Merger Arbitrage Mondays – A Very Active Quarter Draws To A Close

Merger activity increased last week with one new deal announced and one active deal completed.

While we only saw 4 new deals announced this month, Q3 2020 was very active overall with 33 new deals announced. The total value of these deals was just north of $137 billion, and six of these were worth over $10 billion each including Gilead’s (NASDAQ:GILD) recently announced acquisition of Immunomedics (NASDAQ:IMMU).

Several deals in our list of active deals were granted early termination of the required waiting period under the Hart-Scott-Rodino Act from The Federal Trade Commission (FTC) last week, while others like InnerWorkings (NASDAQ:INWK) received shareholder approval. I was closely tracking InnerWorkings on account of its nearly 6% spread but unfortunately did not buy before shareholder approval. The spread almost instantaneously narrowed to just 0.5% after shareholders approved the acquisition.

InnerWorking’s Spread History

Shares of Standard AVB Financial (NASDAQ:STND) shot up almost 73% on Friday after the company announced that it was getting acquired by Dollar Mutual Bancorp for $158 million in cash.

Weekly Spread Changes:

The table below shows weekly spread changes between September 18, 2020, and September 25, 2020.

Symbol Quote Acquiring Company Acquiring Company Quote Current Spread Last Week Spread Spread Change Weekly Deal Type
GNW 3.08 China Oceanwide Holdings Group Co., Ltd. (N/A) 76.30% 65.55% 10.75% All Cash
LINX 6.27 StoneCo Ltd. (NASDAQ:STNE) 53.13 4.78% -1.65% 6.43% Special Conditions
TAT 0.2249 TAT Holdco LLC and TAT Merger Sub LLC (N/A) 0.00 -42.20% -47.26% 5.06% All Cash
VRTU 48.5 Baring Private Equity Asia (N/A) 0.00 5.88% 1.66% 4.22% All Cash
CETV 4.235 PPF Group N.V. (N/A) 8.15% 4.33% 3.82% All Cash
GRUB 71.94 Just Eat N.V. (OTCPK:TKAYY) 10.964 2.26% 5.47% -3.21% All Stock
ONDK 1.55 Enova International, Inc. (NYSE:ENVA) 15.62 0.45% 4.62% -4.17% Cash Plus Stock
INWK 2.985 HH Global Group Limited (N/A) 0.50% 5.63% -5.13% All Cash
GILT 5.63 Comtech Telecommunications Corp. (NASDAQ:CMTL) 13.2 47.28% 52.82% -5.54% Cash Plus Stock
SUNW 2.09 The Peck Company Holdings, Inc. (NASDAQ:PECK) 5.14 -54.46% -26.15% -28.31% All Stock

Deal Statistics:

Total Number of Deals Closed in 2020 96
Total Number of Deals Not Completed in 2020 15
Total Number of Pending Deals
Cash Deals 30
Stock Deals 14
Stock & Cash Deals 4
Special Conditions 3
Total Number of Pending Deals 51
Aggregate Deal Consideration $661.43 billion

New Deals:

  1. The acquisition of Standard AVB Financial (STND) by Dollar Mutual Bancorp for $158 million or $33.00 per share in cash.

Deal Updates:

  1. On September 21, 2020, The Federal Trade Commission (FTC) granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of Rosetta Stone (NYSE:RST) by Cambium Learning Group.
  2. On September 22, 2020, The Federal Trade Commission (FTC) granted early termination of the required waiting period under the Hart-Scott-Rodino Act with respect to the acquisition of Acacia Communications (NASDAQ:ACIA) by Cisco Systems (NASDAQ:CSCO).
  3. On September 22, 2020, Tiffany (NYSE:TIF) welcomed the decision by the Delaware Chancery Court to grant Tiffany’s motion to expedite its lawsuit against LVMH Moët Hennessy-Louis Vuitton (OTCPK:LVMHF). Tiffany’s lawsuit seeks, among other things, an order requiring LVMH to abide by its contractual obligation under the November 24, 2019, Merger Agreement to complete its acquisition of Tiffany on the previously agreed terms. The Court has set January 5, 2021, to begin a four-day trial.
  4. On September 22, 2020, Sanofi (NASDAQ:SNY) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to Sanofi’s proposed acquisition of Principia Biopharma (NASDAQ:PRNB) has expired.
  5. September 23, 2020: According to Reuters, EU antitrust regulators have extended their investigation into Alphabet unit Google’s (NASDAQ:GOOG) (NASDAQ:GOOGL) fitness tracker maker Fitbit (NYSE:FIT) to December 23, 2020.
  6. On September 25, 2020, Asta Funding (NASDAQ:ASFI) announced that at a virtual special meeting of stockholders, the Company’s stockholders voted to adopt the merger agreement pursuant to which the Company would become a wholly-owned subsidiary of Asta Finance Acquisition Inc. The transaction is expected to close during the week of September 28, 2020.
  7. On September 25, 2020, InnerWorkings announced that its stockholders approved the adoption of the previously announced merger agreement whereby InnerWorkings will become a wholly-owned subsidiary of HH Global. The merger is expected to close on October 1, 2020.

Closed Deals:

  1. The acquisition of Majesco (NASDAQ:MJCO) by Thoma Bravo on September 21, 2020. It took 63 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
GNW 10/23/2016 China Oceanwide Holdings Group Co., Ltd. (N/A) $5.43 $3.08 09/30/2020 76.30% 9283.01%
GILT 01/29/2020 Comtech Telecommunications Corp. (CMTL) $8.29 $5.63 10/31/2021 47.28% 43.25%
TIF 11/25/2019 LVMH Moët Hennessy Louis Vuitton SE (OTCPK:LVMUY) $135.00 $115.65 12/31/2020 16.73% 64.28%
FIT 11/01/2019 Google LLC (GOOG) $7.35 $6.53 12/31/2020 12.56% 48.25%
MXIM 07/13/2020 Analog Devices, Inc. (NASDAQ:ADI) $71.49 $65.53 06/30/2021 9.10% 12.03%
CETV 10/27/2019 PPF Group N.V. (N/A) $4.58 $4.235 10/27/2020 8.15% 99.11%
CBMG 08/12/2020 CBMG management (N/A) $19.75 $18.43 12/31/2020 7.16% 27.52%
WLTW 03/09/2020 Aon plc (NYSE:AON) $212.07 $198.67 06/30/2021 6.74% 8.92%
CXDC 06/15/2020 Faith Dawn Limited and Faith Horizon (N/A) $1.20 $1.13 09/30/2020 6.19% 753.69%
VRTU 09/10/2020 Baring Private Equity Asia (N/A) $51.35 $48.5 06/30/2021 5.88% 7.77%

The aggregate deal consideration increased slightly to $661.43 billion last week.

Disclosure: I am/we are long IMMU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: I have a long position in Immunomedics (IMMU). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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