Rite Aid (RAD) – Merger Arbitrage – 77% upside

Current Price –$3.67

Expected Price – $6.5

Upside – 77%

Expiration Date – Dec 2017

This is my second look at the pending WBA/RAD merger – I was spectacularly wrong the first time and the only consolation is that market was wrong as well – the spread narrowed to 3% before the deal started collapsing. The merger agreement has been adjusted – instead of $9/share WBA is planning to acquire RAD at $6.5-$7/share (77% upside) and higher number of stores will be divested to FRED in order to satisfy FTC requirements. As before the key concern/risk is FTC rejection of the transaction.

PennTex Midstream (PTXP) – Acquisition Target – 50% upside

Current Price – $15

Expected Buyout – $23

Upside – 50%

Expiration Date – TBD (expected in H1 2017)

 

Penntex Midstream is likely to be fully acquired by ETP, which already owns 65% of the company. This is similar to OCI/OCIP transaction that was posted on the site earlier as well as a number of other consolidations in the MLP space (TRP/CPPL, TLLP/QEPM) whereby general partner which owns majority of MLP buys out the remaining limited partner units.

Syngenta (SYT) – Merger Arbitrage – 17% upside

Current Price –$79.34

Offer Price – $93

Upside – 17.5%

Expiration Date – TBD (likely in H1 2017)

 

Let me start by saying that this is a large cap transaction and the deal is widely followed and analysed – I do not have any superior insights with regards to the likelihood of the transaction going through so my opinion is as good as anybody’s else. However, I believe this opportunity is quite interesting, spread is large (17%) and therefore worth flagging.

Rite Aid (RAD) and Fred’s (FRED) – Merger Arbitrage With Hedge – 9% upside

Current Price –$8.25

Offer Price – $9.00

Upside – 9.0%

Expiration Date – Jan 2017

 

This is another large cap merger arbitrage deal where the spread of 9% is mostly due to pending regulatory approval. Recent developments suggest the deal is likely to close. At the same time there is opportunity to hedge the risk of the deal failing.