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Merger arb idea

 

$84 stock with an accepted offer at $86.05 on the table and an expected "mid-2020" close date... Elliott Management is the buyer at a price of $4.3bn... Shareholders have approved and the latest update which came in mid-March still indicated a mid-2020 close date.

 

This would be a pretty paltry ~2-2.5% return for the arb (especially compared to the March lows in the high-70s)... But maybe not a bad place to park some cash given the elevated market levels, high likelihood of closing, and near-term close timeframe...

 

As for the stock, it was hanging around the high-60s / low-70s prior to the deal announcement... operating cash flow is in the $350m-ish range with $70-80m in capex on a ~$4bn market cap... business is likely holing up well during the COVID-19 environment given it facilitates remote work...

 

Anyone looked at the situation?

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This does look like a certain deal but other deals have blown up recently including Fourscout, Front Yard and RedRobin. So while there is a double digit annualized return on this there could be a mutually beneficial cancellation of the deal - the PE money might not be available (for whatever reason) and Logmein might be happy to stay public. 

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Completely agree...

 

Elliott already owns some common stock so I'd think this is a reasonable endgame for them... No idea whether Elliott PE has a higher/better "closing rate" than other PE buyers...

 

As for RESI/RRGB -- both of those are in the direct line of fire from COVID-19 so not overly surprised at deals breaking...

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