On June 2, 2016, the First Marblehead Corporation (NYSE:FMD) entered into an agreement to be acquired by two companies controlled by John Carter Risley, a Canadian businessman with investments in fisheries, food supplements, and communications. Investors can buy into FMD now and make an annualized 17% return by the end of the summer.
Why? As always, it’s all about betting on the safest horses. In a diversified portfolio, M&A arbitrage holds the role of an investment which has the volatility of a bond, while offering the annualized return of a stock. Of course, that is assuming that the transaction does not get voted down by shareholders or blocked by regulators for say, antitrust concerns. Continue reading “Why I Just Bought First Marblehead’s Stock”
On April 19, 2016, Apex (SHE:002180) and Lexmark (NYSE:LXK) announced that they had come to an agreement where Lexmark will be acquired for $40.50/share in cash, valuing it at US$3.5 billion
In a world going more and more digital, printers OEM have been struggling for a while with lackluster performance. Take Lexmark for instance: over the last twelve months, operating margin of -3%, return on equity of -9%… you could probably have better metrics opening a lemonade stand for the summer. Therefore, it doesn’t come as a big surprise that the smaller players in the industry are starting to consolidate together in an effort to get more scale and cut costs. Continue reading “Apex/Lexmark: US$3.5 Billion, 29% Potential Return”
On June 13, 2016, Microsoft (NASDAQ: MSFT) announced that it had reached an agreement with LinkedIn (NASDAQ: LNKD) to acquire it for US$26.2 billion
The deal prices Linkedin at US$196/share, or a premium of ~50% to the share price as of June 10, 2016, the last day before the public announcement. Continue reading “Microsoft Swallows LinkedIn”
On March. 16, 2016, China Nepstar (NYSE: NPD) announced it had entered into a definitive merger agreement for a going private transaction. The deal requires 66.6% of the shareholder votes to go through, and 79.5% of the shares have already been committed. The vote being the only material step to closing, the merger spread of ~5.3% is a steal.
Less than a week following the first post identifying an arbitrage opportunity in a Chinese going-private transaction, mergerarbitrages.com doubles down and adds China Nepstar Chain Drugstore to the buy list.
Continue reading “China Nepstar Going Private Is An Arbitrageur’s Dream”
Monsanto (NYSE: MON) has received a non-binding proposal from Bayer (ETR: BAYN) regarding a takeover that could be worth US$70 billion including debt
Less than 6 months after the failed takeover attempt of Syngenta (VTX: SYNN) by Monsanto, the German chemical giant Bayer has decided to make a move to bolster its position as a life sciences company. A typical acquisition premium of 30-40% means an offer for Monsanto could yield US$117 – US$125/share (the stock was trading at ~US$90/share before the news that Bayer was on the lookout for an acquisition came out a week ago). Continue reading “Towards A Bayer Monsanto Combination?”
Pfizer Inc. (NYSE:PFE) announced today that it will acquire Anacor (NASDAQ:ANAC) for US$5.2bn
After terminating two mega deals in a row (the failed hostile takeover of AstraZeneca (LON:AZN) and the blocked merger with Allergan (NYSE:AGN)), Pfizer Inc. is back at the acquisition table, this time with a less financially ambitious target, Anacor Pharmaceuticals. The main strategic reason for the purchase is crisaborole, a product developed by Anacor that treats eczema. Continue reading “Today In The News: Pfizer Inc. On An Acquisition Roll”
On Feb. 3, 2016, China Ming Yang Wind Power (NYSE: MY) announced it had entered into a definitive merger agreement for a going private transaction led by a consortium of investors, including the company’s Chairman and CEO, Mr. Zhang. With little in the way of the transaction closing around mid-June and ~4% of price upside remaining, investors should consider picking up a few shares for what should be a smooth ride.
Going private transactions are often the best arbitrage opportunities, since the antitrust reviews are usually not a concern (the impact of those transactions on a company’s pricing power is limited). What’s more, when the deal is put together by a bunch of insiders with significant control, the chances of it going through are high, especially if no alternative transaction has emerged. China Ming Yang Wind Power displays all the attributes of an attractive merger arbitrage opportunity that is being largely ignored because of the limited liquidity in the stock. However, for the average retail investor, there are more than enough shares changing hands daily to realize a ~55% annualized return, and below are reasons why investors should go ahead. Continue reading “China Ming Yang Wind Power: Potential 55% Annualized Return”
Baxalta Shire merger: On Jan. 11, 2016, Shire (NASDAQ: SHPG) made the headlines of the pharma news when it announced that it had agreed to buy Baxalta (NYSE: BXLT) for US$32bn in a cash and stock transaction. The spread sits currently at ~7% and below are the key reasons why the outcome should be favorable (i.e. the deal closing)
Continue reading “Baxalta Shire Merger: Attractive Spread”