Back From Vacation: What Happened Since I Left?

The markets never sleep, and while I was away on a (well deserved!) trip, a few things worth mentioning happened in the M&A space

Summer.. always a good time to be checked out of the financial world. But that I’m taking a break doesn’t mean nothing is happening, and before publishing about a new deal hopefully early next week, I want to quickly review what’s happened recently in our little merger arbitrage business now that I’m back from vacation. Continue reading “Back From Vacation: What Happened Since I Left?”

Tesla Buys SolarCity: Bailout Or The Future Of Energy?

On August 1, 2016, Tesla (NASDAQ: TSLA) announced that it had reached a definitive agreement with SolarCity (NASDAQ: SCTY), approved and recommended by the Boards of the two companies. Since the talks between the two companies were made public in June, lots have been said about this unusual situation.

So it’s happening. Elon Musk is buying Elon Musk. Or at least to some extent, since the entrepreneur owns roughly 20% of each company and is CEO of Tesla, Chairman of SolarCity. There has been so much said on this deal over the past couple of months that I will only focus on the points that I think are the most relevant: does it make sense for shareholders, should it go through, and will I put my money in it. The answer to the 2 first questions is yes, the one to the last is no, and here is why.

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China Ming Yang Wind Power: Potential 55% Annualized Return

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: Attractive Spread

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)

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