Kraft Heinz shares tumble 28 percent

Kraft Heinz says SEC probing procurement accounting policies

The company (KHC) said in a filing it received a subpoena in October 2018 from the SEC associated with an investigation into the company’s procurement area, more specifically the company’s accounting policies, procedures, and internal controls related to its procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to its agreements with its vendors.

Kraft Heinz shares tumble 28% on SEC investigation, Dividends cut, Stockwinners

Kraft Heinz confirms quarterly dividend cut to 40c from 62.5c per share

The Board of Directors of The Kraft Heinz Company declared a regular quarterly dividend of 40c per share of common stock payable on March 22 to stockholders of record as of March 8.

This represents a reduction of 22.5c from the company’s previous quarterly dividend of 62.5c.

“We believe this action will help us accelerate our deleveraging plan, provide us strategic advantage through a stronger balance sheet, support commercial investments and set a payout level that can both grow over time and accommodate additional divestitures.

By doing this we can improve our growth and returns over time,” said Kraft Heinz CEO Bernardo Hees.

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Buffett loses $4.4billion on Friday, See Stockwinners

Warren’s Loss

Warren Buffett’s Berkshire Hathaway owned 325,634,818 shares of Kraft Heinz as of Dec. 31, according to the latest 13-F filing with the Securities and Exchange Commission. That represented about 26.7% of the shares outstanding, while the value of the holding was just under 8% of Berkshire’s total equity holdings.

If Berkshire’s stake remained intact, it would be worth about $4.4 billion less than it was the day before. And you thought you had a bad day in the market?!?

Berkshire’s stake in Kraft Heinz has been the same since the third quarter of 2015, according to SEC filings.

Before that, filings showed ownership of just 192,666 shares of Kraft Foods Group Inc. and 578,000 shares of Mondelez.

Since Sept. 30, 2015, the stock has now plummeted 50.9%. That indicates Berkshire’s investment has lost $11.7 billion in principal value since then, including an $11.3 billion loss in 2018 alone.

KHC is down 28% to $34.75.

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Achieve Life Sciences higher on smoking data

Achieve Life Sciences announces final data from cytisinicline study

Achieve Life Sciences (ACHV) announced final data from their Phase I/II multi-dose, pharmacokinetic and pharmacodynamics, or PK/PD, clinical study of cytisinicline in smokers.

The study evaluated the repeat-dose PK and PD effects of 1.5 mg and 3 mg cytisinicline in 26 healthy volunteer smokers when administered over the standard 25-day course of treatment.

Smokers in the study had a mean age of 39 years, smoked on average 17.2 cigarettes a day, and were not required to quit smoking or have a predetermined quit date while on study.

All subjects had a significant and immediate reduction in cigarettes smoked within 2 days of initiating cytisinicline treatment.

By Day 26, subjects had an average 80% reduction in cigarettes smoked, 82% reduction in expired carbon monoxide, and 46% had stopped smoking.

The biochemically verified smoking cessation rates were 39% and 54% in the 1.5 mg and 3.0 mg cytisinicline treated groups, respectively.

The PK results indicated expected increases in plasma concentration between the standard 1.5 mg and higher 3.0 mg doses of cytisinicline with no evidence of drug accumulation.

Cytisinicline at either dose was well tolerated with only transient, mild-to-moderate headache as the most common adverse event, which was not treatment limiting. No adverse events were severe, serious, or led to withdrawal from the study.

Cindy Jacobs, CMO at Achieve commented, “Given the short 25-day treatment period, the abstinence rates observed are impressive, particularly since subjects were not required to commit to quitting and received minimal behavioral support during the study. These results continue to support our belief that cytisinicline could be a well-tolerated and effective potential treatment option for the millions of people who are battling nicotine addiction.”

ACHV closed at $1.81, it last traded at $2.88.

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Zosano reports positive migraine data, Shares jump

Zosano says Qtrypta long-term study shows ‘well-tolerated safety profile’

Zosano says Qtrypta long-term study shows 'well-tolerated safety profile', See Stockwinners for more

Zosano says Qtrypta long-term study shows ‘well-tolerated safety profile’ , Stockwinners

Zosano Pharma (ZSAN) announced earlier today the completion of the second and final goal of the long-term safety study for Qtrypta, in which patients treated migraine attacks over a one year period.

