The Special Situation Report #15: 5/1 Roundup

Summary of the Week in Special Situations

May 01, 2022

It was a busy week in special situations, and I have all the details below.

On Thursday I’ll publish my latest research report, covering a recent spin-off. The company has posted solid financial results but trades for 2x trailing free cash flow – meriting a closer look.

Thank you for reading and see you next week: same time, same place.

Update on Developing M&A

Strategic Alternatives & Ongoing Situations

Argo Group (ARGO) announced exploration of strategic alternatives and delayed its AGM (Filing); I reported on this rumor in Report #12
Bright Scholar (BEDU) received a takeover proposal from its chairman (Press Release)
Elemental Royalties (TSXV: ELE) announced the hostile tender offer by Gold Royalty (GROY) was extended for ten days; Elemental continues to review alternatives (Press Release)
Genocea (GNCA) announced restructuring and plan to explore strategic alternatives (Press Release)
Kohl’s (KSS) received an offer from Simon Property Group (SPG) and Brookfield Asset Management (BAM) in its ongoing process (according to NY Post)
NCR (NCR) gained amid speculation of multiple potential bidders in its announced process (Barron’s)
Sio Gene Therapies (SIOX) announced a review of strategic alternatives to maximize shareholder value (Press Release)
Southwest Gas (SWX) released additional details on its strategic alternatives process (Filing)
Spok Holdings (SPOK) ended its strategic alternatives review and will focus on its standalone plan (Filing)
Ted Baker (LSE: TED) provided an update on its formal sale process; it has received several non-binding proposals (Filing)
Turtle Beach (HEAR) disclosed it was engaging on strategic alternatives (Filing); Donerail sent an open letter to shareholders (Filing)
Vp (LSE: VP) announced the commencement of a formal sale process (Filing)
Zymeworks (ZYME) received an unsolicited takeover bid (Press Release)

Rumors

Magnachip (MX) subject of takeover interest from LX Group with LOI expected as early as next week (The Korean Economic Daily)
Match Group (MTCH) subject of speculation regarding a potential takeover by Meta (FB) (Seeking Alpha)
Mattel (MAT) exploring a sale and has talked with firms including Apollo (APO) and L Catterton (Wall Street Journal)
Silicon Motion (SIMO) reportedly exploring a sale amid takeover interest (Bloomberg)
SpartanNash (SPTN) attracts takeover interest from United Natural Foods (UNFI) and others (Reuters); I reported on activist agitation in Report #9
Ubisoft (EPA: UBI) drawing takeover interest from buyout funds (Bloomberg)

Update on Shareholder Activism

Aerojet Rocketdyne’s (AJRD) CEO and her slate of director nominees filed a presentation in ongoing proxy battle (Presentation, Letter); Chairman filed a lawsuit against CEO (Lawsuit)
Athira Pharma (ATHA) investor Richard Kayne issued a presentation to shareholders (Filing); the company issued a rebuttal presentation (Filing)
Everbridge (EVBG) activist Ancora announced plan to withhold support for Everbridge’s chairman and three other directors (Filing)
Hasbro (HAS) activist Alta Fox filed a definitive proxy, modifying its slate to 3 nominees and targeting the chairman (Press Release)
Kohl’s (KSS) activist Macellum issued a presentation in ongoing situation (Filing); ISS recommended 2 of 10 board nominees from activist Macellum (Reuters); Kohl’s incoming chairman sent a rebuttal letter (Press Release)
Nam Tai Properties (NTP) investor Oasis Management filed a 13D disclosing a ~20% stake (Filing)
Nielsen (NLSN) shareholder Windacre filed a presentation outlining its thesis on Nielsen, arguing the takeover price isn’t close to fair value (Filing)
Rubicon Technology (RBCN) activist Paragon Technologies issued a letter to shareholders demanding more accountability (Filing)
Suncor Energy (SU) activist Elliot Management called for new board directors, an overhaul of management, and the initiation of a strategic review (Press Release)
Sylvamo Corporation (SLVM) investment firm Atlas Holdings disclosed a 14% stake in a 13D filing (Filing); the company adopted a shareholder rights plan (Filing)
US Foods (USFD) and activist investor Sachem Head both filed investor presentations in ongoing proxy contest (Company Presentation, Activist Presentation)

Update on Other Special Situations

Spin-Offs

Bausch Health Companies (BHC) launched roadshow for Bausch + Lomb initial public offering (MarketWatch); IPO terms below sell-side expectations (Seeking Alpha)
Bed, Bath & Beyond (BBBY) considers alternatives for Buybuy Bay; RetailWire asks if a spin-off or sale is the right move
Fidelity National (FNF) prepares to spin-off part of its annuity unit (ThinkAdvisor)
Fortune Brands (FBHS) announced its intention to spin-off its Cabinets business to shareholders (Filing)
Fortress Transportation and Infrastructure (FTAI) announced its board approved FTAI Infrastructure spin-off (Filing)
GlaxoSmithKline (GSK) beat forecasts as it prepares consumer health spin-off (Reuters)

Other

AXIS Capital (AXS) reportedly planning to sell its reinsurance segment (Insurance Insider)
HSBC’s (HSBC) largest shareholder is calling for a breakup of the company (Reuters)
Opera (OPRA) announced intentions to sell its remaining stake in OPay (Filing)
Reckitt Benckiser (LSE: RKT) kicked off sale of its infant nutrition business (Bloomberg)
Walgreens (WBA) set mid-May deadline for Boots final bids (Sky News); Apollo (APO) and Reliance (NSE: RELIANCE) plan joint bid (Reuters)
Whirlpool (WHR) announced a strategic review of its business in Europe, Middle East, and Africa (Filing)

Announced M&A

Target / Acquirer – Transaction Enterprise Value

Consumer / Retail

Confectionary business of Grupo Bimbo (MX: BIMBOA) / Mondelez (MDLZ) – $1.3bn (Press Release)

Energy & Natural Resources

Albioma (ENXTPA: ABIO) / KKR (KKR) – $1.7bn (Press Release)

Financials

Beach Bank / The First Bancshares (FBMS) – $117mm (Press Release)
Infrastructure equity investment management business of AMP Capital (ASX: AMP) / DigitalBridge (DBRG) – $328mm (Press Release)
Middle Market Lending portfolio of Annaly Capital (NLY) / Ares Management – $2.4bn (Press Release)

Gaming, Gambling, Lodging & Real Estate

PS Business Parks (PSB) / Blackstone (BX) – $7.6bn (Press Release)

Healthcare

ClaimsXten business of Change Healthcare (CHNG) & UnitedHealth (UNH) / TPG Capital – $2.2bn (Filing)

Industrials

Dynapower / Sensata Technologies (ST) – $580mm (Press Release)
Fill-Rite / Gorman-Rupp Company (GRC) – $525mm (Press Release)
Hitachi Transport (TSE: 9086) / KKR (KKR) – $5.2bn (Press Release)
Storage tank business of Arcosa (ACA) / Black Diamond Capital – $275mm (Press Release)

Technology, Media & Telecommunications

GTY Technology (GTYH) / GI Partners – $427mm (Press Release)
WhiteHat Security / Synopsys (SNPS) – $330mm (Press Release)
Twitter (TWTR) / Elon Musk – $44bn (Press Release, Merger Agreement)

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