Harleysville = Done Deal

At first I thought it must have been a typo when I saw the following headline: “Nationwide will pay $60 a share in cash for Harleysville (Ticker: HGIC)”. I was looking for $35 and at most $40, but $60… You rarely see this kind of premium after news has leaked of a potential merger. This is what you call a home run; no make that a grand slam! Wow…

Some Harleysville Group, Inc.

I just initiated a position in Harleysville Group, Inc. (Ticker: HGIC), a personal auto insurance company, at $29.88. Bloomberg is reporting that the company is in merger discussions with Nationwide Mutual Insurance Co. It sounds like a deal will materialize soon. We’ll see…

Some More China Fire & Security Group, Inc.

I added to my position in China Fire & Security Group, Inc. (Ticker: CFSG) today at $8.75. The company should be releasing the results of the shareholder vote today. I really doubt that they did not get enough votes to approve the merger or else they would have postponed the meeting. If the shareholders approve the merger, the company will complete the management buyout with Bain Capital for $9.00 per share in cash.

Goodrich Corp. = Done Deal???

Wow, Bloomberg is reporting that Goodrich Corp. (Ticker: GR) has agreed to be acquired by United Technologies Corp. (Ticker: UTX) for $127.50 in cash. This was much more than I had hoped for as I was just looking for something in the range of $115 or so. I loaded up on more Goodrich today at $110.38 with an average price of $108.67, which equates to a potential return of 17%. I was planning on purchasing more tomorrow with the expected cash proceeds from a recently completed merger, but this news kind of changes things. Can't get too greedy...

Some Goodrich Corporation

I initiated a position in Goodrich Corporation (Ticker: GR) today at $105.77. Of course the rumor floating around is that United Technologies Corporation (Ticker: UTX) is interested in pursuing a buyout of Goodrich Corporation. I guess we’ll see sometime this week if a deal materializes. Based on all the chatter out there, I believe there’s a good chance of a deal.

Closed Out Varian Semiconductor Equipment Associates, Inc

I sold out of my remaining Varian Semiconductor Equipment Associates, Inc. (Ticker: VSEA) position today at an average price of $61.82. I sold some earlier in the week as well. I needed to free up some cash to play China Fire & Security Group, Inc. (Ticker: CFSG) and China Security & Surveillance Technology, Inc. (Ticker: CSR). The Varian Semiconductor Equipment Associates merger arb play generated an ok return of 1.46% over a 47 day period (11% annualized). Not great, but still ok… I just saw greater opportunities in both of the China merger plays. I may get back into Varian Semiconductor Equipment Associates as the stock will likely stay below $62.00 until they receive word from the U.S. DOJ and China’s MOFCOM sometime in October.

China Security & Surveillance Technology = DONE DEAL

China Security & Surveillance Technology, Inc. (Ticker: CSR) stock was delisted from the NYSE today and shareholders will receive the funds ($6.50 per share) shortly. I don’t know if they are going to impose a $0.05 per share ADR fee as they do sometimes with foreign securities. In any case this was a successful merger arb play. Assuming a worse case scenario in which an ADR fee of $0.05 per share is imposed, I’ll be generating a total return of 4.17% over an eleven day period (136% annualized) and if there’s no ADR fee, my total return will be 4.91% (160% annualized).

Edit: I was informed that this is not an ADR so there will not be a $0.05 per share ADR fee.

China Security & Surveillance Technology Receives Shareholder Approval

China Security & Surveillance Technology, Inc. (Ticker: CSR) received shareholder approval today for the management buyout offer for $6.50 in cash. The company stated that they intend to close the deal in September, which means they should close in the next few days. This was a nice merger arb play as there was lots of skepticism that the company would be able to complete the deal. If you ignore the noise from the short sellers and just read the SEC filings, you'll see that this was a fairly straight forward merger play. So I’m looking at ~ 4% return for ~ 2 week holding period (~62% annualized return assuming a September 30 close). So we’re almost there…

China Security & Surveillance Technology Merger Arb Play

There are lots of opportunities in the risk arb space right now due to a variety of factors ranging from the increase cost of debt financing to distrust in China companies. I’m currently focusing on some China management buyout plays with positions in China Security & Surveillance Technology, Inc. (Ticker: CSR) and China Fire & Security Group, Inc. (Ticker: CFSG). I got into China Fire & Security Group in June at ~ $7.80 and it looks like it is on target to close by the end of this month with a buyout price of $9.00. I just started building a position in China Security & Surveillance Technology with prices ranging from $6.14 to $6.20. The shareholder vote for China Security & Surveillance Technology is scheduled to take place on September 14th and the deal should close shortly after with a buyout price of $6.50. I'm looking at initiating some new positions with other China management buyouts, but I want to wait until these two deals close.