“The long-term data generated in this trial reinforced the well-tolerated safety profile and strong efficacy results previously reported in the six-month dosing portion of this safety study and in the randomized Phase 2/3 ZOTRIP pivotal study,” the company said in a statement.

Throughout the clinical program, over 5,800 migraine attacks have been treated with Qtrypta to date, it added.

The Qtrypta long-term safety trial is an open-label study evaluating the safety of the 3.8 mg dose of intracutaneous zolmitriptan in adults with migraine who have historically experienced at least two migraine attacks per month.

The study evaluated over 150 adults with migraine disease for six months, and more than 50 patients for a year at 31 sites in the U.S.

Of more than 5,800 migraines treated, investigators reported 832 adverse events, of which 298 were reported as application site reactions and 161 were reported as triptan related adverse events.

Observational efficacy parameters continued to demonstrate a rate of pain freedom at two hours following patch application of approximately 44% and most bothersome symptom freedom of approximately 68%, while pain relief at two hours was reported at 81% of migraine attacks treated, said Zosano.

The company expects to file an New Drug Application for Qtrypta in the fourth quarter of 2019.

ZSAN is up 95% to $4.41.

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Bristol-Myers comments on Celgene’s purchase

Bristol-Myers sees ‘meaningful financial benefits’ from Celgene transaction.

Bristol-Myers treatment for colorectal cancer approved, Stockwinners

Bristol Meyers Comments on Celgene purchase, Stockwinners

Bristol-Myers Squibb (BMY) said an updated its investor presentation about the Celgene (CELG) transaction.

The company said, “The Celgene transaction is the natural next step in Bristol-Myers Squibb’s proven strategy that has consistently delivered results for over a decade.

Through a disciplined approach to driving innovation, focusing on high-value opportunities and sourcing innovation externally to complement its internal portfolio and pipeline, Bristol-Myers Squibb has generated consistently strong growth and increased its dividend for 10 consecutive years.

The combination with Celgene will create a leading biopharma with increased scale, while maintaining the same agility and a focus on delivering for patients in core disease areas of high-unmet medical need.

The pipeline of the combined company provides significant near-, medium- and long-term opportunities for value creation. Bristol-Myers Squibb is acquiring Celgene’s robust and complementary pipeline at an attractive price.

In addition to six expected near-term product launches representing more than $15B in revenue potential, the combination will greatly increase Bristol-Myers Squibb’s Phase I and II assets, which will provide the next set of registrational opportunities in core therapeutic areas.

With an expanded set of scientific platforms and research capabilities, Bristol-Myers Squibb will be well positioned to discover and develop highly innovative medicines and accelerate these new options to patients through one of the highest-performing commercial organizations in the industry.

Bristol-Myers Squibb is well positioned for 2025 and beyond with continued leadership across Oncology and a diversified portfolio of assets.

The combined company will have a broad, balanced and earlier life-cycle marketed portfolio with a significantly higher number of opportunities across multiple diseases to drive the growth of Bristol-Myers Squibb in the second half of the decade. These opportunities will support financial strength for continued investment and innovation.

The Celgene transaction is expected to generate meaningful financial benefits for all stockholders.

With more than $45B of expected free cash flow generation over the first three full years post-closing, the combination will enable rapid debt reduction to de-lever the balance sheet and strengthen Bristol-Myers Squibb’s credit profile.

Bristol-Myers Squibb expects to realize run-rate cost synergies of approximately $2.5B by 2022 from the combination, and the combined company is expected to grow revenue and EPS every year through 2025.”

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Merck reports positive results of its renal cell carcinoma drug

Merck presents results from Phase 3 KEYNOTE-426 study

Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners
Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners

Merck (MRK) announced presentation of the full results from the pivotal Phase 3 KEYNOTE-426 trial investigating KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with Pfizer’s (PFE) Inlyta, a tyrosine kinase inhibitor, for the first-line treatment of advanced renal cell carcinoma at the 2019 Genitourinary Cancers Symposium.

Merck's anti-PD-1 therapy works in combination with Pfizer's (PFE) Inlyta, Stockwinners

Merck’s anti-PD-1 therapy works in combination with Pfizer’s (PFE) Inlyta

This is the first combination regimen to significantly improve overall survival, progression-free survival and objective response rate compared to sunitinib.

