International Barrier Technology Sold for $22 Million

Louisiana-Pacific to acquire Int’l Barrier Tech for $22M

Louisiana-Pacific to acquire Int'l Barrier Tech for $22M. See Stockwinners.com Market Radar to read more

 

Louisiana-Pacific Corporation (LPX) announced it has entered into an arrangement agreement to acquire Watkins, Minn.-based International Barrier Technology Inc. (IBTGF) for $22M.

The agreement is for 100% of the shares of Barrier, a British Columbia company publicly traded on the TSX Venture Exchange, making Barrier a wholly owned subsidiary of LP.

International Barrier Technology Inc. develops, manufactures, and markets proprietary fire resistant building materials designed to protect people and property from the destruction of fire in the United States. The company uses non-toxic Pyrotite formulation that is used to coat wood panels and has application to engineered wood products, paint, plastics, and expanded polystyrene.

The transaction is subject to the approval of the Barrier shareholders and satisfaction of customary conditions, including court approval.

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Discovery to acquire Scripps for $14.6B

Discovery to acquire Scripps for $90 per share in cash and stock deal

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Discovery Communications (DISCA) and Scripps Networks Interactive (SNI) announced that they have signed a definitive agreement for Discovery to acquire Scripps in a cash-and-stock transaction valued at $14.6B, or $90 per share, based on Discovery’s Friday, July 21 closing price.

The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday, July 18, 2017.

The transaction is expected to close by early 2018.

Combined, Discovery and Scripps will have nearly 20% share of ad-supported pay-TV audiences in the U.S. Additionally, the combined company will be home to five of the top pay-TV networks for women and will account for over 20% share of women watching primetime pay-TV in the U.S.

The combination is expected to create significant cost synergies, estimated at approximately $350M. The deal is expected to be accretive to adjusted EPS and to Free Cash Flow in the first year after close.

Scripps shareholders will receive $90 per share under the terms of the agreement, comprised of $63.00 per share in cash and $27.00 per share in Class C Common shares of Discovery stock, based on Discovery’s Friday, July 21 closing price. The stock portion will be subject to a collar based on the volume weighted average price of Discovery Class C Common Shares over the 15 trading days ending on the third trading day prior to closing.

Scripps shareholders will receive 1.2096 Discovery Class C Common shares if the Average Discovery Price is below $22.32, and 0.9408 Discovery Class C Common shares if the Average Discovery Price is above $28.70. If the Average Discovery Price is greater than or equal to $22.32 but less than or equal to $28.70, Scripps shareholders will receive a number of shares between 1.2096 and 0.9408 equal to $27.00 in value.

If the Average Discovery Price is between $22.32 and $25.51, Discovery has the option to pay additional cash instead of issuing more shares.

Scripps shareholders will have the option to elect to receive their consideration in cash, stock or the mixture described above, subject to pro rata cut backs to the extent cash or stock is oversubscribed. This purchase price implies a total transaction value of $14.6 billion, including the assumption of Scripps’ net debt of approximately $2.7 billion.

Post-closing, Scripps’ shareholders will own approximately 20% of Discovery’s fully diluted common shares and Discovery’s shareholders will own approximately 80%. Kenneth Lowe, Chairman, President & CEO, Scripps Networks is expected to join Discovery’s board following the close of the transaction.

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Barron’s is Bullish on Citi, Honeywell, Remains Bearish on Twitter

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue is bullish on several names. They include:

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Advance Auto Parts could rally 20%-30% in two years – Advance Auto Parts (AAP) stock’s valuation seems to discount a lot of bad news, while ignoring the potential for the company to boost profit margins and spur earnings growth in coming years, Vito Racanelli writes in this week’s edition of Barron’s. The shares could rally 20%-30% in the next two years, as earnings rise and the company demonstrates it can hold its own in the face of increasing online competition, he adds.

Citi could rise by 50% – At its first investor day since 2008, Citigroup (C) laid out some ambitious financial targets and Wall Street liked what it heard, Andrew Bary writes in this week’s edition of Barron’s. While the company’s shares finished the week up 2%, there could be more upside because Citi offers the combination of a low valuation and what could be the highest earnings growth rate among its peers in the years to come, Barron’s adds. The bank is targeting $9 a share in 2020 earnings, and suggested its stock could hit $100, 48% above the current level, Bary points out.

