MANDA Portfolio Update: SM&A, Lincoln Bancorp, Rohm-Haas

Just a quick update to my M&A portfolio. All figures will be updated in the MANDA portfolio table either later today or tomorrow.

SM&A acquisition completed
Private equity firm Odyssey Investment Partners completed its acquisition of SM&A (WINS) on December 29th in a $6.25 per share all-cash deal. This represents an 11.4% return on the investment.

Lincoln Bancorp announces dividend.
On December 18th, Lincoln Bancorp (LNCB) announced a 7 cent per share dividend payable on January 15th to shareholders on record as of December 31st. The dividend was cut in half because of declining economic conditions and the desire to preserve capital, according to the company’s CEO.

Lincoln Bancorp merger completed with First Merchant’s
First Merchant’s (FRME) takeover of Lincoln Bancorp (LNCB) was completed on January 2nd. One share of LNCB was swapped for 0.7004 shares of FRME. The shares of FRME were sold today at a price of $22.91. This represents a 14.7% return without the dividends and 16.3% including dividends.

Bullish play on Rohm-Haas
I took advantage of the high options volatility as well as today’s slump in Rohm-Haas stock (ROH) and sold 2 January 50 put contracts (ROHMJ) for $3. Takeover company Dow Chemical (DOW) announced that it’s threatening to sue the Kuwaiti government for backing out of a joint venture deal whose monies were slated to be used in part to finance the Rohm-Haas acquisition. Dow has until this Saturday to complete the current $78/share all-cash merger with Rohm-Haas, and if Dow starts dragging its feet, substantial penalties will kick in. I’m sure the company will try not to make that happen.

The put contracts are $10 out of the money. The $50 price level is about where the company was trading at in July before the acquisition announcement so I feel that all-in-all the risk here is limited. If not, then I’ll either buy back the puts or else be happy to have the stock put to me at $50. Most likely I’ll know where I stand come next Monday.

NOTE: The ROH put was executed in my own portfolio and not in the Manda portfolio. However, buying a protective put when the stock fell below $70 would have been prudent and I can only say that considering this economic environment, it was my bad. I also should have done the same with Bluegreen as that was an overpriced deal from the get-go. I will try very hard not to make this error in judgment again.

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