Basics of the transaction
The Pall (PLL)–Danaher (DHR) transaction is a cash merger. These deals have a longer timeframe than cash-tender deals, which can close in as little as 45 days. Deals without major regulatory obstacles can usually close within three months, provided the proxy gets through the US Securities and Exchange Commission quickly.
Terms of the Pall–Danaher transaction
Pall shareholders will receive $127.20 in cash once the deal closes. Pall is not allowed to pay any dividends during the pendency of the deal.
The following conditions need to be satisfied in order for the deal to close:
- Pall shareholder vote
- Hart–Scott–Rodino antitrust filing
- other overseas antitrust approvals—if required
- US Securities and Exchange Commission approval of the proxy statement
Pall has a non-solicitation agreement with a fiduciary out. This means that prior to shareholder approval of the transaction, if Pall is approached by another suitor, it could discuss a merger with it.
First, the Pall board of directors would have to determine that such discussions could lead to a bona fide offer that would likely result in a higher bid for the company. Pall isn’t permitted to shop itself around, however.
In the event that another bidder comes in and tops the Danaher bid, and Pall is unable to get shareholder approval, it will owe Danaher a breakup fee of $423 million.
The likelihood of another bidder coming in depends on whether Pall ran a process to auction off the company or not. If it didn’t run a process, then it’s possible another suitor could be interested. You’ll usually find this information in the background section of the proxy statement.
Other merger arbitrage resources
Other important merger spreads include the Halliburton (HAL)–Baker Hughes (BHI) transaction. For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.
Investors who are interested in trading in the healthcare sector should look at the Health Care Select Sector SPDR Fund (XLV).