 per share in cash.

Completion of this transaction is expected to take between six to nine months. On the completion of merger TAM shareholders will receive 0.90 shares in LAN for each TAM share they hold. Shares of LAN Airlines SA of Chile and Brazilian carrier TAM SA fell sharply Monday, January 31, 2011, as investors reacted to the Chilean antitrust court's move late Friday to suspend their proposed merger.

Update March 18, 2011: Chile's LAN Airlines (LFL) said a regulatory investigation into complaints about the merger could take between 6 to 9 months and the merger will most likely not complete before the fourth quarter. We have updated the closing date to 12/31/2011.

Expected to close in the fourth quarter of 2011 for a closing value of $31.2 million in an all stock deal. Upon completion of the merger, Alliance shareholders will receive 0.4317 shares (the “Conversion Ratio”) of Eagle common stock for each share of Alliance common stock subject to adjustment based upon certain factors set forth in the Agreement.

I have analyzed some complex deals in the past but the lengthy list of factors that could affect the conversion ratio of this deal takes the cake. It is therefore not surprising that the spread on the deal is so large. You can find additional information about the adjustment to the “conversion ratio” in this 8-K form filed with the SEC.

Expected to close in the fourth quarter of 2011 for a closing value of $686 million in an all stock deal. Upon completion of the merger, Allos stockholders will receive a fixed ratio of 0.1282 shares of AMAG common stock for each share of Allos common stock they own.

Expected to close in October 2011 for a closing value of $1.46 billion in an all stock deal where shareholders of Northgate Minerals will receive 0.365 AuRico common shares per Northgate common share.

Expected to close by the end of 2011 or early 2012 for a closing value of $12.5 billion. Upon completion of the merger, shareholders of Motorola Mobility Holdings will receive $40.00 per share in cash.

5.73%

Expected to close by the end of the year in a cash plus stock deal. Upon completion of the merger,  LoopNet shareholders will receive $16.50 in cash and 0.03702 shares of CoStar Group common stock per share held.

Expected to close in the fourth quarter of 2011 for a closing value of $700 million in an all stock deal, where Fundtech shareholders will receive 2.72 shares of S1 common stock for each Fundtech ordinary share they own.

Update August 2, 2011: SONE received a $540 million buyout offer from ACI Worldwide (ACIW), which was rejected by the SONE board in favor of the Fundtech deal.

Expected to close in the third quarter of 2011 for a closing value of $281.3 million in an all-stock deal. Upon comlpletion of the merger, Crude Carriers shareholders will receive 1.56 CPLP common units for each Crude Carriers share.

Expected to close by the end of the year for a closing value of $545 million in an all stock deal, where Encore's public unitholders would receive 0.75 Vanguard common units in exchange for each Encore common unit they own.

Expected to close in the first half of 2012 for a closing value of $3.7 billion. Upon completion of the merger, shareholders of NetLogic Microsystems will receive $50.00 per share in cash.

3.80%

Expected to close in early 2012 for a closing value of $7.9 billion in an all-stock deal. Upon completion of the merger, Constellation shareholders will receive 0.93 shares of Exelon for each Constellation share.

Expected to close in the next six months for a closing value of $2.3 billion in an all stock deal. Upon completion of the merger, PAETEC shareholders will receive 0.460 shares of Windstream common stock for each PAETEC share owned.

Expected to close in the fourth quarter of 2011 for a closing value of $130 million in an all stock deal. Upon completion of the merger, Parkvale Financial Corporation's shareholders will receive 2.178 shares of F.N.B. Corporation common stock for each share of Parkvale Financial Corporation stock. 

Expected to close in the second quarter of 2011 for a closing value of $85.4 million. Upon completion of the merger, Orchid Cellmark shareholders will receive $2.80 per share in cash.

Expected to close by November 15, 2011 for a closing value of $265.5 million. Upon completion of the merger, China Fire and Security Group shareholders will receive $9.00 per share in cash.

Expected to close in the second half of 2011 in an all cash deal. Upon completion of the merger, Kinetic Concepts shareholders will receive $68.50 per share.

2.83%

Expected to close in the fourth quarter of 2011 for a closing value of $71.4 million. Upon completion of the merger, Herald National Bank shareholders will receive either cash or BankUnited common stock with a value of $1.35 in cash and 0.099 shares of BankUnited common stock, subject to proration.

Expected to close in the first quarter of 2012 for a closing value of $4.3 billion. Upon completion of the merger, shareholders of Temple-Inland will receive $32.00 per share in cash.

Expected to close in the fourth quarter of 2011. Upon completion of the merger, shareholders of M&F Worldwide will receive $25.00 per share in cash.

Expected to close by the end of the year. Upon completion of the merger, shareholders of Clark Holdings will receive $0.46 per share in cash.

Expected to close in early 2012 for a closing value of $1.1 billion. Upon completion of the merger, shareholders of Global Industries will receive $8.00 per share in cash.

