Berkshire, Liberty Media Exploring Sprint Investment

 

Berkshire may invest more than $10B into the transaction with Sprint

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Sprint Corp’s boss, Masayoshi Son, has been in talks with Berkshire Hathaway Inc’s Warren Buffett and media mogul John Malone for a potential investment in the U.S. wireless company, the Wall Street Journal reported

Talks are at an early stage, but one possibility would see Berkshire put more than $10B into a transaction with Sprint, the sources added to the Journal.

Son met Buffett and Malone, the chairman of Liberty Interactive Corp, separately this week at an annual gathering of CEOs in Sun Valley, Idaho, the Journal reported.

Rumors of a Sprint sale have been circulating the market for the past few month. T-Mobile (TMUS) has often being mentioned a suitor along with some cable companies.

S is up 37 cents to $8.57. Sprint has a 52-week trading range of $4.420 – $9.650.

 

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Wells Fargo to Close 450 Branches

Wells Fargo targeting $2B expense reduction by year-end 2018

Wells Fargo to close 450 branches. See Stockwinners.com Market Radar for the story.

Sees FY17 effective tax rate about 29%. Expects efficiency initiatives will reduce expenses by $2B annually by year-end 2018 and that those savings will support investments in the business.

Plans to close ~450 branches in 2017-2018 to eliminate overlap and improve performance of the network; says 93 branches closed YTD 2017 through June.

Anticipates $130M in 2017 savings from gains on building dispositions and workforce optimization with an additional $20M in 2018.

Also reducing non-customer facing travel and expenses with focused efforts on virtual conferences and telepresence, as well as leveraging internal meeting spaces and services.

Wells Fargo sees auto portfolio stabilizing in 1H18 – Says seeing “slow but steady” improvement in retail business.

Expects an additional $2B in annual expense reductions by the end of 2019; these savings are projected to go to the “bottom line.”

Says had digital active customers of 27.9M, stable LQ and up 2% YoY; had 20.4M mobile active customers, up 1% LQ. Notes that mobile active customers surpassed our desktop active customers for the first time in May.

Expects to increase Q3 dividend to 39c per share from 38c per share, subject to board approval.

WFC last traded at $55.17.

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Macau Casinos Drop on Money Laundering Probe

Macau gaming names slide after Daiwa uncovers junket operator warning

Macau gaming names slide on money laundering probe. See Stockwinners.com Market Radar for the latest.

Shares of several Macau gaming stocks are lower after #Daiwa analyst Jamie Soo told investors that his checks uncovered that a memo was distributed to customers and key staff by “one of Macau’s largest” #junket operators warning of recently heightened enforcement of anti-money laundering initiatives in both China and #Macau.

The junket operator advised its customers to withdraw funds out of “underground” bank accounts, which is the first time such a dissemination has occurred to Soo’s knowledge, he informed clients.

The expected further heightening of enforcement continues to be reaffirmed given this news and other events over the past six months, added #Soo, who said he remains Neutral on the Macau gaming sector.

Stocks to watch

Las Vegas Sands (LVS) MGM Resorts (MGM), Wynn Resorts (WYNN) and Melco Resorts (MLCO).

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Congressman Requests Hearing on Amazon Whole Food Merger

Democratic Rep calls for oversight hearing on Amazon-Whole Foods tie-up

Democratic House Representative David Cicilline of Rhode Island wrote a letter to the Republican leaders of the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law, requested that the committee hold an oversight hearing on Amazon’s (AMZN) proposed takeover of Whole Foods (WFM).

#Cicilline said in the letter that he has heard concerns that the merger may discourage innovation and entrance into emerging markets, such as grocery and food delivery.

The Rep added that some have raised concerns that the deal will also increase Amazon’s online dominance, enabling it to “prioritize its products and services over competitors.”

“Without taking a position on the legality of the transaction under the antitrust laws, Amazon’s proposed acquisition of Whole Foods raised important questions concerning competition policy, such as how the transaction will affect the future of retail grocery stores, whether platform dominance impedes innovation, and if the antitrust laws are working effectively to ensure economic opportunity, choice, and low prices for American families,” Cicilline said in the letter.

Note that United Natural Foods (UNFI) is headquartered in the Congressman’s district. United Natural Foods, Inc. distributes and retails natural, organic, and specialty foods and non-food products in the United States and Canada. The company operates through three divisions: Wholesale, Retail, and Manufacturing and Branded Products.