Honeywell (HON) shares could return 15% next year – If Darius Adamczyk, Honeywell’s new CEO, delivers as expected, the company’s revenue could rise 4% next year, and earnings, 10%, leading to a higher price/earnings ratio and a 15% total return for the shares, Lawrence Strauss writes in this week’s edition of Barron’s.

Blue Chips set to boost dividends – The third quarter is shaping up to be a ‘very strong one’ for dividend growth among blue-chip names, Lawrence Strauss writes in this week’s edition of Barron’s. IHS Markit expects Mondelez (MDLZ) to announce a 10.5% dividend increase and Intuit (INTU) to declare a hike of 15%, he says. Meanwhile, Microsoft (MSFT) is expected to raise its quarterly dividend by 10.3%, Royal Caribbean Cruises (RCL) to boost its quarterly payout by nearly 15%, Yum! Brands (YUM) to increase 13.3%, and Accenture (ACN) to boost payout by 10%, Barron’s points out.

BEARISH MENTION

Amazon.com, Alphabet to likely ‘cool off for a while,’ – Last week, Alphabet (GOOG; GOOGL) and Amazon (AMZN) beat quarterly sales expectations but showed underwhelming profit and it is not surprising investors would seize upon blemishes in the report as an excuse to take profits, Tiernan Ray writes in this week’s edition of Barron’s. While there is no fundamental weakness with either company, shares will probably show less upside in the rest of this year than in the first half, he notes.

Barron’s sees ‘no relief in sight’ for Twitter – Twitter (TWTR) is nearly as expensive as Facebook (FB), whose revenue and profit are galloping higher, based on next year’s projected earnings before interest, taxes, depreciation and amortization, Jack Hough writes in this week’s edition of Barron’s. That means Twitter must bounce back quickly, or get bought, or suffer a continuing stock-price decline, perhaps to single digits, Hough argues, adding that the first two outcomes are looking increasingly unlikely.

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Rig Counts Rise Again!

Baker Hughes reports U.S. rig count up 8 to 958 rigs

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Baker Hughes (BHGE) reports that the U.S. Rig Count is up 8 rigs from last week to 958, with oil rigs up 2 to 766 and gas rigs up 6 to 192.

The U.S. Rig Count is up 495 rigs from last year’s count of 463, with oil rigs up 392, gas rigs up 106, and miscellaneous rigs down 3 to 0.

The U.S. Offshore Rig Count is up 1 rig from last week to 24 and up 5 rigs year over year.

The Canadian Rig Count is up 14 rigs from last week to 220, with oil rigs up 11 to 129 and gas rigs up 3 to 91.

The Canadian Rig Count is up 101 rigs from last year’s count of 119, with oil rigs up 69, gas rigs up 33, and miscellaneous rigs down 1 to 0.

WTI crude edged a few cents lower after the report, and though remains less than 20 cents below its earlier trend high of $49.80.

#WTI  =  West Texas Intermediate

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FDA Issues Tobacco Regulations

FDA ‘providing targeted relief’ on some tobacco regulation timelines

FDA announces new 'comprehensive plan' for tobacco, nicotine regulation. See Stockwinners.com Market Radar

The U.S. Food and Drug Administration announced a new comprehensive plan for tobacco and nicotine regulation that will serve as a multi-year roadmap to better protect kids and significantly reduce tobacco-related disease and death.

As part of the plan, the agency is also providing targeted relief on some timelines described in the May 2016 final rule that extended the FDA’s authority to additional tobacco products.

The agency intends to extend timelines to submit tobacco product review applications for newly regulated tobacco products that were on the market as of Aug. 8, 2016. This action will afford the agency time to explore clear and meaningful measures to make tobacco products less toxic, appealing and addictive.

The agency plans to issue this guidance describing a new enforcement policy shortly.

The approach places nicotine, and the issue of addiction, at the center of the agency’s tobacco regulation efforts.

