Kirby Goes Shopping!

Kirby acquires Stewart & Stevenson for $756.5M

Kirby acquires Stewart & Stevenson for $756.5M. See Stockwinners.com Market Radar for details

Kirby (KEX) closed the acquisition of substantially all of the assets and businesses of Stewart & Stevenson for approximately $756.5M, before post-closing adjustments. The purchase was funded with 5.7 million shares of Kirby common stock valued at $366.6M and $377.0M in cash through Kirby’s revolving credit facility, as well as assumed debt of $12.9M.

The company expects the transaction to be 2c-4c per share accretive to Q4 EPS. The full benefit from the earnings contribution is likely to be partially offset in the quarter by one-time integration and transaction-related expenses. Kirby will include a more definitive earnings assessment of Stewart & Stevenson in its 2018 full year guidance on its Q4 earnings call in January.

Kirby Corporation operates domestic tank barges in the United States. The company’s Marine Transportation segment provides marine transportation services and towing vessels transporting bulk liquid products, as well as operates tank barges throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along three United States coasts, and in Alaska and Hawaii.

Kirby acquires Stewart & Stevenson for $756.5M. See Stockwinners.com for details

Stewart & Stevenson, founded in 1902, is a manufacturer and distributor of products and services for the oil and gas, marine, construction, power generation, transportation, mining and agricultural industries. The company serves domestic and global markets with equipment, rental solutions, parts, and service through a strategic network of sales and service centers in domestic and international locations.

HURRICANE  IMPACT

Kirby announced that Hurricanes Harvey and Irma caused little damage to Kirby vessels and minor flooding to one facility.

CEO Grzebinski stated, “Harvey has significantly dislocated normal supply and distribution routes in our inland barge business. Ports from Corpus Christi to Houston started closing on August 23rd, and began reopening on September 1st.

Irma has also significantly disrupted our offshore business. We expect lost revenues and costs associated with recovery efforts for both hurricanes to impact Q3 EPS by 6c-8c per share.

For Harvey, the lost revenues have been partially offset by an increase in our vessel utilization as the U.S. Gulf Coast petrochemical and refinery complex returns to normal operations.

As such, we believe Q3 earnings results will fall within our previously provided guidance range, although towards the low end after the negative impact from the storms.” The company had seen Q3 EPS of 40c-55c, consensus is 48c.

PRICE ACTION

KEX has a 52-weeks trading range of $55.09 – $74.50. Shares last traded at $64.33.


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Halozyme is on the move!

Halozyme to receive $150M from Bristol-Myers for Enhanze technology partnership

halozyme is on the move. See Stockwinners.com for details

Bristol-Myers (BMY) and Halozyme (HALO) announced a global collaboration and license agreement to develop subcutaneously administered Bristol-Myers Squibb immuno-oncology medicines using Halozyme’s Enhanze drug-delivery technology.

The Halozyme Enhanze technology is based on a proprietary recombinant human hyaluronidase enzyme to aid in the dispersion and absorption of other injected therapeutic drugs.

Halozyme will receive an initial $105M for access to the Enhanze technology. Bristol-Myers Squibb has an option to select additional targets within five years from the effective date. The collaboration may extend to a maximum of 11 targets.

Halozyme has the potential to earn milestone payments of up to $160M for each of the nominated collaboration targets and additional milestone payments for combination products.

In addition, Bristol-Myers Squibb will pay Halozyme royalties on sales of products using the Enhanze technology developed under the collaboration. For Bristol-Myers, the transaction is expected to be dilutive to non-GAAP EPS in 2017 and 2018 by approximately 1c, and by approximately 5c in 2019.

ROCHE  DEAL

Separately, Halozyme (HALO) licensed its Enhanze drug-delivery technology to Roche (RHHBY) for exclusive development of an undisclosed therapeutic target.

Halozyme will receive an initial $30M with the potential to earn additional payments of up to $160M subject to achievement of specified development, regulatory and sales-based milestones.

Halozyme will also receive tiered, mid-single digit royalties on sales of commercialized products. The Halozyme/Roche relationship dates back to the original global collaboration and licensing agreement for the ENHANZE technology signed in 2006.

RAISED   GUIDANCE

Halozyme raised its FY17 revenue view to $245M-$260M from $115M-$130M vs FY17 consensus $131.9M. Reflecting the portion of upfront payments from the new agreements expected to be recorded as revenue in 2017.

PRICE  ACTION

HALO closed at $13.18. It has a 52-weeks trading range of $8.18 – $15.20. Shares last traded at $14.80 in pre-market trading.


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Autoliv to split into two companies

Autoliv initiates strategic review of separating business segments

Autoliv to split into two companies. See Stockwinners.com for details.

Autoliv (ALV) announced that its board has instructed management to conduct a strategic review of its operating structure with the intent to create separate companies of its current business segments, Passive Safety and Electronics.

The intent is to create two publicly traded companies capable of addressing two distinct, growing markets with leading product offerings and thereby create additional value for shareholders, customers and other stakeholders as compared to the current, combined structure of Autoliv.

The strategic review process will evaluate this and other options.

Although the strategic review has been initiated there is no guarantee that the review will result in any transaction, including a separation or listing of the businesses. Electronics consists of Active Safety Products, Restraint Control and Sensing and Brake Systems.

Its market is characterized by a high pace of change and growth which requires an agile innovation and partnering model as well as significant upfront investments to capture future growth.

It is estimated that the total available market for Safety Electronics will grow from around $20B in 2017 to more than $40B in 2025.

The objective for Electronics is to capture a significant portion of that growth while continuously improving the profitability of the unit. Electronics is one of the leaders in Active Safety today with one of the broadest and most advanced product portfolios in the industry.

Over the last two years Electronics has further positioned itself to be a major player in automotive electronics, including the competitiveness of the product portfolio, becoming a qualified supplier with a high number of OEM’s for active safety and entering into important partnerships with companies like Volvo Cars, NVIDIA (NVDA) and LiDAR experts Velodyne for the next generation of highly automated cars.

In 2016, Electronics sales were $2.22B, with a target to reach $3B in revenue in 2020.

Passive Safety consists of airbag systems, steering wheels and seatbelts.

Its market is characterized by stable growth and incremental innovation which requires the highest requirements on quality and manufacturing efficiency. It is estimated that the total available market for Passive Safety will grow from around $20B in 2017 to around $25B in 2025.

During the same period Passive Safety is expected to outgrow the market and light vehicle production, which is expected to grow by close to two percent annually.

The objective for Passive Safety is to remain the market and innovation leader while maintaining a high level of quality and capital efficiency and further improving its margin performance. Passive Safety is the global market leader with a market share of 39% in 2016.

Over the last 2.5 years Passive Safety’s share of order intake has been around 50% or more indicating significant market share expansion ahead. Standalone, Passive Safety will have increased freedom to further optimize its performance.

In 2016 Passive Safety sales were $7.9B, with a target to reach more than $10B in revenues in 2020. If the separation takes place, the process is estimated to take around one year under most separation scenarios.

Updates to the progress of the strategic review will be provided in a timely manner.

Autoliv (ALV) has been reporting its Passive Safety and Electronics businesses as two separate segments since the beginning of 2016.

PRICE  ACTION

ALV closed at $113.25. It has a 52-week trading range of $93.31 – $117.54. Shares last traded at $123.60 in pre-market trading.


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