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Arbitrage Spreads On Pending Mergers & Acquisitions
By Martin | December 23, 2009
Encore Acquisition Co. (EAC), Denbury Resources Inc. (DNR)
Premium offered: $1.97 or 4.10%
Acquirer: DNR
Target: EAC
Offer per share: $50.00 cash and stock
Value of outstanding common equity: $2,777,000,000
Target share price: $48.03
Acquirer share price: $14.83
Expected closing: 1Q 2010 2/14/2010
Annualized gain: 27.98%
Note: Each Encore holder is entitled to $15 in cash and a value of $35 of
Denbury stock if Denbury’s stock price is in a range from $13.29 to $16.91.
Encore holders will also have an option to receive all stock or all cash,
subject to a proration feature such that the overall mix of consideration is
70% Denbury common stock and 30% cash. If Denbury’s stock price moves
outside that range, the terms of the deal are subject to the following
collar mechanism: if Denbury’s stock price falls below $13.29, EAC holders
will receive 2.6336 shares of Denbury stock; above $16.91, holders will
receive 2.0698 shares of Denbury stock. The cash will remain $15. Denbury
has anti-trust approval to go ahead with the merger.
FGX International (FGXI), Esslior International (EI.FR)
Premium offered: $0.07 or 0.36%
Acquirer: EI.FR
Target: FGXI
Offer per share: $19.75 stock
Value of outstanding common equity: $436,870,000
Target share price: $19.68
Acquirer share price: N/A
Expected closing: N/A
Annualized gain: N/A
Note: Boards of Directors of both compaines have approved the deal.
Harleysville National Corp. (HNBC), First Niagara Fincl Grp. (FNFG)
Premium offered: $0.17 or 2.62%
Acquirer: FNFG
Target: HNBC
Shares offered per HNBC share: 0.474 shares
Value of offer per share: $6.78
Value of outstanding common equity: $292,412,543
FNFG share price: $14.31
HNBC share price: $6.61
Expected closing: 2/14/2010
Annualized gain: 17.85%
Note: First Niagara said in late Sept. it will offer $400M of stock to
bolster capital cusion, fund expansion and for other purposes. The company
in Dec. also said it will lend up to $50 million as part of a
recapitalization plan that will make HNBC and its bank subsidiary
well-capitalized.
I2 Technologies Inc. (ITWO), JDA Software Group Inc. (JDAS)
Premium offered: $0.10 or 0.55%
Acquirer: JDAS
Target: ITWO
Offer per share: 0.256 share and $12.70 per share
Value of offer per share: $19.30
Value of outstanding common equity securities: $433,006,664
Acquirer share price: $25.80
Target share price: $19.20
Expected closing: N/A
Annualized gain: N/A
Note: JDAS completed its sale of $275 million in notes and raised enough
cash to proceed with the intended structure of the deal. The acquisition was
expected to close Dec. 10. I2 has set 1/28/10 for a special shareholders
meeting.
ICT Group Inc. (ICTG), Sykes Enterprises Inc. (SYKE)
Premium offered: $0.12 or 0.72%
Acquirer: SYKE
Target: ICTG
Offer per share: 0.3423 share and $7.69 per share
Value of offer per share: $16.68
Value of outstanding common equity securities: $2,827,556,625
Acquirer share price: $26.26
Target share price: $16.56
Expected closing: Year End 12/31/2009
Annualized gain: 32.73%
Note: Each issued and outstanding share of ICTG will be converted into $7.69
in cash and SYKES stock with a value of $7.69, subject to a collar
mechanism. If the average SYKE share price is at/above $22.4652, the
exchange ratio will be 0.3423 SYKE share per ICTG share; at/below $19.3306,
the ratio becomes 0.3978 SYKE share per ICTG share.
IMS Health (RX), TPG Capital (Private)
Premium offered: $0.99 or 4.71%
Acquirer: TPG Capital
Target: RX
Offer per share: $22.00 cash
Value of outstanding common equity: $4,013,680,000
Target share price: $21.01
Expected closing: By End of 1Q 2010 1/17/2010
Annualized gain: 68.80%
Note: The deal includes the assumption of RX debt and has yet to be approved
by shareholders of the company.
Iowa Telecommunication Services Inc. (IWA), Windstream Corp. (WIN)
Premium offered: -$0.30 or -1.76%
Acquirer: WIN
Target: IWA
Offer per share: 0.804 share and $7.90 per share
Value of offer per share: $16.99
Value of outstanding common equity securities: $557,281,774
Acquirer share price: $11.30
Target share price: $17.29
Expected closing: mid 2010 4/1/2010
Annualized gain: -6.50%
Note: The boards of both companies have approve the deal and hope to close
it in mid-2010.
Marvel Entertainment Inc. (MVL), Walt Disney Co. (DIS)
Premium offered: $0.04 or 0.08%
Acquirer: DIS
Target: MVL
Offer per share: 0.745 share and $30.00 per share
Value of offer per share: $53.96
Value of outstanding common equity securities: $4,235,643,543
Acquirer share price: $32.17
Target share price: $53.92
Expected closing: By End Of 4Q 12/31/2009
Annualized gain: 3.73%
Note: The children of late comic-book creator Jack Kirby are seeking to
recapture the copyrights to the characters he created by as early as 2014.
Control over the copyrights would grant them licensing rights, or at least a
share of the profits the characters generate. Marvel shareholders of record
on Nov. 23 will be allowed to vote at a special meeting on Dec. 31, when the
cos expect to close the acquisition.
MPS Group Inc. (MPS), Adecco Group (Private)
Premium offered: $0.06 or 0.44%
Acquirer: Adecco
Target: MPS
Offer per share: $13.80 cash
Value of outstanding common equity: $1,285,332,000
Target share price: $13.74
Acquirer share price: N/A
Expected closing: First Quarter 2010 2/14/2010
Annualized gain: 3.01%
Note:EU Commission cleared the Adecco-MPS deal on 12/18.
On2 Technologies Inc. (ONT), Google Inc. (GOOG)
Premium offered: $0.01 or 2.28%
Acquirer: GOOG
Target: ONT
Shares offered per share: 0.0010 shares
Value of offer per share: $0.61
Value of outstanding common equity: $105,306,000
GOOG share price: $606.60
ONT share price: $0.59
Expected closing: N/A
Annualized gain: N/A
Note: On2 shareholders file lawsuit against Google Aug. 10 claiming the
deal’s price tag is unfair. ONT settles some suits in Oct. The shareholders
special meeting on 12/18 was adjourned until 12/23 On 12/22, On2 announced
that another adjournment was the only issue to be voted on at the
shareholders meeting on 12/23. Leading proxy advisors recommend merger. On
12/16 the exchange ratio was announced as 0.0010 per share of Google for
each ONT share.
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