Under expected revised timelines, applications for newly-regulated combustible products, such as cigars, pipe tobacco and hookah tobacco, would be submitted by Aug. 8, 2021, and applications for non-combustible products such as ENDS or e-cigarettes would be submitted by Aug. 8, 2022.

Additionally, the FDA expects that manufacturers would continue to market products while the agency reviews product applications.

WHAT’S NEW

The FDA announced a new comprehensive plan for tobacco and nicotine regulation that will serve as a multi-year roadmap to “better protect kids and significantly reduce tobacco-related disease and death.”

The approach shifts focus to nicotine and the issue of addiction as the center of the agency’s tobacco regulation efforts. The aim, according to the agency, is to ensure that the FDA has the proper scientific and regulatory foundation to efficiently and effectively implement the Family Smoking Prevention and Tobacco Control Act.

Commenting on the matter, FDA commissioner Scott Gottlieb said, “Unless we change course, 5.6M young people alive today will die prematurely later in life from tobacco use. Envisioning a world where cigarettes would no longer create or sustain addiction, and where adults who still need or want nicotine could get it from alternative and less harmful sources, needs to be the cornerstone of our efforts – and we believe it’s vital that we pursue this common ground.”

TOBACCO STOCKS FALL

Publicly traded companies in the tobacco products space include Altria Group (MO), British American Tobacco (BTI), Philip Morris (PM) and Reynolds American (RAI). Altria Group is down 5% on the news.

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Nokia Gets $2 Billion from Apple

Apple Pays $2 billion to Nokia for Patent Infringement

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Apple (AAPL) paid Nokia (NOK) $2B in cash as part of a deal to settle a patent disputes in which Nokia claimed Apple was infringing on 32 technology patents, 9to5Mac reports, citing a Nokia conference call.

In the call, Nokia said, “We got a substantial upfront cash payment of EUR$1.7B from Apple, strengthening further our cash position.

As said earlier, our plans is to provide more details on the intended use of cash in conjunction with our Q3 earnings.

Third, instead of a simple patent licensing agreement, we have agreed on a more extensive business collaboration with Apple, providing potential for a meaningful uplift in our IP Routing, Optical Networks and Digital Health business units over time.

Hence, the value of the agreement will be reflected partly as patent licensing net sales in Nokia Technologies, and partly as net sales in other Nokia business groups.”

Nokia first filed the lawsuit claiming Apple was infringing on its technology patents last December, which Apple initially responded to with a lawsuit of its own.

At the center of the dispute were 32 patents involving the iPhone 3GS and later (as well as other Apple products) which Apple claimed Nokia intentionally left out of a 2011 licensing agreement.  Back in May, Apple and Nokia announced that the two companies had reached a resolution to the dispute and would work together by expanding their relationship.

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When It Rains, It Pours

Insurers are dropping Valeant’s top products

Insurers are dropping Valeant's top products. See Stockwinners.com Market Radar

The beleaguered pharmaceutical firm sees its products being denied coverage by major health insurers.

United Healthcare’s (UNH) formulary is no longer covering Valeant Pharmaceuticals’ (VRX) number three branded drug Solodyn and will also now exclude Retin-A brand, its number four branded drug, Wells Fargo analyst David #Maris tells investors in a research note.

The analyst estimates the two drugs represented approximately $214M of Valeant’s sales in 2016. Maris also points out that #Glumetza, Valeant’s number eight branded drug, and Relistor were removed in July from CVS/Caremark’s (CVS) formulary.

These two drugs had approximately $119M in 2016 revenues. Maris notes his counterpart Peter Costa estimates that United Healthcare covers approximately 17% of the U.S. and CVS covers approximately 33%.

Express Scripts (ESRX) is releasing its 2018 national formulary next week, Costa adds.

Maris keeps an Underperform rating on shares of Valeant with a $9 price target. The stock closed on Thursday at $17.13.

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GE’s Immelt May Become Uber CEO

GE’s Immelt has held ‘active’ discussions with Uber search committee

GE's Immelt May Become Uber CEO. See Stockwinners.com for more details

Uber is considering General Electric (GE) CEO Jeff Immelt among “a handful” of candidates for its CEO, The Wall Street Journal reports, citing a person familiar with the matter.

