Wednesday, February 10, 2016

Some Keurig Green Mountain and Solera Holdings

Now onto my next merger arb plays… I picked up some Keurig Green Mountain (Ticker: GMCR) at an average price of $89.05 (~15% position). This company is being acquired for $92.00 / share in cash by JAB Holding. A good chunk of the loan is being placed in Europe. HSR expires on 02/18 and shareholder vote is 02/24.

I also initiated a small position in Solera Holdings (Ticker: SLH) at $54.39 (~4.5% position). This one is being acquired for $55.85 / share in cash by Vista Equity Partners. The debt marketing started this week so we’ll be hearing shortly in terms of how receptive the market is for their debt. Again, they will be marketing a portion of the debt in Europe.

Both of these merger arb plays offer an annualized return of +20% assuming a close by 03/31. I really like the odds of Keurig Green Mountain and would not hesitate adding at lower prices. I need to keep a close eye on Solera, but I believe this one has a good shot at closing based on the recent high yield loan offerings


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