The MergerArb model managed by Atlas Capital stays focused on US companies that are definite or potential takeover targets. Atlas Capital uses screening guidelines to choose which pre-takeover companies to add to the model. These guidelines consider liquidity, premium and share prices of the company. When a certain premium yield has been achieved or when the merger has been completed, the positions may be sold. Stock that is given to shareholders under the merger or acquisition agreement is usually sold upon receipt.
The top holding in the model is Talecris Biotherapeutics Holdings Corp (NASDAQ: TLCR). TLCR produces medical treatments for certain life-threatening disorders. According to their website, the company is also the largest producer and manufacturer of plasma-derived protein therapies worldwide. In July, the company announced that they had filed forms regarding their proposed merger with plasma derivative and medical materials company Grifols SA (Pink OTC Markets Inc: GIFLF).
Another top holding in the model is AirTran Holdings Inc (NYSE: AAI). On September 27th of this year, AAI announced that they had agreed to be acquired by Southwest Airlines (NYSE: LUV). In the company’s press release, they state that the aggregate transaction value is about $3.42 billion. Shareholders are supposed to receive a combination of stock and cash totaling $7.25-$7.35 for every common share owned. The actual amount will depend on the average trading price of LUV before the acquisition.
Lastly, let’s take a look at the third top holding in the model, mining equipment producer Bucyrus International Inc (NASDAQ: BUCY). BUCY authorized a press release in November declaring that Caterpillar Inc. (NYSE: CAT) would be acquiring BUCY. The transaction is said to be worth about $8.6 billion. According to the November announcement, BUCY shareholders will receive $92 per share.