According to the person, Uber’s search committee has held “active” discussions with Immelt, who is stepping down as GE’s CEO at the end of the month, though he will remain chairman through the end of the year.

Uber hopes to wrap up the CEO search process by Labor Day, according to the report.

HP Enterprise (HPE) CEO Meg Whitman, who was rumored to be in contention for Uber CEO, says she is “fully committed” to HPE and she will not take the job at Uber.

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What Caused Stocks to Fall on Thursday?

Legendary investor Howard Marks cautions investors in latest memo

Howard Marks cautions investors in latest memo. See Stockwinners.com for stocks to watch,stocks to trade,stocks to buy

Howard Marks, co-chairman of Oaktree Capital (OAK), penned a memo out on Wednesday urging investors to proceed with caution.

Marks notes that the end of the current bull market may not come today or soon but that risks are elevated and investors may be ignoring them.

“My observations are always indicative, not predictive … an eventual increase in risk aversion – should happen, but they don’t have to happen. And they certainly don’t have to happen soon,” said Marks.

Marks contends the point that bull markets seem to focus on a few stocks as “the greatest.”

He mentions the FAANG’s as the current bull market’s “anointed stocks.” The acronym FAANG is used to describe the current “super stocks”: Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOG). In his 22 page memo, Marks says, “I’m not saying the FAANGs aren’t great, or that they’ll suffer such a fate. Just that their elevated status today is a sign of the kind of investor optimism for which we must be on the lookout.”

Marks also turns his sights on digital currencies. “Some businesses accept Bitcoin as payment. Some buyers want to own Ether because it can be used to pay for computing power on the Ethereum network. Some people are eager to speculate on digital currency for profit. Others want to put a little money into these to-date-profitable phenomena rather than run the risk of missing out. But they’re not real!,” Marks explained.

Mark’s ends his discussion by pointing out that the four components of today’s market, “high uncertainty, low prospective returns, high prices and pro-risk behavior – are indisputable.”

Because of this #Marks says this may be a good time to curtail investments, however he points out that large institutional investors do not have the option to stop investing, especially “especially true when the return on cash is as low as it is today.”

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KKR, CVC Capital to bid for Azko Nobel unit 

KKR, CVC Capital work on joint bid for Azko Nobel unit 

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Private equity firms KKR (KKR) and CVC Capital Partners have started to work on a joint bid for the specialty chemicals business of Akzo Nobel (AKZOY) specialty chemicals division, Bloomberg reports, citing people familiar with the situation.

Advent International and Apollo Global Management (APO) are also mulling offers for the unit, which may be valued at over EUR9B or $10.6B.

Akzo Nobel has said it plans to dispose of the unit, part of its defense against PPG Industries Inc.’s unsuccessful 26.9 billion euro takeover bid, and will solicit offers in September.

The sale process is at an early stage and no final decisions have been made, the people said.

Representatives for CVC, KKR, Advent, Apollo, Akzo Nobel declined to comment reports Bloomberg.

TURBULENT TIMES

The company has had a turbulent few months following the PPG offer, which was withdrawn in June.

Chief Executive Officer Ton #Buechner resigned last week for health reasons. That leaves new CEO Thierry #Vanlancker, who joined the company last year, to carry out the ambitious targets Akzo Nobel put forth as its defense against being sold.

Activist investor #Elliott Management Corp., which holds a stake in Akzo Nobel, is attempting to oust the company’s chairman.

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ShoreTel Sold for $530 Million

Mitel announces agreement to acquire ShoreTel for $7.50 per share in cash

 

Mitel announces agreement to acquire ShoreTel for $7.50 per share in cash. See Stockwinners.com for stocks to watch, stocks to buy, stocks to trade

Mitel (MITL) and ShoreTel (SHOR) announced that they have entered into a definitive merger agreement pursuant to which Mitel will acquire 100% of the outstanding shares of ShoreTel common stock in an all-cash transaction at a price of $7.50 per share, or a total equity value of approximately $530 million and a total enterprise value of approximately $430 million.

ShoreTel, Inc. provides business communication solutions for small and medium sized businesses. The company offers integrated voice, video, data, and mobile applications based on Internet protocol technologies. It offers various solutions, such as ShoreTel Voice Switches; ShoreTel Service Appliances for messaging, conferencing, and collaboration applications

The purchase price represents a 28% premium to ShoreTel’s closing share price on July 26, 2017.

