Worldpay’s Possible Sale Raises the Secor

Payment processing companies trade up after Vantiv, Worldpay in potential merger

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Shares of payment processing stocks are outperforming the broader market after Vantiv (VNTV), a U.S.-based payment processing and technology provider, announced its intentions to acquire Worldpay, the U.K.’s largest payment processing firm, in a deal valued at GBP 7.7B, or $9.94B.

POTENTIAL MERGER TERMS

Under the terms of the potential merger, the ordinary shareholders of Worldpay would receive GBP 0.55 in cash and GBP 0.0672 new Vantiv shares.

Worldpay shareholders would also be entitled to a cash dividend of 5p per Worldpay share, in place of any anticipated interim dividend payment to be declared and approved by the board of Worldpay by the time of Worldpay’s half year results 2017.

The total value to Worldpay shareholders would be GBP3.85 per Worldpay share comprising the 5p dividend payment and GBP3.80 per Worldpay share, based on the closing share price of Vantiv on July 3 of $62.51.

Following completion of the potential merger, Worldpay investors would own approximately 41% of the share capital of the combined group on a fully diluted basis. Discussions between the parties remain ongoing regarding the other terms and conditions of the potential merger, the companies cautioned, and said they will proceed with a mutual due diligence process.

WHAT’S NOTABLE

JPMorgan (JPM), which had been rumored to be eyeing Worldpay, is not planning to make a competing offer, Bloomberg reported.

PRICE ACTION

Vantiv is down 2.5% to $60.92 in Thursday’s trading, while shares of other firms in the payment processing space are higher, including Square (SQ), up 5% , First Data (FDC), up 2.1%, Fiserv (FISV), up 0.7%, and Fortinet (FTNT), up almost 4%.

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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.

O’Reilly Brings the Sector Down

Auto retailers fall after O’Reilly comp sales miss

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Shares of auto retailers are falling after O’Reilly Automotive (ORLY) reported second quarter same-store-sales that were below previous expectations.

SSS MISS:

O’Reilly Automotive reported Q2 comparable same-store-sales (SSS) results of 1.7%, which fell short of previously issued Q2 comparable store sales guidance of 3%-5%.

CEO Greg #Henslee stated, “After exiting Q1 and entering April on an improved sales trend, we faced a more challenging sales environment than we expected for the remainder of the quarter.”

Henslee added that the Q2 comp sales results of 1.7% represent an improvement over our Q1, but fell below the 3%-5%, “due to what we believe were continued headwinds from a second consecutive mild winter and overall weak consumer demand.”

The executive said the comparable store sales shortfall will have a “consequent impact on our operating profitability.”

O’Reilly is expected to report full results for the second quarter on July 26 after the market close.

ANALYST COMMENTARY:

Following the lower than expected Q2 preannouncement, Raymond James analyst Dan #Wewer lowered his price target on O’Reilly Automotive to $250 from $310 and said he is bullish long-term, but is disappointed with ongoing sales challenges facing the company and the industry.

BTIG analyst Alan #Rifkin also lowered his price target for O’Reilly to $243 from $310 and said he believes the sustained comp weakness suggests sales are being impacted by factors other than income tax delays and weather.

Nonetheless, the analyst thinks O’Reilly’s long-term fundamentals remain strong.

PRICE ACTION:

In Thursday’s trading, O’Reilly Automotive is down 20.5% to $175.23.

PEERS ALSO DROPPING:

O’Reilly peers also declining include Advance Auto Parts (AAP), down 15%, AutoZone (AZO), down 9.6%, Genuine Parts (GPC) dropping 4.2%, and U.S. Auto Parts (PRTS), down 3.3%.

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U.K. Approves Alexion’s Strensiq

Alexion reaches funding agreement with NICE and NHS England for Strensiq

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Alexion Pharmaceuticals (ALXN) announced that it has reached a national funding agreement with the National Institute for Health and Care Excellence, or NICE, and the National Health Service, or NHS, England based on a Managed Access Agreement, or MAA, which provides access to Strensiq for patients in England with pediatric-onset hypophosphatasia, or HPP, regardless of their current age.

The funding agreement was announced today in a positive final evaluation determination, or FED, issued by the NICE Highly Specialised Technologies, or HST, Evaluation Committee to recommend Strensiq according to the MAA.

#Strensiq (asfotase alfa) is an enzyme replacement therapy approved for the treatment of patients with perinatal/infantile- and juvenile-onset hypophosphatasia (HPP). 

#HPP is a genetic, chronic, progressive and life-threatening metabolic disease in which patients experience devastating effects on multiple systems of the body, leading to debilitating or life-threatening complications. HPP is characterized by low alkaline phosphatase (ALP) activity and defective bone mineralization that can lead to destruction and deformity of bones and other skeletal abnormalities, as well as systemic complications such as muscle weakness and respiratory failure leading to premature death in infants.

The MAA has been developed in collaboration between physician thought-leaders, patient groups, NHS England, and Alexion. The MAA ensures access to Strensiq for infants, children and adult patients with pediatric-onset HPP who experience the most disabling symptoms and are expected to benefit most from therapy.

ALXN has a 52-weeks trading range of $96.18 – $145.42. Shares last traded at $124.48.

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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.