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Dominion Diamond is For Sale

Dominion Diamond in advanced talks to be bought by Washington Cos.

 

Dominion Diamond in advanced talks to be bought by Washington Companies. See Stockwinners.com Market Radar for more

Washington Companies is in advanced negotiations to purchase Dominion Diamond after it raised its prior unsolicited cash offer of $13.50 per share and a deal could be announced within weeks, the New York Times reports.

Dominion Diamond Corp of Canada is the world’s third-largest diamond producer by market value.

Dominion Diamond Corporation engages in the mining and marketing of rough diamonds. It operates through Diavik Diamond Mine and Ekati Diamond Mine segments.

The company holds 88.9% ownership interest in the Core zone and 72.0% ownership interest in Buffer zone of Ekati Diamond Mine; and a 40% ownership interest in the Diavik Diamond Mine located at Lac de Gras in Northwest Territories, Canada.

It produces, sorts, and sells rough diamonds in Canada, Belgium, and India. The company was formerly known as Harry Winston Diamond Corporation and changed its name to Dominion Diamond Corporation in March 2013.

It is unclear how much Washington increased its proposal for Dominion, which previously rejected Washington’s initial bid, saying it undervalued the company.

Trade in Dominion shares on the Toronto Stock Exchange was halted pending news. The stock had gained as much as 4.74 percent following Reuters’ report on the talks. DDC last traded at $13.46, up 70 cents.

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Rig Count Unchanged!

Baker Hughes reports U.S. rig count unchanged at 952 rigs

Oil Should Rise on the News

Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count

Baker Hughes, a GE Company (BHGE) reports that the U.S. rig count is unchanged from last week at 952, with oil rigs up 2 to 765 and gas rigs down 2 to 187.

The U.S. Rig Count is up 505 rigs from last year’s count of 447, with oil rigs up 408, gas rigs up 98, and miscellaneous rigs down 1 to 0.

The U.S. Offshore Rig Count is unchanged from last week at 21 and down 1 rig year over year.

The Canadian Rig Count is up 16 rigs from last week to 191, with oil rigs up 1 to 106 and gas rigs up 15 to 85.

The Canadian Rig Count is up 96 rigs from last year’s count of 95, with oil rigs up 62, gas rigs up 35, and miscellaneous rigs down 1 to 0.

Note that Baker-Hughes was recently purchased GE. Also note that stock symbol has changed to BHGE.

Class A common stock of Baker Hughes, a GE company began trading on the New York Stock Exchange under the symbol BHGE on July 5, 2017. Shares of common stock of Baker Hughes Inc. (BHI) stopped trading on July 3rd.

 

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Nutanix Could Be Sold

Nutanix climbs after Goldman adds to Conviction List, highlights M&A potential

Nutanix climbs after Goldman says it could be take over target. See Stockwinners.com Market Radar

The shares of Nutanix (NTNX) are rallying after Goldman Sachs added the stock to its Conviction List and called the company a potential takeover target.

The firm added that the company is “a once-in-a-decade tech infrastructure story,” while its results are poised to beat consensus estimates in “coming quarters.”

POSSIBLE TARGET IN HIGH-GROWTH MARKET

Calling hyperconvergence “the biggest trend in IT since public cloud,” Goldman analyst Simona Jankowski estimated that Nutanix has a roughly 30% share of the $2B hyperconvergence market, which she predicted would grow to $20B in a decade.

Hyper-convergence (hyperconvergence) is a type of infrastructure system with a software-centric architecture that tightly integrates compute, storage, networking and virtualization resources and other technologies from scratch in a commodity hardware box supported by a single vendor.

Meanwhile the stock’s 30% drop so far this year and the lack of similar companies makes a takeover of Nutanix “increasingly likely,” the analyst stated.

RESULTS OUTLOOK POSITIVE

Nutanix’s strong fundamentals and an accounting change it’s making should enable the company to report strong results, wrote Jankowski.

Later this year, Nutanix’s switch to new accounting rules that will allow it to recognize software revenue up front should significantly boost its results, Jankowski believes.

Goldman’s checks indicate that adoption trends for hyperconverged infrastructure in general and Nutanix specifically have been strong, according to the analyst.

COMPETITIVE ADVANTAGES

A number of Nutanix’s advantages over its competitors should enable it to retain its market share over the longer term even as competition in its category heats up, Jankowski stated.