The combined company will be headquartered in Ottawa, Canada, and will operate as Mitel. Rich McBee, Mitel’s Chief Executive Officer, will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role.

Financial highlights of the transaction include: Combined sales of $1.3 billion; Increases Mitel’s total recurring revenue to 39% of total revenue; More than doubles Mitel’s UCaaS revenue to $263 million; Significant synergy opportunity targeted at $60M in annual run rate spend expected to be achieved over two years; Expected to be accretive to non-GAAP EPS in the first year.

Mitel intends to finance the consideration for the acquisition and associated transaction expenses using a combination of cash on hand from the combined business, drawings on its existing revolving credit facility and proceeds from a new fully underwritten $300 million term loan maturing in 2023.

The transaction is expected to be completed in the third quarter of 2017, subject to ShoreTel stockholders having tendered shares representing more than 50% of the outstanding shares of ShoreTel common stock, certain regulatory approvals having been obtained and other customary conditions to the tender offer having been satisfied.

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AstraZeneca receives $8.5 Billion from Merck

AstraZeneca receives $1.6B upfront in oncology collaboration with Merck

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AstraZeneca (AZN) and Merck (MRK) announced that they have entered a global strategic oncology collaboration to co-develop and co-commercialise AstraZeneca’s Lynparza for multiple cancer types.

#Lynparza is an oral poly ADP ribose polymerase, or PARP, inhibitor currently approved for BRCA-mutated #ovarian cancer in multiple lines of treatment.

The companies will develop and commercialize Lynparza jointly, both as monotherapy and in combination with other potential medicines.

Independently, the companies will develop and commercialise Lynparza in combination with their respective PD-L1 and PD-1 medicines, Imfinzi and Keytruda.

The companies will also jointly develop and commercialize AstraZeneca’s selumetinib, an oral, potent, selective inhibitor of MEK, part of the mitogen-activated protein kinase pathway, currently being developed for multiple indications including thyroid cancer. Under the terms of the agreement, AstraZeneca and Merck will share the development and commercialization costs for Lynparza and selumetinib monotherapy and non-PD-L1/PD-1 combination therapy opportunities.

Gross profits from Lynparza and selumetinib Product Sales generated through monotherapies or combination therapies will be shared equally.

Merck will fund all development and commercialization costs of Keytruda in combination with Lynparza or selumetinib. AstraZeneca will fund all development and commercialization costs of #Imfinzi in combination with Lynparza or selumetinib. AstraZeneca will continue to manufacture Lynparza and selumetinib.

As part of the agreement, Merck will pay AstraZeneca up to $8.5B in total consideration, including $1.6B upfront, $750M for certain license options and up to $6.15B contingent upon successful achievement of future regulatory and sales milestones.

Under the terms of the agreement, AstraZeneca anticipates approximately $1B to be recorded under Externalization Revenue in 2017.

OTHER EVENTS

AstraZeneca plunged in pre-market trading as Phase III MYSTIC trial endpoint not met. AstraZeneca announced progression-free survival results for the Phase III #MYSTIC trial, a randomized, open-label, multi-center, global trial of Imfinzi monotherapy or Imfinzi in combination with tremelimumab versus platinum-based standard-of-care chemotherapy in previously-untreated patients with metastatic 1st-line non-small cell lung cancer.

MYSTIC TRIAL:

AstraZeneca has announced progression-free survival, or PFS, results for the Phase III MYSTIC trial, which is testing Imfinzi monotherapy or Imfinzi in combination with tremelimumab versus platinum-based standard-of-care chemotherapy in previously-untreated patients with metastatic first line non-small cell lung cancer.

The combination did not meet the primary endpoint of improving PFS compared to standard-of-care in patients whose tumors express PD-L1 on 25% or more of their cancer cells.

PRICE ACTION

In Thursday’s trading, shares of AstraZeneca have dropped over 15% to $28.72, while Bristol’s (BMY) stock has slipped almost 5% to $53.23. MYSTIC trial failure is a negative read-through for Bristol-Myers’ combo of Opdivo + Yervoy in the ongoing CheckMate-227 trial.

