Why TransCanada, Chemtura, Yahoo, Verizon, and More Are in the Spotlight

As is the case on many Mondays, today is another busy day in terms of M&A events. In today’s case, two M&A deals have occurred or have potentially occurred, while a previous M&A deal looks like it is in more danger.

In this article, we’ll examine the M&A deals concerning Columbia Pipeline Partners LP (NYSE:CPPL), TransCanada Corporation (USA) (NYSE:TRP), Chemtura Corp (NYSE:CHMT), Yahoo! Inc. (NASDAQ:YHOO), and Verizon Communications Inc. (NYSE:VZ) and use the latest 13F filings to see how some of the most successful investors are positioned in each stock.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

TransCanada Corporation (USA) (NYSE:TRP)‘s wholly owned subsidiary has offered to buy all of the outstanding common units of Columbia Pipeline Partners LP (NYSE:CPPL) for $15.75 in cash per common unit. The offer price represents a slight premium to Columbia Pipeline Partners’ closing price on September 23 and an 11.3% premium to the 30-day average closing price of Columbia Pipeline as of the same day. According to the press release, TransCanada’s offer has been made to the Board of Directors of the general partner of Columbia Pipeline. A committee composed of the Independent Directors of Columbia Pipeline’s Board will be formed to consider the offer and the transaction will also need approval by the majority of Columbia Pipeline’s common unitholders. Given the small premium offered, it is unclear whether Columbia shareholders or its Board will approve the deal.

Of the 749 hedge funds that we track which filed 13Fs for the June 30 reporting period, 18 them had a long position in TransCanada Corporation (USA) (NYSE:TRP) at the end of June, while ten were bullish on Columbia Pipeline Partners LP (NYSE:CPPL).

Chemtura Corp (NYSE:CHMT) shares have soared by over 15% after German chemical company Lanxess AG agreed to buy it for $33.50 per share in cash. That translates to an 18.9% premium to the stock’s closing price on September 23 and indicates a total transaction value of around $2.5 billion. The Boards of both companies have unanimously given the thumbs up to the deal, which should close around mid-2017. 22 funds in our database were long Chemtura Corp (NYSE:CHMT) at the end of June, up by three funds from the end of March.

On the next page we’ll find out why Yahoo! and Verizon are in the spotlight.

Verizon Communications Inc. (NYSE:VZ)‘s $4.8 billion acquisition of Yahoo! Inc. (NASDAQ:YHOO) isn’t looking like a slam dunk any more, at least not according to the New York Post, which claims that Verizon’s top executives are mad that the internet company didn’t notify them of the hacking of 500 million Yahoo user accounts sooner. According to the Post’s sources:

“Verizon is livid they were not informed during due diligence and infighting … is impacting the Yahoo deal and this could be the escape clause… I would expect a price renegotiation at a minimum.”

Although it is unclear when Yahoo’s top executives were notified of the hack, some experts think that CEO Marissa Mayer knew of a breach probe as early as July. Verizon execs, on the other hand, were informed just a few days before the public found out. While some experts think the terms of the deal might be altered, other experts have argued for the status quo, opining that it is hard to prove that the hack is clearly a material adverse change.

According to our records, 81 funds were long Yahoo! Inc. (NASDAQ:YHOO) at the end of June, while 52 were shareholders of Verizon Communications Inc. (NYSE:VZ).

Disclosure: None