Capula reports Cirsa stake and Lottomatica short position during merger process
Deals & M&A2 min read
Capula Investment Management disclosed a stake of slightly more than 1% in Cirsa and a short position of 0.5% in Lottomatica to Spain’s CNMV. The positions were valued at approximately €30m and €35m respectively, as the proposed integration awaits a vote by Lottomatica shareholders scheduled for 23 November.
Capula Investment Management has disclosed a stake of just over 1% in Cirsa and a 0.5% short position in Lottomatica to Spain’s CNMV during the companies’ proposed integration. The Cirsa stake is valued at about €30m and the Lottomatica short position at around €35m.
Under the exchange terms, Lottomatica will issue 0.668 new shares for each Cirsa share, with Cirsa shareholders receiving a dividend of €1.65 per share. The consideration is valued at €20.78 per Cirsa share at the cited market prices, compared with a share price of €20.30. The difference amounts to a premium of approximately €0.48 per share.
The strategy seeks to profit from the difference between the deal’s implied value and the companies’ current share prices. Arbitrage funds seek to capture that gap by buying Cirsa shares and shorting Lottomatica, provided the deal completes on the expected terms. Such strategies can use financial leverage to increase exposure, though this increases risk.
Capula’s disclosed Cirsa stake belongs to Capula Multi Strategy Master Fund, which is domiciled in the Cayman Islands. The general disclosure threshold for stakes in Spanish companies involved in takeover or merger deals has been 3% since late October, falling to 1% when the buyer is based in a territory considered a tax haven.
Citadel, Millennium and Ilex Capital Partners hold short positions in Lottomatica but have not disclosed equivalent stakes in Cirsa.
Capula, founded in 2005 by Yan Huo and Masao Asai, manages approximately €30bn in assets. Historically focused on macroeconomic investment strategies, it has expanded into corporate arbitrage in recent years. During the euro crisis, one of its vehicles held short positions in Spanish banks.
Blackstone, which controls 72% of Cirsa, backs the integration. Lottomatica shareholders are scheduled to vote on the deal at a meeting on 23 November.