Merger Arbs With Wide Spreads (April 2023)

This is a fresh review of ongoing merger arbitrage cases. This post is a continuation of my previously published pieces in July, September, November and January.

In this article you will find 17 merger arbitrage situations with my quick takes on all the cases and reasons for the spread.

Some of the cases that I consider to be attractive have already been posted as Portfolio Ideas, including TCRR here and YI here. Meanwhile, some ideas have been covered on SSI Quick Pitches – CCHWF here and here and FHN here. Several large-cap names, including SAVE, ATVI and TGNA, are still a part of our Large Cap M&A basket from May.

A printable PDF as well as full descriptions below.

SSI Merger Arbitrage April 2023 1

GSMG was covered in Quick Pitches here and here.


Spirit Airlines (SAVE)

  • Buyers: JetBlue Airways (JBLU)
  • Consideration: JBLU: $31/share + $0.1 per month
  • Spread: 76%
  • Exp. Closing: H1’24
  • Main risk: Regulatory approval.


CCHWF was covered in Quick Pitches here and here.


Silicon Motion Technology (SIMO)


Infinity Pharmaceuticals (INFI)

This is a tiny all-stock merger between two biopharmas. Merger spread stood at minimal levels upon anouncement in Feb’23 and then gradually widened to 50% in March. This seems to have been driven by the risk of MEIP’s shareholder opposition as the transaction terms appear to be quite unfavorable for the buyer. This is also indicated by MEIP’s share price fall of 20% upon the announcement. As part of the transaction, the buyer is required to keep $80m in net cash vs $4m for INFI while giving away a 42% ownership of the combined entity to INFI’s equity holders. MEIP would add INFI’s phase 2 drug candidate to its early-stage pipeline. In liquidation scenario MEIP could be worth materially above the current share price levels.




Largest Canadian bank is acquiring a US peer. The merger would make TD’s US franchise the sixth largest bank in the United States. Target’s shareholder approval has already been received. The spread on this regional bank merger used to stand at minimal levels despite still pending regulatory approvals. The spread widen to 20% in March on the news that the parties will not be able to receive regulatory approvals by the merger outside date of May’23. The spread increased further to over 40% amid the subsequent banking industry fall-out. Aside from the pending regulatory aprrovals, the current spread also reflects the risk of a downward price adjustment given that US bank indices are down significantly since the merger agreement was signed more than a year ago. The buyer’s management has mentioned that negotiations regarding a merger consideration adjustment are ongoing. TD has remained committed to closing the transaction and the parties are in discussions to extend the outside date.

FHN was covered in Quick Pitches here.


YI is covered as a Portfolio Idea here.






Seagen (SGEN)

This is the largest merger so far this year. SGEN’s shareholder approval seems likely given a massive premium to pre-announcement levels. The current spread seems to exist due to the likely scrutiny from antitrust regulators and potentially prolonged closing timeline. The transaction would give Pfizer a leading position in cancer treatment space where the company already owns a sizable portfolio of drugs. This might increase the combined company’s power to negotiate with insurers. Industry analysts have noted that divestitures in some areas, such as bladder cancer treatment, might be needed. SGEN’s shareholder approval seems likely, given a massive premium to pre-announcement levels. The merger is expected to close in late 2023-early 2024.




TCRR is covered as a Portfolio Idea here.


4 thoughts on “Merger Arbs With Wide Spreads (April 2023)”

  1. Regarding ATVI/MSFT – what’s the word on July 18 break fee? Is MSFT going to have to increase deal price to avoid this? Or other scenarios?

    • I think the main risk still remains approval of China’s antitrust regulator (SAMR), hence the spread. However, I don’t have any opinion on how this could go.


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