Merger Arbitrage Mondays – April 19, 2010

Merger and acquisition activity continues to heat up with 5 new mergers announced last week and two deals closing. The pace of merger activity over the last few weeks combined with an uptick in IPOs (5 new offerings were filed last week) and heavy insider selling have me very worried about this market.

On a positive note, Carl Icahn raised his offering price for SINLetter model portfolio holding Lions Gate Entertainment (LGF) from $6 to $7/share. In an interesting twist another billionaire Mark Cuban disclosed a 5.4% stake in Lions Gate. It remains to be seen if Mr. Cuban plans on making a rival bid for Lions Gate given his interest in the film and media business through stakes in Landmark Theatres and HDNet.

The five new deals include the acquisition of DynCorp International (DCP) by Cerberus Capital Management for $17.55 in cash per share, the acquisition of Mariner Energy (ME) by Apache Corporation for $25.77 per share in a cash plus stock deal, the acquisition of Phase Forward (PFWD) for $17 in cash per share by Oracle, the acquisition of Dialysis Corporation of America (DCAI) for $11.25 in cash per share by U.S. Renal Care and the acquisition of Mirant Corporation (MIR) for $11.71 per share in an all stock transaction by RRI Energy to form GenOn Energy.

The two deals that closed last week include the acquisition of Terra Industries (TRA) by CF Industries Holdings and the acquisition of Peco II Inc. (PIII) by Lineage Power Holdings Inc.