Results were consistent across all IMDC subgroups, including favorable, intermediate and poor risk groups, and regardless of PD-L1 expression.

As previously announced, the U.S. Food and Drug Administration has granted priority review for a supplemental Biologics License Application for #KEYTRUDA in combination with axitinib for the first-line treatment of patients with advanced RCC based on the results of KEYNOTE-426, and has set a Prescription Drug User Fee Act, or target action, date of June 20, 2019.

Findings from the first interim analysis showed KEYTRUDA in combination with axitinib reduced the risk of death by 47% – significantly improving OS compared to sunitinib.

For the dual primary endpoint of PFS, the KEYTRUDA combination showed a reduction in the risk of progression of disease or death of 31% compared to sunitinib.

In the study, the ORR was 59.3% for patients who received KEYTRUDA in combination with axitinib and 35.7% for those who received sunitinib, with a complete response rate of 5.8% and 1.9% and a partial response rate of 53.5% and 33.8%, for patients receiving the KEYTRUDA combination or sunitinib, respectively.

Median duration of response was not reached in the KEYTRUDA combination arm and was 15.2 months in the sunitinib arm. The results for OS, PFS and ORR were consistent across all IMDC risk groups and seen regardless of PD-L1 expression.

The observed adverse event profile was as expected based on the known profiles of KEYTRUDA and axitinib.

There was a higher incidence of grade 3 or 4 liver enzyme elevation with KEYTRUDA plus axitinib than previously observed with each agent as monotherapy.

Merck has filed these data with regulatory authorities worldwide.

Merck has an extensive clinical development program in RCC and is advancing multiple potential registration-enabling studies with KEYTRUDA, as monotherapy and in combination with other treatments, including KEYNOTE-564 and KEYNOTE-581.

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Rig counts rise!

Baker Hughes reports U.S. rig count up 2 to 1,051 rigs

The international offshore rig count for April 2018 was 194. Stockwinners
The U.S. rig count rises to 1,051

Baker Hughes (BHGE) reports that the U.S. rig count is up 2 rigs from last week to 1,051 rigs, with oil rigs up 3 to 857 and gas rigs down 1 to 194.

The U.S. Rig Count is up 76 rigs from last year’s count of 975, with oil rigs up 59 and gas rigs up 17.

The U.S. Offshore Rig Count is up 2 rigs to 21 and up 3 rigs year-over-year.

The Canada Rig Count is down 16 rigs from last week to 224, with oil rigs down 6 to 152 and gas rigs down 10 to 72.

The Canada Rig Count is down 94 rigs from last year’s count of 318, with oil rigs down 66 and gas rigs down 28.

USO is up 12 cents to $11.60.

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WalMart Earnings Outlook

Walmart (WMT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 19, with a conference call scheduled for 8:00 am EDT.

Wal-Mart reports next week. See Stockwinners.com for the report

What to watch for:

1. OUTLOOK: Walmart previously raised its fiscal 2019 EPS view to $4.90-$5.05 and narrowed its net sales view to up about 2%, but cut its EPS outlook at its investor meeting in October to $4.65-$4.80.

In its November earnings report, Walmart again raised its FY19 EPS outlook to $4.75-$4.85. The current Street forecast for FY19 EPS stands at $4.84 on revenue of $514.33B.

The company previously said it was moving to an annual guidance framework with its quarterly updates, and that while there may be fluctuations within the quarters, “we believe EPS growth will be relatively consistent across the year.”

Baird analyst Peter Benedict said he expects Walmart’s Q4 earnings to be solid, and expects guidance to remain intact, although he recognizes the uncertainty with Flipkart as the result of new regulations in India.

2. HOLIDAY SEASON:

Jet.com’s holiday weekend was “truly horrible,” with sales down 6% on Thanksgiving and Black Friday and a 39% plunge on Cyber Monday vs. last year, BuzzFeed News reported, citing data from market research firm Edison Trends.

According to the data, Target.com (TGT) sales increased 48% on Thanksgiving and Black Friday and 19% on Cyber Monday, Amazon (AMZN) increased by 25% on Black Friday and Thanksgiving and 17% on Cyber Monday, and Jet.com parent Walmart.com increased sales revenue by 23% on Thanksgiving and Black Friday and 32% on Cyber Monday.

In late December, Amazon said that it had a “record-breaking” holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said.