Expected to close in the third quarter of 2011 for a closing value of $4.9 billion. Upon completion of the merger, Varian shareholders will receive $63 in cash for each share of Varian stock they hold. 

The closing of the acquisition is subject to customary conditions, including approval by Varian's shareholders and review by U.S. and international regulators. 

Expected to close in the fourth quarter of 2011 for a closing value of $1.64 billion. Upon completion of the merger, Blackboard's shareholders will receive $45.00 per share in cash.

1.75%

1.56%

Expected to close in the fourth calendar quarter of 2011 for a closing value of $175 million. Upon completion of the merger, Allied Healthcare International's shareholders will receive $3.90 per share in cash.

Expected to close by late second quarter or early third quarter of 2011 for a closing value of $157 million in an all-stock deal.

Pursuant to the terms of the merger agreement, at the effective time of the merger, TGC shareholders will receive 0.188 shares of Dawson stock for every one share of TGC stock, provided that the average of the volume weighted average price of Dawson common stock on the NASDAQ during the ten consecutive trading days ending on the second business day prior to the date of the shareholders' meetings of Dawson and TGC to be called for the purpose of approving the transaction is equal to or greater than $32.54 but less than or equal to $52.54. In the event that the average of the volume weighted average price of Dawson's common stock is outside of that range, then the parties, at their respective option, shall be entitled to terminate the transaction following good faith negotiations to determine a modified, mutually acceptable exchange ratio.

Expected to close in the fourth quarter of 2011 for a closing value of $10.3 million. Upon completion of the merger, Brooklyn Federal Bancorp's shareholders will receive $0.80 per share in cash.

Expected to close in the third quarter of 2011 for a closing value of $57.2 million. Upon completion of the merger, Conmed Healthcare Management's shareholders will receive $3.85 per share in cash.

Expected to close in the first quarter of 2012. Upon completion of the merger, Penn Millers Holding Corporation will receive $20.30 per share in cash.

1.04%

Expected to close in the third calendar quarter of 2011 for a closing value of $416 million in a cash plus stock deal, where shareholders of Continucare will receive $6.25 per share in cash, and 0.0414 of a share of Metropolitan common stock f0r each share of Continucare common stock. The exact value of the consideration per share will depend on Metropolitan's share price at closing. Metropolitan expects to issue approximately 2.7 million shares in connection with the transaction.

Progress Energy's shareholders will receive 2.6125 shares of common stock of Duke Energy in exchange for each share of Progress Energy common stock. Based on Duke Energy's closing share price on Jan. 7, 2011, Progress Energy shareholders would receive a value of $46.48 per share, or $13.7 billion in total equity value.

Expected to close in the next three to six months for a closing value of $307 million. Upon completion of the merger, Ness Technologies shareholders will receive $7.75 per share in cash.

Expected to close in the second half of 2011 for a closing value of $3 billion. Upon completion of the merger, Emdeon's shareholders will receive $19.00 per share in cash.

Expected to close later in 2011 for a closing value of $1.4 billion. Upon completion of the merger, Arch Chemicals shareholders will receive $47.20 per share in cash.

Expected to close in the third quarter of 2011 for a closing value of $6.8 billion. Upon completion of the merger, Cephalon's shareholders will receive $81.50 per share in cash.

Expected to close before the end of the year for a closing value of $3 billion. Upon completion of the merger, Global Crossing shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing.

Upon completion of the merger, shareholders of Caliper Life Sciences will receive $10.50 per share in cash.

Expected to close in the fourth quarter of 2011 for a closing value of $470 million. Upon completion of the merger, APAC Customer Services shareholders will receive $8.55 per share in cash.

Expected to close in the third quarter of 2011 for a closing value of $2.4 billion. On the completion of the merger, Nicor shareholders will receive $21.20 in cash and 0.8382 of an AGL Resources share for each Nicor share held.

Expected to close in the fourth quarter of 2011 for a closing value of $362 million. Upon completion of the merger, FPIC Group shareholders will receive $42.00 per share in cash.

Expected to close in the fourth quarter of 2011 for a closing value of $2.8 billion. Upon completion of the merger, BJ's Wholesale Club's shareholders will receive $51.25 per share in cash.

Expected to close in six to nine months for $6.5 billion. On the completion of the merger, National Semiconductor shareholders will receive $25.00 per share in cash.

Expected to close early in the fourth quarter of 2011 for a closing value of $222 million in an all-stock deal. Upon completion of the merger, State Bancorp shareholders will receive 1 share of Valley National Bancorp common stock per State Bancorp share held.

0.21%

Expected to close in the fourth quarter of 2011 for a closing value of $266 million. Upon completion of the merger, Global Traffic Network's shareholders will receive $14.00 per share in cash.

Expected to close in third quarter of 2011 for $273 million. Under terms of the agreement, Abington shareholders will receive 1.32 shares of Susquehanna common stock for each share of Abington common stock on the completion of merger.