	Symbol	Announced Date	Acquiring Company	Closing Value	Closing Price	Last Price	Closing Date	Profit	Annu. Profit
+	RCNI	3/5/2010	Abry	$1.2 billion	15	14.78	9/30/2010	1.49%	3.37%
Details of RCN Corp.: Expected to close by the Second half 2010 for a closing value of $1.2bn. It is a cash deal @ $15.00 per share
+	ADG	1/19/2010	Chemring Group Plc	$59 million	7.25	6.32	4/19/2010	14.72%	14.72%
Details of Allied Defense Group Inc.: Expected to close by April 19, 2010 for a closing value of $59mn. The closing price for the cash deal is $7.25 per share
+	AYE	2/11/2010	FirstEnergy	$8.5 billion	25.25	22.27	3/31/2011	13.38%	14.28%
Details of Allegheny Energy Inc.: Expected to close by March 31, 2011 for a closing value $8.5bn. It is a stock based transaction @ 0.667 share of FE
+	SSE	2/23/2010	Naugatuck Valley Financial Corp	$19.5 million	7.25	6.67	8/16/2010	8.70%	27.13%
Details of Southern Connecticut Bancorp Inc.: Expected to close by the third calendar quarter of 2010, for a closing value of $19.5mn @ $7.25/share. The Cash/stock election is subject to proration
+	STBK	3/18/2010	Roma Financial Corp	$14.7 million	2.52	2.377	8/16/2010	6.02%	18.77%
Details of Sterling Banks, Inc.: Expected to close in the third quarter of 2010 for a closing value of $14.7 million. The cash deal is @ $2.52 per share
+	ARD	4/4/2010	SandRidge Energy Inc.	$1.6 billion	36.85	35.18	9/30/2010	4.75%	10.76%
Details of Arena Resources Inc.: Expected to close during the second or third quarter of 2010 for a value of $1.6bn. The stock-cash merger is @ 4.7771 shares of SandRidge common stock and $2.50 in cash for each share of Arena common stock.
+	SWWC	3/3/2010	Institutional Investors	$275 million	11	10.55	5/17/2010	4.27%	55.60%
Details of Southwest Water Co.: Expected to close by the second quarter of 2010 for a closing value of $275bn. It is a cash deal @ $11.00 per share
+	SII	2/19/2010	Schlumberger	$7.5 billion	45.84	44.37	9/30/2010	3.31%	7.51%
Details of Smith International Inc. : Expected to close by the second half of 2010. It is a stock-for-stock merger @ 0.6966 shares of SLB / $42.96 per SII share
+	BNE	2/24/2010	RR Donnelley	$481 million	11.5	11.14	9/30/2010	3.23%	7.33%
Details of Bowne & Co. Inc. : Expected to close by the second half of 2010 for a closing value of $481mn. It is a cash deal @ $11.50 per share
+	MAM	3/12/2010	Emera Inc.	$75.7 million	45	43.638	12/31/2010	3.12%	4.52%
Details of Maine & Maritimes Corporation: Expected to close by the end of 2010 for a closing value of $75.7 million. The cash deal is @ $45 per share
+	ORCD	3/16/2010	eMusic	$12.77 million	2.05	2	8/16/2010	2.50%	7.80%
Details of The Orchard Enterprises Inc.: Expected to close by the third quarter of 2010 for $12.7 million @ $2.05 per share.
+	WEL	4/9/2010	Halliburton Company	$240 million	3	2.94	9/30/2010	2.04%	4.63%
Details of Boots & Coots, Inc.: Expected to close in the summer of 2010 for a value of $240mn. The $3 cash & stock deal consists of $1.73 in cash and $1.27 in Halliburton stock.
+	PINN	2/24/2010	Investor Group lead by Scotia Waterous (USA)	$11 million	0.34	0.334	5/17/2010	1.80%	23.42%
Details of Pinnacle Gas Resources, Inc.: Expected to close by the second quarter of 2010 for a closing value of $11mn. It is a cash deal @ $0.34 per share
+	DCP	4/12/2010	Cerberus Capital Management	$1.5 billion	17.55	17.29	11/15/2010	1.50%	2.66%
Details of DynCorp International Inc.: Expected to close in the third or fourth quarter of 2010 for a value of $1.5bn. DynCorp International’s stockholders will receive $17.55 in cash for each share of DynCorp International common stock they own.
+	ME	4/15/2010	Apache	$2.7 billion	25.77	25.45	9/30/2010	1.26%	2.85%
Details of Mariner Energy, Inc.: Expected to close by the third quarter of 2010 for a value of $2.7bn. Under the cash and stock deal, Mariner stockholders will receive cash of $7.80 and 0.17043 of a share of Apache common stock in exchange for each share of Mariner common stock.
+	PFWD	4/16/2010	Oracle Corp.	$685 million	17	16.8	6/30/2010	1.19%	6.12%
Details of Phase Forward Inc.: Expected to close in the middle of the year 2010 for a value of $685mn. Oracle is paying $17 per share in cash.
+	RISK	3/1/2010	MSCI	$1.55 billion	23.06	22.82	7/16/2010	1.05%	4.41%
Details of RiskMetrics Group, Inc.: Expected to close by the third fiscal quarter of 2010 for a closing value of $1.55bn. It is cash plus stocks deal @$16.35/share + 0.1802 MSCI shares
+	RBI	3/15/2010	affiliate of Oncap Management Partners L.P.		13.55	13.42	8/16/10	0.97%	3.02%
Details of Sport Supply Group, Inc: Expected to close in the second or third quarter of 2010. ONCAP has the unilateral option to terminate the merger agreement by paying to Sport Supply Group a termination fee of either $6,000,000 or $10,000,000, depending on whether financing is available to ONCAP. It is a cash deal @ $13.55
+	MIL	3/1/2010	Merck	$6 billion	107	106	9/30/2010	0.94%	2.14%
Details of Millipore Corp. : Expected to close by the second half of 2010 for a closing value of $6bn. It is a cash deal @ $107 per share
+	PRPX	2/17/2010	L.B. Foster Co.	$112 million	11.71	11.61	6/30/2010	0.86%	4.43%
Details of Portec Rail Products Inc. : Expected to close by the end of June 2010 for a closing value of $112mn. The cash deal is @ $11.71 per share
+	SKIL	2/12/2010	consortium of private equity funds	$1.2 billion	11.25	11.17	5/31/2010	0.72%	6.22%