3. COMPETITION:

Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon rather than at brick-and-mortar stores. Walmart is seeking to create a big ad business to rival that of Amazon, Bloomberg reported, adding that it has hired executives from NBC (CMCSA) and CBS (CBS) to help bolster its advertising business.

Walmart has also launched a private-label furniture brand, called MoDRN, which is “a direct hit to big furniture retailers” such as Wayfair (W) and Ikea and a challenge to rival Amazon, Erica Pandey wrote for Axios.

4. FLIPKART:

Bernstein analyst Brandon Fletcher said that India has been bandying about restrictive e-commerce regulations this past year, and finally pulled the trigger despite protestations from both Walmart and Amazon.

Walmart to pay about $16B for initial stake of about 77% in India's Flipkart, Stockwinners
Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners

The new rules put a damper on 1P selling models, pricing discounts, supplier exclusives, and supplier shares of sales above 25%, all of which are important to both companies’ planned models.

While not significant to Walmart’s total revenues, the analyst believes it does put a damper on its long-term growth potential in the market through Flipkart and raises the question of where Walmart will make up that growth.

Morgan Stanley analyst Simeon Gutman said Flipkart’s losses will likely rise due to new e-commerce regulations in India and Walmart investors “can’t ignore Flipkart” as it once again becomes a bigger part of the retailer’s investment narrative.

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Caladrius Biosciences tumbles on disappointing results

Caladrius says no improvement in primary endpoint in T-Rex study results

Caladrius tumbles on results, Stockwinners
Caladrius tumbles on results, Stockwinners

Caladrius (CLBS) announced top-line results from the Sanford Project: T-Rex study, a prospective, randomized, placebo-controlled, double-blind Phase 2a clinical trial of 110 subjects to evaluate the safety and efficacy of the company’s CLBS03 as a treatment for recent-onset type 1 diabetes, or T1D, in adolescents.

The initial analysis of the one-year follow-up data for all subjects shows that CLBS03 was well tolerated at the doses tested in the study, however, no improvement in the primary endpoint of preservation of C-peptide levels vs. placebo at one year was observed at the group level.

As with many Phase 2a trials, the database from this study is large and the analysis and interpretation of all the information will require several months of intensive evaluation and will be critical to the decision regarding the next steps in development of CLBS03.

In addition, the data from the 2-year follow-up, once complete, will afford supplemental information and are necessary to complete the evaluation of this therapy.

Type 1 diabetes, once known as juvenile diabetes or insulin-dependent diabetes, is a chronic condition in which the pancreas produces little or no insulin. Insulin is a hormone needed to allow sugar (glucose) to enter cells to produce energy.

Different factors, including genetics and some viruses, may contribute to type 1 diabetes. Although type 1 diabetes usually appears during childhood or adolescence, it can develop in adults.

Despite active research, type 1 diabetes has no cure. Treatment focuses on managing blood sugar levels with insulin, diet and lifestyle to prevent complications.

CLBS is down $1.26 to $4.08.

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Retail Sales Plunged in December

U.S. retail sales dropped 1.2% in December with ex-autos plunging 1.8%.

Retail sales plunge in December, Stockwinners
Retail sales plunge in December, Stockwinners

November’s 0.2% headline gain was revised down to 0.1%, while the 0.2% ex-auto figure was unrevised after strong gains in October of 1.0% (revised from 1.1%) and 0.8% (revised from 1.0%), respectively.

Sales excluding autos, gas, and building materials tumbled 1.6% versus the prior 0.7% jump (revised from 0.6%). Motor vehicle sales climbed 1.0% after a 0.7% prior gain (revised from 0.2%).

Gas station sales declined 5.1% from -4.4% (revised from -2.3%). Food, beverage prices were down 0.4% compared to 0.1% previously (revised from 0.4%).

Building materials edged up 0.3% from -1.5% (revised from -0.3%). Furniture sales dropped 1.3% from 0.5% (revised from 1.2%).

Clothing sales fell 0.7% from 0.4% (revised from -0.2%). Nonstore retailers were down 3.9% from 2.8% (revised from 2.3%).

Miscellaneous sales crashed down 4.1% from 4.0% (revised from 0.4%). This is a very disappointing result and should knock yields and equities lower.

Some analysts blame the drop on the government shutdown while others are seeing a worrying consumers above the situation in Washington as the main reason.