Expected to close before the end of the year for a closing value of $56 million. Upon completion of the merger, Icagen shareholders will receive $6.00 per share in cash.

On July 12, 2011, Central Vermont Public Services terminated its agreement with Fortis after deeming “superior” the offer from Gaz Métro.

Expected to close in six to twelve months for a closing value of $702 million. Upon completion of the merger, Central Vermont Public Services shareholders will receive $35.25 per share in cash.

Expected to close as early as the fouth quarter of 2011 for a closing value of $772 million. Upon completion of the merger, Ameron International shareholders will receive $85.00 per share in cash.

-0.21%

Expected to close in six to nine months for a closing value of $4.7 billion. Upon completion of the merger, DPL Inc. shareholders will receive $30.00 per share in cash.

Expected to close in the fouth quarter of 2011 for a closing value of $5.4 billion. Upon completion of the merger, Nalco's shareholders may elect to receive either 0.7005 share of Ecolab common stock per share of Nalco common stock or $38.80 in cash, without interest, per share of Nalco common stock. The overall mix of consideration paid to Nalco shareholders will be approximately 30% cash and 70% stock.

Expected to close in the fourth quarter of 2011 for a closing value of $440 million. Upon completion of the merger, Renaissance Learning's shareholders will receive $14.85 per share in cash.

Expected to close in the first quarter of 2012 for a closing value of $343 million in a cash or stock transaction, where Tower Bancorp shareholders will receive either 3.4696 shares of Susquehanna Bancshares common stock or $28.00 in cash per share held with $88 million of the aggregate consideration being paid in cash. Since a majority of the consideration will be paid out as stock, we have classified this deal as an all stock deal in our Merger Arbitrage Tool.

Expected to close in the third quarter of 2011 for a closing value of $2.02 billion. Upon completion of the merger, Telvent's shareholders will receive $40.00 per share in cash.

Expected to close in the first quarter of 2012 for a closing value of $7.9 billion. Upon completion of the merger, Southern Union Company's shareholders will receive $33.00 per share in series B units of ELMG. These series B units are expected to list on the NYSE and will have an annualized distribution yield of 8.25%. ETE has the option to redeem the Series B Units at any time after the closing of the transaction.

Update(s)

June 24, 2011: Southern Union Company SUG received a proposal by The Williams Companies, Inc. WMB to acquire all of the outstanding shares of Southern Union for $39.00 per share in cash.

July 05, 2011: Energy Transfer Equity, L.P. ETE and Southern Union Company SUG today announced that they have entered into an amended and restated merger agreement under which ETE will acquire SUG for $8.9 billion, including $5.1 billion in cash and ETE common units. 

Under the terms of the revised agreement, which has been unanimously approved by the boards of directors of both companies, SUG shareholders can elect to exchange their common shares for $40.00 of cash or 0.903 ETE common units. The maximum cash component is 60% of the aggregate consideration and the common unit component can fluctuate between 40% and 50%. Elections in excess of either the cash or common unit limits will be subject to proration.

July 14, 2011: Southern Union Company (SUG) confirmed receipt of a revised proposal by The Williams Companies, Inc. (WMB) to acquire all of the outstanding shares of Southern Union for $44.00 per share in cash.

July 19, 2011: Energy Transfer Equity (ETE) upped its bid for Southern Union to $44.25 a share for an enterprise value of $9.4 billion including debt. Shareholders can elect to receive either $44.25 per share cash or one unit of ETE, with 60% of the new bid payable in cash. To keep things conservative, we are treating this deal as an all stock deal.

Expected to close by the end of the year for a closing value of $234 million. Upon completion of the merger, Bancorp Rhode Island shareholders will receive either $48.25 in cash, or 4.686 shares of Brookline Bancorp common stock or a combination thereof, with total cash consideration of approximately $121 million and total stock consideration of approximately 11.0 million shares of Brookline Bancorp common stock. 

Elections will be subject to allocation procedures that are intended to ensure that approximately 50% of the outstanding shares of Bancorp Rhode Island common stock will be converted into Brookline Bancorp common stock.

To stay on the conservative side we are treating this transaction as an all stock deal in our Merger Arbitrage tool.

Expected to close by the end of the year in an all stock deal. On the completion of the merger NYSE Euronext shareholders will receive 0.4700 of a share of Deutsche Boerse common stock per share held.

Update April 1, 2011: The Nasdaq (NDAQ) and ICE have made a joint offer for NYSE Euronext (NYX) that is worth $43 as of April 1, 2011.

Expected to close in the fourth quarter of 2011 for a closing value of $118 million in a cash plus stock deal. Upon completion of the merger, Ocean Freight's shareholders will receive $11.25 in cash and 0.52326  of a share of common stock of Ocean Rig UDW Inc., a global provider of offshore ultra deepwater drilling services that is 78% owned by DryShips. Ocean Rig shares will be listed on the Nasdaq Global Select Market upon the closing of the merger.