Details of SkillSoft plc: The merger agreement has a “go-shop” period, ending on March 6, 2010. It has a closing value of approximately $1.2bn. The closing price for the cash deal has been revised from $10.80 per share to $11.25 per share as on March 31, 2010.
+	NADX	4/5/2010	GDC Holdings Inc.	$100 million	17	16.951	6/30/2010	0.29%	1.49%
Details of National Dentex Corp.: Expected to close at the end of the quarter ending June 30 for a value of $100mn. The deal is @ $17.00 per share in cash.
+	BELM	3/29/2010	Avnet	$252 million	7	6.98	6/30/2010	0.29%	1.47%
Details of Bell Microproducts Inc. : Expected to close in two to four months for a closing value of $252mn and also assuming $342 million in debt for the company as part of the transaction, bringing the total value of the deal up to $594 million.Avnet is paying $7 a share for San Jose-based Bell Microproducts Inc.
+	DCAI	4/14/2010	U.S. Renal Care	$112 million	11.25	11.22	5/31/2010	0.27%	2.32%
Details of Dialysis Corp. of America: Expected to close by the Second half 2010 for a closing value of $1.2bn. It is a cash deal @ $15.00 per share
+	CXG	3/22/2010	Consol Energy Inc.	$363 million	38.25	38.16	5/5/2010	0.24%	5.38%
Details of CNX Gas Corporation: Expected to launch tender offer by May 05, 2010 for a closing value of $363 million for 9.5 million shares of CNX Gas Corp. from stockholders represented by T. Rowe Price Associates Inc. at a price of $38.25 per share
+	CHRD	3/15/2010	Pegasystems	$161.5 million	5	4.99	5/17/2010	0.20%	2.61%
Details of Chordiant Software, Inc.: Expected to close by the Second half 2010 for a closing value of $1.2bn. It is a cash deal @ $15.00 per share
+	FACT	3/9/2010	Abbot	$450 million	27	26.99	5/17/2010	0.04%	0.48%
Details of Facet Biotech Corporation: Expected to close by the second quarter of 2010 for a value of $450 million. The closing price for the cash deal is $27
+	BWY	3/29/2010	Madison Dearborn Partners, LLC ("MDP")	$915 million	20	20	8/16/2010	0.00%	0.00%
Details of BWAY Holding Company: Expected to close in the second or third quarter of 2010 for a value of $915 million.Under the agreement, BWAY shareholders will receive $20.00 cash for each share of BWAY common stock they own.
+	IUSA	3/8/2010	CCMP	$460 million	8	8	6/30/2010	0.00%	0.00%
Details of infoGROUP, Inc.: Expected to close by this Summer for a value of $460 million @ $8.00 per share
+	TWLL	3/22/2010	Intersil Corp.	$400 million	18.5	18.55	5/17/2010	-0.27%	-3.51%
Details of Techwell, Inc.: Expected to close by the second quarter of 2010 for a closing value of $400 million. Intersil is paying $18.50 per Techwell share.
+	LGN	1/22/2010	Lone Star Funds	$270 million	2.5	2.51	5/17/2010	-0.40%	-5.19%
Details of Lodgian Inc. : Expected to close by the second quarter of 2010 for a closing value of $270mn. The closing price for the cash deal is $2.50 per share
+	WEDC	3/30/2010	Microsemi Corporation	$100 million	7	7.03	6/27/2010	-0.43%	-2.29%
Details of White Electronic Designs Corp.: Expected to close in the fiscal third quarter ending June 27 for a closing value of $100mn. Micorsemi is paying $7 per White Electronic’s share.
+	CFL	1/18/2010	Tyco International	$2.9 billion	42.5	42.81	6/26/2010	-0.72%	-3.94%
Details of Broadview Security : Expected to close in the second half of Tyco’s fiscal year, which began on September 26, 2009, for a closing value of $2.9bn. The closing price for the cash deal is $42.50 per share
+	ZNT	2/18/2010	Fairfax Financial Holdings	$I.4 billion	38	38.36	5/17/2010	-0.94%	-12.23%
Details of Zenith National Insurance Corp.: Expected to close by the second quarter of 2010 for a closing value of $1.4bn. It is a cash deal @ $38 per share
+	NGA	4/1/2010	AZZ Inc.	$125.6 million	7.5	7.6	8/31/2010	-1.32%	-3.64%
Details of North American Galvanizing & Coatings Inc.: Expected to close by the end of AZZ’s fiscal second quarter, Aug. 31 for a value of $125.6 million. AZZ plans a cash tender offer for NAGC of $7.50 per share
+	SMMX	4/5/2010	Accelrys Inc.	$186 million	5.59	5.67	6/30/2010	-1.41%	-7.25%
Details of Symyx Technologies Inc. : Expected to be completed by the end of June 2010 for a value for $186mn. It is an all-stock merger where Symyx shareholders will receive 0.7802 shares of Accelrys common stock for each share of Symyx.
+	MIR	4/12/2010	RRI Energy In.	$1.6 billion	11.71	11.99	12/31/2010	-2.34%	-3.38%
Details of Mirant Corporation: Expected to close by the end of the year 2010 for a value of $1.6bn. Mirant Corp. will combine with RRI Energy Inc. in a stock-deal to form GenOn Energy. Mirant stockholders will get about 2.84 RRI common shares for each Mirant share they own.
+	TUTR	3/26/2010	Thoma Brava	$141 million	5.6	5.76	7/31/2010	-2.78%	-9.94%
Details of Plato Learning, Inc.: Expected to close by July 31, 2010 for a closing value of $141 million. Thoma Bravo LLC will pay $5.60 in cash for each Plato share.
+	CKR	3/1/2010	Thomas H. Lee	$928 million	11.05	11.97	5/17/2010	-7.69%	-100.19%
Details of CKE Restaurants Inc. : Expected to close by the second quarter of 2010 for a closing value of $928bn. It is a cash deal @ $11.05 per share
+	CCE	2/25/2010	The Coca-Cola Company	$12.3 billion		28.37	10/1/2010	-100.00%	-225.31%
Details of Coca-Cola Enterprises Inc.: Expected to close by October 1, 2010 for a closing value of $1.23bn. The deal includes $10 per share + a share in a new bottling company