Retailer Stocks to Watch: FIVE, OLLI, ULTA, and BOOT.

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Levi’s coming to NYSE

Levi Strauss & Co. said in a regulatory filing that it intends to seek listing on the New York Stock Exchange under the symbol “LEVI” via an initial public offering.

Levis coming to NYSE – Stockwinners.com

“Today we design, market and sell products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under our Levi’s, Dockers, Signature by Levi Strauss & Co. and Denizen brands.

With $5.6 billion in net revenues and sales in more than 110 countries in fiscal year 2018, we are one of the world’s leading apparel companies, with the Levi’s brand having the highest brand awareness in the denim bottoms category globally,” the company disclosed.

The underwriters on the deal include Goldman Sachs, J.P. Morgan, Morgan Stanley, Evercore, BNP Paribas, Citigroup, Guggenheim, HSBC, Drexel Hamilton, Telsey Advisory and The Williams Capital Group.


Levi Strauss was founded in May 1853  when German immigrant Levi Strauss came from Bavaria, to San Francisco, California to open a west coast branch of his brothers’ New York dry goods business. 

Levi Strauss & Co. introduces its first bicycle pants in 1895. It took another 116 years for the company to come out with Levi’s® Commuter, a multi-functional performance product designed for the modern cyclist. When Levi Strauss passes away in September, his four nephews take over the business and carry out his numerous bequests to Bay Area charities serving children and the poor. On April 18, The San Francisco earthquake and fire destroy the headquarters and two factories of Levi Strauss & Co.

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Tesaro sold for $75 per share

Tesaro to be acquired by GSK for approx. $5.1B

 

Tesaro could be sold soon, Stockwinners
Tesaro sold for $75 per share, Stockwinners

GlaxoSmithKline (GSK) and TESARO (TSRO) announced that the companies have entered into a definitive agreement pursuant to which GSK will acquire TESARO, an oncology-focused company based in Waltham, Massachusetts, for an aggregate cash consideration of approximately $5.1B.

The proposed transaction significantly strengthens GSK’s pharmaceutical business, accelerating the build of GSK’s pipeline and commercial capability in oncology. The acquisition price of $75 per share in cash represents a 110% premium to TESARO’s 30 day Volume Weighted Average Price of $35.67 and an aggregate consideration of approximately $5.1B including the assumption of TESARO’s net debt.

Zejula’s revenues in its current approved indication as second-line maintenance treatment for ovarian cancer were $166 million for the 9 months ended 30 September 2018.

GSK expects the acquisition of TESARO and associated R&D and commercial investments will impact Adjusted EPS for the first two years by mid to high single digit percentages, reducing thereafter with the acquisition expected to start to be accretive to Adjusted EPS by 2022. GSK’s guidance for full-year 2018 Adjusted EPS growth remains unchanged at 8 to 10% at CER.

GSK continues to expect to deliver on its previously published Group Outlooks to 2020, but following the acquisition of TESARO now expects Adjusted EPS growth at CER for the period 2016-2020 to be at the bottom end of the mid to high single digit percentage CAGR range.

GSK confirms no change to its current dividend policy and continues to expect to pay 80p in dividends for 2018. GSK expects to fund the acquisition from cash resources and drawing under a new acquisition facility.

Please click here and read our blog when we predicted this transaction.


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Tribune Media sold for $6.4 billion

Nexstar to acquire Tribune Media for $46.50 per share

Nexstar agrees to acquire Tribune Media, Stockwinners
Nexstar agrees to acquire Tribune Media, Stockwinners

Nexstar Media Group (NXST) and Tribune Media (TRCO) announced that they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4B including the assumption of Tribune Media’s outstanding debt.
The transaction reflects a 15.5% premium for Tribune Media shareholders based on its closing price on November 30, 2018, and a 45% premium to Tribune Media’s closing price on July 16, 2018, the day the FCC Chairman issued a public statement regarding his intention to circulate a Hearing Designation Order for Tribune Media’s previously announced transaction with a third party.
Tribune Media shareholders will be entitled to additional cash consideration of approximately 30c per month if the transaction has not closed by August 31, 2019, pro-rated for partial months and less an adjustment for any dividends declared on or after September 1, 2019.
The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.
Upon closing, the transaction is expected to be immediately accretive to Nexstar’s operating results inclusive of expected operating synergies of approximately $160M in the first year following the completion of the transaction and planned divestitures.
The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank. Completion of the transaction is subject to approval by Tribune’s shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions.

Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.


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EQGP Holdings sold for $20.00 per share

Equitrans Midstream to acquire EQGP Holdings for $20.00 per unit in cash

Equitrans Midstream Corporation (ETRN) announced that it has entered into definitive purchase agreements with certain unitholders of EQGP Holdings (EQGP) to acquire limited partner interests in EQGP for $20.00 per unit in cash, which is a 17.5% premium to the EQGP closing market price as of November 29, 2018.

The Private Purchases are expected to close on or about December 31, 2018, after which ETRN and its affiliates will own more than 95% of the outstanding EQGP Common Units. Upon closing of the Private Purchases, ETRN intends to exercise the Limited Call Right under EQGP’s partnership agreement to acquire all remaining EQGP Common Units not then owned by ETRN and its affiliates.

If the Limited Call Right is exercised, the remaining holders of EQGP Common Units will receive at least the same cash price per unit that will be paid in the Private Purchases.

The Limited Call Right is expected to close in January 2019 and will be a taxable transaction for EQGP unitholders.

ETRN intends to use the cash proceeds from a newly issued Term Loan B to finance the Private Purchases and the purchases pursuant to the Limited Call Right.

ETRN has secured committed financing in support of these purchases. ETRN also announced that it has made a proposal to EQM Midstream Partners (EQM) for the exchange of its incentive distribution rights and the economic general partner interest in EQM for 95 million units in EQM and a non-economic general partner interest in EQM, subject to the closing of the Private Purchases and completion of the Limited Call Right.

ETRN expects that a portion of the units received will be in the form of Payment-In-Kind Units.

The PIK Units would receive distributions in the form of additional PIK Units and would convert on a one-to-one basis into common units representing limited partner interests in EQM at a date to be determined.

Final terms of the Proposed IDR Transaction are subject to negotiation with the board of directors of EQM’s general partner or its conflicts committee, and assuming an agreement is reached, ETRN expects that the Proposed IDR Transaction would close in the first quarter of 2019.

Upon completion of the Private Purchases, the Limited Call Right, and the Proposed IDR Transaction, ETRN will have accomplished a full simplification of EQGP and EQM, resulting in a projected 61% ownership of EQM.

Additionally, EQM will be the only publicly traded partnership under ETRN and is expected to benefit from the elimination of the IDR burden, as well as stronger coverage and balance sheet metrics.

Highlights: The proposed transactions would not result in a distribution cut for EQM unitholders; Targeting 6% – 8% annual distribution growth beginning in 2019; 2019 distribution coverage in excess of 1.0x; Long-term distribution coverage target in excess of 1.2x beginning in 2020; Long-term debt to EBITDA target of 3.5x – 4.0x beginning in 2020; PIK Units will provide balance sheet and coverage support; Improves cost of capital; No equity issuance is required to fund capital projects for the next several years; Reduces corporate overhead associated with the elimination of a publicly traded entity.

ETRN expects that the EQM Conflicts Committee will review the Proposed IDR Transaction. Unitholder voting is not required in connection with the Private Purchases, the exercise of the Limited Call Right, or the Proposed IDR Transaction.


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Altria to buy stake in Juul Labs

Altria, under pressure from FDA, said in talks to buy stake in Juul Labs

 

Altria to buy stake in Juul Labs, Stockwinners
Altria to buy stake in Juul Labs, Stockwinners

Following a report that Altria Group (MO) is in talks to take a “significant” stake in Juul Labs, an analyst said that an agreement could make strategic sense for the tobacco giant to gain exposure to a fast-growing product that poses a threat to its cigarette business.

The Wall Street Journal said Altria is in talks to take a “significant” minority interest in Juul Labs, a controversial e-cigarette startup.

According to people familiar with the matter, any deal is likely several weeks away. Juul was last valued at $16B in a private fundraising round this summer.

Altria has an agreement with Philip Morris (PM) to market IQOS, subject to regulatory approval. Philip Morris is already selling it in 43 countries and has said it could get approved for the U.S. by the end of the year.

Juul has drawn criticism over its products’ popularity with teens.

Juul, whose products are sold online and in convenience stores, gas stations and vape shops, accounted for about three-quarters of the U.S. e-cigarette market in the four-week period ended November 17, according to the Wells Fargo analysis of Nielsen data.

