AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

Bed Bath & Beyond Inc. operates a nationwide chain of retail stores. The Company, through its retail stores, sells a wide assortment of merchandise principally including domestics merchandise and home furnishings as well as food, giftware, health and beauty care items and infant and toddler merchandise.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bed-bath-beyond-inc" target="_blank" data-smartkarma-citation="entities:18231:1" rel="noopener">Bed Bath &amp; Beyond (BBBY US)</a> , the one-time iconic US homes good retailer, whose financial condition has continued to deteriorate rapidly, is barreling towards bankruptcy  sooner rather than later</li>
<li>A default notice on one of its primary credit facilities has been served and failure to make a bond interest payment on Feb 1 could well seal its fate</li>
<li>There may not be any money left for its equity holders to recover which means there  is a real prospect of the BBBY share price moving rapidly to zero</li>
</ul>



Bed Bath &amp; Beyond (BBBY US) , the one-time iconic US homes good retailer, whose financial condition has continued to deteriorate rapidly, is barreling towards bankruptcy  sooner rather than later
A default notice on one of its primary credit facilities has been served and failure to make a bond interest payment on Feb 1 could well seal its fate
There may not be any money left for its equity holders to recover which means there  is a real prospect of the BBBY share price moving rapidly to zero


ActivistTalk: Bed Bath & Beyond at Death's Door

iRobot Corporation manufactures robots that vacuum and wash floors and perform battlefield reconnaissance and bomb disposal. The Company markets its products to consumers through retailers, the United States military, and other government agencies worldwide.

<ul>
<li>Amazon's pursuit of robotic vacuum manufacturer iRobot is being scrutinized by the FTC,  a merger which we think the regulator will be hard pressed  to prove is harmful to competition.</li>
<li>However, although unlikely, the pending ruling next month on the FTC's unusual lawsuit against Meta's acquisition of virtual reality start-up Within  could rewrite regulatory guidelines for vertical mergers </li>
<li>The 27% spread offers a potentially lucrative trade generating double-digit IRR even if deal completion is delayed by regulatory review, although it might be wise to entertain some  downside protection</li>
</ul>


Amazon's pursuit of robotic vacuum manufacturer iRobot is being scrutinized by the FTC,  a merger which we think the regulator will be hard pressed  to prove is harmful to competition.
However, although unlikely, the pending ruling next month on the FTC's unusual lawsuit against Meta's acquisition of virtual reality start-up Within  could rewrite regulatory guidelines for vertical mergers 
The 27% spread offers a potentially lucrative trade generating double-digit IRR even if deal completion is delayed by regulatory review, although it might be wise to entertain some  downside protection


MergerTalk: Regulators May Be Hard Pressed To Prove The Amazon/IRobot Deal Harmful To Competition

Black Knight, Inc. operates as a holding company. The Company, through its subsidiaries, provides integrated technology, work flow automation, data, and analytic solutions to the mortgage and real estate industries. Black Knight serves clients in the United States and India.

<ul>
<li>We think that a ~40% spread overstates the risk of this deal not moving to completion. </li>
<li>The horizontal integration aspects of this transaction can be remedied, but this is a largely vertical merger transaction which regulators may struggle to prove will lead to monopolistic behavior.</li>
<li>Even if the  ICE merger is ultimately blocked,  BKI has other supporting factors that could drive upside - an attractive valuation and a potential revival of interest from other parties </li>
</ul>


We think that a ~40% spread overstates the risk of this deal not moving to completion. 
The horizontal integration aspects of this transaction can be remedied, but this is a largely vertical merger transaction which regulators may struggle to prove will lead to monopolistic behavior.
Even if the  ICE merger is ultimately blocked,  BKI has other supporting factors that could drive upside - an attractive valuation and a potential revival of interest from other parties 


MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE

VMware, Inc. provides virtualization solutions from the desktop to the data center. The Company's solution products addresses a range of IT problems, which includes cost and operational inefficiencies, business continuity, software lifecycle management and desktop management.

<ul>
<li>While the size of the $61BN Broadcom/VMware deal has naturally attracted the scrutiny of regulators, the transaction's regulatory obstacles are far less  onerous than the failed Nvidia/Arm deal</li>
<li>Timing risk is a consideration as we can expect a protracted review process </li>
<li>If the regulatory review timeline  does not stretch too far beyond  the end 2023, there are still decent IRRs to be earned by arbs</li>
</ul>


While the size of the $61BN Broadcom/VMware deal has naturally attracted the scrutiny of regulators, the transaction's regulatory obstacles are far less  onerous than the failed Nvidia/Arm deal
Timing risk is a consideration as we can expect a protracted review process 
If the regulatory review timeline  does not stretch too far beyond  the end 2023, there are still decent IRRs to be earned by arbs


MergerTalk:Why Broadcom's Pursuit of VMware Will Fare Better Than Nvidia's Doomed Bid For ARM

Silicon Motion Technology Corporation is a semiconductor company that designs, develops, and markets semiconductor products for the multimedia consumer electronics market. The Company's products include controllers used in mobile storage media and multimedia systems on a chip.

<ul>
<li>Turbulent markets can  widen merger spreads arbitrarily creating attractive  arb opportunities with the potential for outsized IRRs</li>
<li>Among the several live transactions indicating unusually high spreads, none looks more alluring than the prospective MaxLinear (MX US) acquisition of Silicon Motion (SIMO US) in the semiconductor sector</li>
<li>The combination of an exceptionally wide spread driven by unsupported skepticism that the merger will not pass muster with China's SAMR and historically low valuations make SIMO's risk-reward profile  enticing</li>
</ul>


Turbulent markets can  widen merger spreads arbitrarily creating attractive  arb opportunities with the potential for outsized IRRs
Among the several live transactions indicating unusually high spreads, none looks more alluring than the prospective MaxLinear (MX US) acquisition of Silicon Motion (SIMO US) in the semiconductor sector
The combination of an exceptionally wide spread driven by unsupported skepticism that the merger will not pass muster with China's SAMR and historically low valuations make SIMO's risk-reward profile  enticing


MergerTalk:Market Turbulence/Wide Spreads-Spotlight On MaxLinear's Acquisition Of Silicon Motion

AlphaSituations
AlphaSituations-Event/Catalyst Driven Research

ActivistTalk: Bed Bath & Beyond at Death's Door

BBBY is barreling towards bankruptcy sooner rather than later.By the time, There may not be any money left for its equity holders to recover, which...

Robert Sassoon

MergerTalk: Regulators May Be Hard Pressed To Prove The Amazon/IRobot Deal Harmful To Competition

Amazon's pursuit of robotic vacuum manufacturer iRobot is being scrutinized by the FTC, a vertical merger the regulator will be hard pressed to...

Robert Sassoon

MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE

BKI appears to offer a very enticing risk-reward profile with attractive upside irrespective of whether the ICE merger transaction moves to...

Robert Sassoon

MergerTalk:Why Broadcom's Pursuit of VMware Will Fare Better Than Nvidia's Doomed Bid For ARM

In spite of the prospect of a protracted regulatory review and AVGO's previous run-ins with US and European regulators, we don't expect its pursuit...

Robert Sassoon

MergerTalk:Market Turbulence/Wide Spreads-Spotlight On MaxLinear's Acquisition Of Silicon Motion

A 90% plus spread would typically represent a big red flag for a merger transaction. However in the context of current dislocated markets, the...

Robert Sassoon