Specifically, while the hypercoverged solutions of Cisco (CSCO) and HP Enterprise (HPE) can only work on their servers, Nutanix’s products can work on a number of third party servers, the analyst noted. Additionally, Nutanix’s system works with several hypervisors, including its own, free hypervisor, enabling users to avoid paying for VMware’s (VMW) product, thereby saving them as much as 30%, according to Jankowski.

TARGET

The analyst set a $31 price target on the stock, but she believes that the shares can rise more than 50% above her target.

PRICE ACTION:

In Friday trading, Nutanix rose 7.5% to $21.79.

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Nerf Sold for $1.2 Billion

Neff Corporation sold for $21.07 per share

Neff Corp sold for $1.2 Billion. See Stockwinners.com Market Radar to read more.

H&E Equipment Services, Inc. (HEES) and Neff Corporation (NEFF) today announced that they have entered into a definitive merger agreement under which H&E Equipment Services (“H&E”) will acquire Neff Corporation (“Neff”).

Neff Corporation operates as an equipment rental company in the United States. The company offers earthmoving equipment, including excavators, backhoes, loaders, bulldozers, mini-excavators, trenchers, sweepers and tractors, track loaders, and skid steers; and material handling equipment comprising reach forklifts, industrial forklifts, and straight-mast forklifts.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, H&E will pay $21.07 in cash per share of Neff common stock, for a total enterprise value of approximately $1.2 billion, including approximately $690 million of net debt.

The per share merger consideration payable to Neff stockholders is subject to certain downward adjustments, not to exceed $0.44 per share, in the event that H&E incurs certain increased financing costs due to the transaction not being consummated on or prior to January 14, 2018.

The transaction is expected to close in the late third quarter or early fourth quarter of 2017, and is subject to customary closing conditions including Hart-Scott-Rodino Act clearance.

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Oaktree Capital to Acquire Fifth Street Finance, Fifth Street Senior

Oaktree Capital to acquire Fifth Street Finance, Fifth Street Senior BDCs

Oaktree Capital to acquire Fifth Street Finance, Fifth Street Senior. See Stockwinners.com Market Radar

Oaktree Capital Group (OAK) announced that Oaktree Capital Management has signed a definitive asset purchase agreement under which Oaktree will become the new investment adviser to two business development companies: Fifth Street Finance (FSC) and Fifth Street Senior Floating Rate (FSFR).

Oaktree will pay $320M in cash to Fifth Street Management upon the close of the transaction. The parties expect the transaction to be completed in Q4.

Oaktree portfolio manager Edgar Lee is expected to serve as CEO of both BDCs, which together have approximately $2.5B of assets under management across first lien, second lien, uni-tranche and mezzanine credits.

Following the transaction, FSC will change its name to Oaktree Specialty Lending Corporation, and will trade under the ticker symbol OCSL; FSFR will change its name to Oaktree Strategic Income Corporation, and will trade under the ticker symbol OCSI.

Following the closing of the transaction, Oaktree will replace FSM as the investment adviser to the BDCs, and an Oaktree affiliate will become their administrator.

Oaktree’s proposed investment advisory agreements are more aligned with BDC shareholders as the management fee rate for FSC will be reduced from 1.75% to 1.50%, and the incentive fee will be reduced from 20.0% to 17.5% with respect to both income and capital gains.

The incentive fee for FSFR will also be reduced from 20.0% to 17.5% with respect to both income and capital gains. The current FSFR management fee rate of 1.0% will remain unchanged. OCG expects the transaction to be immediately accretive to its adjusted net income. The new advisory agreements are subject to approval by the stockholders of FSC and FSFR.

The FSC and FSFR boards of directors unanimously recommended that the stockholders of each BDC vote in favor of the new investment advisory agreement with Oaktree and related corporate governance matters, including the election of new directors.

Following the closing of the transaction, all current FSC board members except Richard P. Dutkiewicz, and all current FSFR board members except Richard W. Cohen, have agreed to resign.

Each BDC board has nominated Marc H. Gamsin, Craig Jacobson, Richard G. Ruben and Bruce Zimmerman as new independent directors and John Frank, Vice Chairman of Oaktree, as a new interested director of the board, each of whom would take office upon approval of the stockholders and the closing of the transaction.

Mr. Frank is expected to serve as Chairman of each BDC board. The executive officers of FSC and FSFR will resign and will be replaced with individuals affiliated with Oaktree at the closing of the transaction.

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