Earlier this month, the U.S. Food and Drug Administration announced plans to place restrictions on sales of flavored e-cigarettes.

Juul also said it would restrict sales of nearly all its flavored pods to the internet, and stop most social media promotion to combat youth vaping.

“More than 99% of all social media content related to JUUL Labs is generated through third-party users and accounts with no affiliation to our company. Nevertheless, we understand that many young people get their information from social media. To remove ourselves entirely from participation in the social conversation, we have decided to shut down our U.S.-based social media accounts on Facebook (FB) and Instagram. We have never used Snapchat (SNAP),” the company stated.

WHAT’S NOTABLE

Following the FDA statement on the agency’s proposed steps against underage smoking, Altria General Counsel Murray Garnick said it “welcomed” the FDA’s efforts to address the underage use of e-vapor products and said it believes Congress should raise the legal age of purchase for all tobacco products to 21.

Last month, Altria said it would pull its pod-based e-vapor products from the market until approved by FDA.

The company said Nu Mark will remove MarkTen Elite and Apex by MarkTen pod-based products from the market “until these products receive a market order from the FDA or the youth issue is otherwise addressed,” and that for the remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties.

Nu Mark will discontinue the sale of all other flavor variants of our cig-a-like products until these products receive a market order from the FDA.

The FDA is also pursuing a ban on menthol cigarettes, which could remove nearly a third of the roughly 250B cigarettes sold annually in the U.S., The Wall Street Journal said.

A rule could take a year or more to finalize, the FDA said. The FDA concluded in 2013 that menthols are harder to quit and likely pose a greater health risk than regular cigarettes.

ANALYST COMMENTARY

Morgan Stanley analyst Pamela Kaufman said she has no knowledge of a potential deal between Altria and Juul but that taking such a stake could make strategic sense for Altria to gain exposure to a fast growing product that poses a threat to its cigarette business.

Altria does not have a robust reduced risk product portfolio and Juul’s e-cigs could significantly enhance its competitive position, stated Kaufman, who also believes Altria would likely be buying in at a lower valuation than the previously reported $15B given the FDA recently prohibited flavored pods sales in convenience stores.

 OTHERS TO WATCH

Publicly traded companies in the tobacco products space also include Philip Morris and British American Tobacco (BTI).


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Cinedigm to acquire ComicBlitz 

Cinedigm to acquire ComicBlitz 

 

Cinedigm to acquire ComicBlitz , Stockwinners
Cinedigm to acquire ComicBlitz , Stockwinners

Cinedigm (CIDM) announced an agreement to acquire the digital comic book service ComicBlitz, which will provide access to approximately 10,000 digital comic books, with more than 175,000 pages of content from a growing network of 30 or more publishers.

#ComicBlitz content will be distributed globally as a licensed offering for mobile carriers, OTT providers and other media companies.

It will also be integrated with Cinedigm’s existing and planned OTT services, including the fandom lifestyle network CONtv.

Cinedigm expects that the acquisition will close before the end of the year. Cinedigm plans on rapidly enhancing ComicBlitz’s content and services offering by leveraging Cinedigm’s forthcoming, next-generation technology platform and expects to service global distribution of the ComicBlitz content and platform offerings alongside Cinedigm’s existing footprint of nine OTT channel offerings.

From a business perspective, the transaction is expected to generate revenues through content licensing, subscription and advertising revenues, new distribution platform partnerships and by accelerating global expansion of Cinedigm’s OTT business.

Cinedigm expects the acquisition will be accretive within the first quarter following closing, pending certain license deals currently in negotiation. The deal could be expected to generate more than $5M in incremental annual digital revenues within 18-24 months after closing, if new platform and licensing agreements related to this acquisition are consummated.

This deal will support Cinedigm’s strategy to provide high quality turn-key offerings to third party platforms on a global scale through acquisition and partnerships.

It will also provide a deep portfolio of quality comic book offerings that significantly broadens the company’s content portfolio for highly sought after fandom audiences worldwide.

The worldwide digital comic book and graphic novel market is estimated at over $1B in annual sales. Launched in 2015, ComicBlitz has a distribution footprint of over 133 countries, with key penetration in North America and major territories including the United Kingdom, Australia, India, Mexico, Brazil and Germany.


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