With a flurry of transactions announced over the last few weeks, I’m initiating a position in the Bass Pro Cabela’s merger. But first, an overview of the recent news and a quick portfolio update.
Just as America is about to elect its next president, companies have rushed to announce their merger plans, in a move that departs with other election years. I will cover these first before giving some updates on the portfolio and give a few reasons why I initiated a position in the Bass Pro Cabela’s merger.
But first, the latest M&A activity. Continue reading “Bass Pro Cabela’s Merger, News And Portfolio”
The arbitrage of the eFuture Holding transaction should reward investors jumping on while the current spread exists
As promised last week, I’m back at the trading station with a deal for arbitrage-hungry fellow readers to invest in. Without any more teasing, here is the latest opportunity I’ve just put money into. Continue reading “eFuture Holding: Initiating A Stake”
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?”
On March 16, 2016, Coherent (NASDAQ: COHR) annouced that it was acquiring Rofin-Sinar (NASDAQ: RSTI) for US$32.50/share. Now in the last finish line, the deal seems like a relatively easy win.
The transaction had a few milestones to hit on the road map, including shareholder vote and some regulatory approvals. Now that the vote has taken place and Coherent received clearance from the US regulator to acquire Rofin-Sinar, the only thing left to do is getting approval from the European Commission. Continue reading “Coherent/Rofin: One Last Small Regulatory Approval”
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.
Continue reading “Tesla Buys SolarCity: Bailout Or The Future Of Energy?”
Two deals part of the portfolio, Anthem/Cigna and AbInBev/SABMiller, have been making the headlines in recent weeks. Re-visiting those two opportunities and updating my views.
Two of the 5 pending deals in the portfolio date from before the the existence of this blog. Just seizing the opportunity of the recent press coverage to briefly go over them again as well as provide an update on my strategy.
Continue reading “Mega Deals In The Spotlight”
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 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”
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”