Analysis of the FTC v $AMGN / $HZNP complaint

1/ This certainly was a last-minute hail mary pass, given the parties were set to close the merger in a week

2/

With the looming 1% excise tax coming into effect in 2023, this is what I would do as a SPAC sponsor:

🧵 1/ Irrespective of deadline, stage an extension vote before year end 2022. Offer "game theory" redemption economics (max $ amount or $/share amount) to encourage small # of non-redeemers

This allows a large redemption with no potential excise tax while extending deal runway

2/

**Oct 3 SPAC Update**

$FACT business combination with Complete Solaria
$UPTD business combination with Estrella Biopharma
$GIA non-binding term sheet with QT Imaging

1/ **Oct 3 SPAC Update** (Cont'd)

$CFFE shareholders approved deadline extension to Mar 16 2023, 19.2 million shares (86.6%) redeemed, 3.0 million shares remain, NAV $10.24

2/

**Oct 3 M&A Update**

$LOGC to be acquired by $AZN for $2.07 cash per share, 666.7% premium, $68.2 million
$OIIM to be acquired by management for $5.00 cash per share, 55.3% premium, $145.9 million
$SAVE / $JBLUE $2.50 special dividend had Sept 9 ex-date

1/ **Oct 3 M&A Update** (Cont'd)

$MYOV received non-binding proposal from Sumitomo Pharma for $22.75 cash per share, 26.7% premium, $2.5 billion, rejected as it “significantly undervalues the Company”
$CHNG / $UNH deal closed
$CTXS / Vista Equity / Evergreen Coast deal closed

2/

Elon Musk moved to terminate the $TWTR merger agreement, claiming that Twitter breached the agreement by failing to operate in ordinary course in addition to suffering a material adverse effect (MAE)

What happens now?

A 🧵👇

/1 First, Twitter will sue to enforce the merger agreement

There are a number of ways that this can go, and a few case studies that we can analyze

2/

https://twitter.com/btaylor/status/1545526087089696768

$TWTR has not yet filed the DMA for Musk's acquisition (which is odd, granted it came together quickly)

Nonetheless, here's my take as a merger arbitrageur who has analyzed / invested in nearly 2,500 M&A deals over the past 15 years

🧵🧵🧵👇 1/ The market is pricing in a 71% odds of successfully closing, with a 21.3% arbitrage yield

This implies a high-risk transaction

In my opinion, the biggest risk is the financing

Specifically, the $12.5 billion of margin loans against $TSLA stock have significant market risk

2/

#NFTs: A Nascent Investable Asset Class With 10X Potential

My investment thesis via a long🧵

accelerateshares.com/blog/nfts-a-na…

1/ It isn’t every day that a piece of art, specifically digital art, sells for a lofty eight-figure sum.

Last spring, Everydays: The First 5000 Days, a digital work of art by digital artist Beeple, sold as an NFT for $69.3 million (paid for with 42,329 Ether).

2/

FTC and DOJ are reviewing existing merger guidelines

kvgo.com/ftc/virtual-pr… "THE CURRENT MERGER BOOM HAS CREATED MASSIVE FEES FOR INVESTMENT BANKS EVIDENCE SHOWS MANY AMERICANS HAVE LOST OUT"

I agree with Ms Kahn on this statement!

3 SPAC IPOs today, with all 3 featuring "anchor investors"

"Anchor investors" sound like something good, but they're not. SPACs with anchor investors should be avoided like the plague

They are of the lowest quality and face the highest risk of liquidation

1/ Anchor investors typically take down the entire issue, in return they get 25% of the sponsor's free shares

Here's why these SPACs should be avoided:

A) They come to the market on non-market terms. These deals only get done due to free promote "bribe".

2/

A Sober Look at SPACs

SSRN link: papers.ssrn.com/sol3/papers.cf…

🆕 academic research time

1/ The median proceeds of a SPAC IPO are roughly $220 million, but at the median, 73% of those proceeds are returned to shareholders in redemptions

2/

My notes on Forescout vs Advent (Ferrari Group)

Advent breached the Forescout merger agreement and "The Court should not allow a private equity buyer to walk away from the binding deal it struck because it will no longer make a profit as quickly as it had hoped"

$FSCT 1/n All deal conditions are satisfied.

Pandemic is explicitly carved-out as a potential MAE

$FSCT

Some easy investing rules of thumb:

1. Never go long a SPAC (aside from an arbitrage)
2. Never go long a merger deal that has a buyside vote
3. Never buy on new lows and never sell / short on new highs
4. Never short a story stock unless the story (and chart) has broken 5. Never ever get emotional about a stock
6. Never buy preferred shares (unless for an arb / liquidation)
7. Liquidations will always take twice as long and proceeds will be less than expected
8. Never sell a stock to "take profits". Why bench your best player, coach?