May is for merger…

Just a few weeks ago, when three deals were announced on a Monday, we wondered whether M&A was back after six or so relatively dry months. It’s certainly looking that way in May. Our friends at Mergerinvesting count 9 deals so far this month, which works out to a deal for every trading day in May so far.

For the most part, these deals involved relatively small companies. But then yesterday, Alpha Natural Resources (ANR) announced that it had reached a deal to acquire Foundation Coal (FCL) for about $1.5 billion. While the press release noted that Foundation shareholders would wind up with over $32 a share, based on Alpha Natural’s closing price before the deal was announced, Foundation’s stock actually closed at just over $28, in part because investors pushed Alpha Natural down over 6%.

Even so, Foundation stock was up just over 20% yesterday, which seemed like a good enough reason to take a look through the filings to see if there had been any of the tell-tale signs that we look for — primarily for our subscription-based service, FootnotedPro — when it comes to M&A. Let’s just say it didn’t take very long. In the 10-Q that Foundation filed just last Thursday, there were a number of interesting disclosures that we wish we had caught ahead of time. But for some reason, they didn’t show up despite our various screens, though we’re pretty sure that’s due to a recent technical glitch related to — wait for it — a merger.

Equally interesting was that according to this story in the Options Insider, there was some unusually bullish activity in Foundation options last week. Though Options Insider said the extra activity was tied to Alpha Natural’s earnings, it definitely seems like an odd coincidence.

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