Staples Sold for $10.25 a Share

Staples to be acquired by Sycamore Partners for roughly $6.9B

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Staples and Sycamore Partners announced that they have entered into a merger agreement in which investment funds managed by Sycamore Partners will acquire the company in a transaction that values Staples at an equity value of approximately $6.9B.

Under the terms of the merger agreement, all Staples’ stockholders will receive $10.25 per share in cash for each share of common stock they own, which represents a premium of approximately 20% to the 10-day volume weighted average stock price for Staples shares for the period ended April 3, 2017, the last trading day prior to widespread media speculation about a potential transaction.

Staples’ Board of Directors has unanimously approved the merger agreement and recommends that all Staples stockholders vote in favor of the transaction.

The transaction is subject to customary closing conditions, including the receipt of regulatory and stockholder approval, and is expected to close no later than December, 2017. The closing is not subject to a financing condition.

See our earlier post regarding Staples.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Cara Therapeutics’ Rise Could Continue

Watch Cara Therapeutics into osteoarthritis pain results

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Cara Therapeutics (CARA) has soared this month amid the wider biotech rally, but research firm Janney argues the stock could continue higher on a pending release of data from a study of its potential treatment for osteoarthritis pain.

BACKGROUND

Cara Therapeutics is a clinical-stage researcher focused on treating pain and pruritus, or itching, by targeting the body’s so-called “kappa” #opioid receptors.

The company’s pipeline includes #CR845 and #CR701, the former of which is in advanced studies for both oral and intravenous forms.

In its most recent earnings report on May 4, Cara said it expects top-line data from the Phase 2b trial of oral CR845 for osteoarthritis-related pain in Q2, and the company confirmed on its conference call that the trial is “now fully enrolled at 480 patients and on track for a data readout later in Q2.” Cara’s second quarter ends June 30.

JANNEY SEES BIG POTENTIAL MOVE

Janney’s Ken #Trbovich said Wednesday he expects “significant volatility” in Cara Therapeutics as investors await the Phase 2 osteoarthritis data.

Highlighting the stock’s all-time highs on the back of the biotech rally and Friday’s announcement of “breakthrough therapy” designation, the analyst nevertheless says positive osteoarthritis data can “easily justify” a move into the $31-$36 range, though he warns that negative results could take the stock to $10-$15.

The long-term potential of oral #CR845 in chronic pain is “tantalizing” for a company whose market cap remains below $1B — with Trbovich offering Nektar’s (NKTR) 42% surge on the back of Phase 3 opioid data as an example — but the analyst cautions that the pending results are only mid-stage and that “a portion” of the potential upside has already been priced in.

Modeling the company on a discounted cash flow basis while factoring any potential dilution necessary to fund and launch oral CR845, Trbovich ends up at $31-$34 per share assuming peak sales of just over $1B.

On the other hand, he expects a retrace to $15 if data is negative, or even as low as $10-$12 if results are particularly bad and investors apply the news to Cara’s pain program for intravenous CR845.

POSITIVE HINT FROM UNRELATED TRIAL

H.C. #Wainwright analyst Corey Davis wrote June 22 that the osteoarthritis data is “expected any day.” #Davis added that Cara’s announcement that week of continuing its Phase 3 trial of I.V.

#CR845 in postoperative pain after an interim analysis — while largely unconnected from the osteoarthritis trial — is “still a slight positive indicator” given the lack of futility or safety signals.

PRICE ACTION:

CARA last traded at $27.72.

See our recent post on CARA.

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Nutanix Higher on Google Deal

Nutanix jumps after announcement of Google cloud partnership

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Shares of Nutanix (NTNX) are rising in pre-market trading after the company and Google parent Alphabet (GOOG) announced a partnership via which Nutanix customers will be able to easily move application workloads to Google’s cloud, according to CNBC.

Nan Boden, Google’s head of global alliances, told CNBC that in terms of the public cloud, “you have to meet them where they are — that’s becoming increasingly clear.”

Nutanix intends to support application deployment on Amazon’s (AMZN) AWS and Microsoft’s (MSFT) Azure, although at this point it’s working most closely with at Google, CNBC added.

The first integration resulting from the partnership, which will enable applications to move from on-premise data centers to Google’s, will become available in the first quarter of 2018. Pricing details aren’t available, CNBC noted.

The deal is another indication that Nutanix, which held its IPO last year, is now embracing the public cloud as a viable infrastructure choice. Simultaneously it reflects how Google is becoming more receptive to the needs of enterprises.

NTNX closed at $18.64. The issue has a 52-weeks trading range of $14.38 – $46.78.

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Spectranetics Sold for $2.1 Billion

Philips to acquire Spectranetics for $38.50 per share in cash

Stocks to Buy Now

Royal Philips (PHG) and Spectranetics (SPNC) announced that they have entered into a definitive merger agreement. Pursuant to the agreement, Philips will commence a tender offer to acquire all of the issued and outstanding shares of Spectranetics for $38.50 per share, to be paid in cash upon completion. This represents a 27% premium to Spectranetics closing price on June 27.

The implied enterprise value is approximately EUR 1.9B, inclusive of Spectranetics’ cash and debt.

The board of directors of Spectranetics has approved the transaction and recommends the offer to its shareholders.

The transaction is expected to close in Q3. Spectranetics is currently growing double digits and projects 2017 sales to be in the range of $293M-$306M. Upon completion of the transaction, Spectranetics and its more than 900 employees will become part of the Image-Guided Therapy Business Group within Philips.

Spectranetics’ standalone revenue growth is expected to be double-digit and adjusted EBITA to be positive by 2018. Philips sees sustained high sales growth through new product introductions across a highly synergistic therapy device portfolio.

Moreover, the transaction will enhance the geographical expansion of Spectranetics’ products and commercialization opportunities in new, adjacent segments.

As part of Philips, the Spectranetics business will benefit immediately from Philips’ platform enabling cost and working capital synergies. As a result, the combined Spectranetics and Philips Image Guided Therapy Devices business, within the Image-Guided Therapy Business Group, is expected to grow to approximately EUR 1B by 2020.

For the overall Image-Guided Therapy Business Group, Philips targets a high single-digit comparable sales growth and high-teens adjusted EBITA margin for the medium-term. In 2016, this business group reported sales of approximately EUR 1.9B of which approximately 20% was attributable to device sales.

The transaction is expected to be accretive to Philips’ revenue growth, adjusted EBITA margins and adjusted EPS by 2018.

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First Potomac Sold for $1.4 Billion

First Potomac shareholders will receive $11.15 in cash per share

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First Potomac Realty Trust (FPO) announced that it has entered into a definitive merger agreement with Government Properties Income Trust (GOV) under which GOV will acquire all of the outstanding shares of First Potomac.

The transaction, which is valued at $1.4B, including the assumption of debt, is expected to close prior to year end 2017.

Under the terms of the agreement, First Potomac shareholders will receive $11.15 in cash per share at the close of the transaction. This represents a premium of approximately 9.3% to First Potomac’s 30-trading day Volume Weighted Average Price ended April 24, the last trading day before media speculation regarding a potential sale of First Potomac.

The transaction is subject to customary closing conditions, including approval by First Potomac shareholders at a special meeting. The Board of Trustees of First Potomac has unanimously approved the merger agreement and has recommended approval of the merger by First Potomac’s shareholders.

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