Monday, October 4, 2010

Merger Arbitrage: Recent M&A Activity

Let's take a moment to look at recent happenings in the merger arbitrage space.

Deals that have closed recently are AmeriCredit Corp, Contiental Airlines Inc, NBTY Inc, and Hewitt Associates Inc.

Bloomberg reported that Isilon Systems Inc (ISLN) has retained Frank Quattrone's Qatalyst Partners to explore a possible sale of the company. Qatalyst is the firm that ran the wildly successful auction of 3PAR Inc, and investors are likely to expect a similar process for ISLN. Drew Guevara, head of west coast Technology banking for Morgan Stanley, remarked how only 1% of deals involving publicly traded companies result in bidding contests. Takeover expectation is certainly priced into ISLN, as the stock is up 319% YTD.

Potash Corp (POT) is still being pursued by BHP Billiton (BHP), and the $130/share unsolicited tender offer is scheduled to expire on November 18. China's Sinochem Group is reportedly drumming up interest for a rival bid, but is said to be having trouble finding partners and financing.

Sanofi-aventis (SNY) formally launched a hostile $69/share tender offer for Genzyme Corp (GENZ). SNY's language on the conference call it held for investors indicated that they are committed to a successful acquisition. A higher offer is required to obtain that outcome.

Dollar Thrifty (DTG) shareholders voted down the merger with Hertz (HTZ) last week, and HTZ terminated the agreement on October 1. Expect the final terms on a deal with Avis Budget Group (CAR) to be slightly different that previously offered. If the earlier proposal was acceptable to DTG then a definitive agreement should have been reached by now.

Last week saw the departure of more names than usual, due to the end of the third quarter, but replacements are seemingly being offered daily.


About the Authors

Hunter is the founder of the Distressed Debt Investing Blog and the Distressed Debt Investors Club. He has worked on the buy side for the past 7 years in high yield and distressed debt investing.

Edward has been a professional investor for four years, focusing mainly on the event-driven space. His investment philosophy is value-based, and he spends the majority of his time identifying near-term catalyst based opportunities.


hunter [at] distressed-debt-investing [dot] com