Meanwhile, Merck is up over 3% to $63.75.

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Facebook Ahead of Earnings!

Facebook in strong uptrend before the earnings report on Wednesday.

stockwinners.com analysis of facebook stock

The stock has been in a stable uptrend since breaking out in July 2013.

In April of this year, the shares broke out above the top of the bullish price channel that had been in place since July 2013.

The uptrend has accelerated in recent weeks moving price even further from the prior channel top.

The current point of intersection with the old channel top is at the $150 area. If the news is strongly positive, exceeding even the most current expectations, the breakout may extend.

The very top of the current price channel when projected forward in the near-term reaches the $168 area. Beyond that, a move to the $170-$175 area might be possible.

If the news doesn’t meet expectations, given the sentiment in the name a pullback could be quite large.

Initial support would be at the $156.50 area, which is the top of the consolidation range from May to early July of this year. Thereafter the $150 area would be next.

A move below $150 might seem like an extreme move, but would still leave price within the long-term channel. The low of the old long-term channel is at the $135-$134 area.

The consensus estimate on Facebook for Q2 revenue is to reach $9.17 billion. The consensus on adjusted earnings is $1.12 a share. Revenue from advertising is expected to come at $8.78 billion.

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State National Companies Sold for $919 Million

Markel to acquire State National for $21.00 per share in cash

Markel to acquire State National for $21.00 per share in cash. See Stockwinners.com Market Radar

Markel (MKL) and State National Companies (SNC) announced that they have entered into a definitive agreement under which Markel will acquire all of the outstanding shares of State National common stock for $21.00 per share in cash. The transaction has a total value of approximately $919M.

State National Companies, Inc. provides property and casualty insurance in the United States. It operates in two segments, Program Services and Lender Services.

The agreement, which has been unanimously approved by both companies’ board of directors, represents a 38% premium to State National’s 30-day volume-weighted average stock price as of May 18, 2017, the last trading day prior to published market speculation regarding a potential sale of State National, and a premium of approximately 7% to State National’s closing stock price on July 25, 2017.

The transaction, which is subject to the approval of a majority of State National shareholders, approvals by relevant state insurance regulators and other customary closing conditions, is expected to close in the fourth quarter of 2017.

The transaction is not subject to any financing condition, and #Markel plans to finance the transaction using cash balances on hand.

Members of the #Ledbetter family have entered into a voting agreement with Markel in support of the merger. CF SNC Investors LP has entered into a separate similar voting agreement with Markel.

As a result of these voting agreements, approximately 37% of State National’s common stock is committed to vote in favor of the transaction.

Upon completion of the transaction, State National will operate as a separate business unit. The management team, led by Terry Ledbetter, State National’s current Chairman and CEO will remain in place and will continue to be based in Bedford, Texas.

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Guidance Software Sold for $240 Million

Guidance Software to be acquired by OpenText for $7.10 per share

Guidance Software sold for $240 Million. See Stockwinners.com Market Radar

Guidance Software (GUID) has entered into a definitive agreement to be acquired by OpenText (OTEX).

Under the terms of the merger agreement, OpenText will commence a tender offer to acquire all outstanding shares of Guidance Software common stock in a transaction valued at approximately $240 million.

Subject to the terms and conditions of the offer, Guidance stockholders will receive $7.10 per share in cash for each outstanding share of common stock held.

“Our board of directors has carefully evaluated the merger proposal by OpenText and believes it represents the best value reasonably attainable for our stockholders and will benefit our customers and employees,” said Patrick Dennis, Guidance president and CEO.

“We believe this all-cash transaction offers our stockholders liquidity and certainty of value. Joining with OpenText is a new beginning for Guidance products, customers and employees.”

The merger has been unanimously approved by the Board of Directors of Guidance and is expected to close in the third quarter of calendar 2017.

Consummation of the transaction is subject to customary closing conditions, including the receipt of regulatory approvals and the tender of a majority of the shares of Guidance Software common stock in the offer.

Morgan Stanley and Atlas Technology Group are serving as financial advisors and Latham & Watkins is acting as legal counsel to Guidance.

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