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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