Sucampo Pharmaceutical sold for $1.2 billion

Mallinckrodt to acquire Sucampo for $18.00 per share  

Sucampo Pharma sold for $1.2B. Stockwinners
Sucampo Pharma sold for $1.2B

Mallinckrodt (MNK) and Sucampo Pharmaceutical (SCMP) announced that they have entered into an agreement under which Mallinckrodt will acquire Sucampo, including its commercial and development assets.

The transaction was approved by the Boards of Directors of both companies. Sun Acquisition, a subsidiary of Mallinckrodt, will commence a cash tender offer to purchase all of the outstanding shares of Sucampo Pharmaceuticals’ common stock for $18.00 per share.

The total transaction value is approximately $1.2B.

The acquisition is expected to be funded through borrowings under Mallinckrodt’s existing revolving credit facility, a new secured term loan facility and/or cash on hand.

Following the transaction, Mallinckrodt intends to utilize its significant cash generation to focus on reducing outstanding debt over time.

Sucampo stockholders holding approximately 32% of the outstanding Sucampo shares have entered into a tender and support agreement for this transaction.

Mallinckrodt expects accretion from the acquisition to adjusted diluted earnings per share of at least 30c in 2018 and at least double that amount in 2019, assuming a first quarter 2018 close.

Guidance on the impact of the acquisition to the company’s GAAP 35c diluted earnings per share has not been provided due to the inherent difficulty of forecasting the timing or amount of items that would be included in calculating such impact.

The transaction is subject to customary closing conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the tender of a majority of the outstanding Sucampo shares.

MNK closed at $23.32. SCMP closed at $17.00.


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Barron’s is bullish on Apple, Western Digital

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names: 

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review 

BULLISH  MENTIONS

Apple may hit $1T in market value next year- Apple (AAPL) could soon reach a milestone, namely to be the first U.S. company with a $1T market valuation, with iPhone X and a rising stream of service revenue helping it get there, Jack Hough writes in this week’s edition of Barron’s. Hough does not thing the peak is near as Apple seems to be escaping its product supercycle peaks and troughs to post more-consistent year-to-year growth.

Opportunity seen in semiconductors as Bitcoin plummets on Friday – Last Friday, the price of Bitcoin plummeted over 25% before bouncing back, and no major crypto asset was immune to the selloff, with even Bitcoin Investment Trust momentarily changing hands at more than a 5% discount of its NAV, Crystal Kim writes in this week’s edition. But in every “bloodbath” there is an opportunity to buy, she adds, noting that while bitcoin is a possibility, a better one may be the stocks of semiconductors companies that make the chips and equipment needed to mine bitcoin and other cryptocurrencies.

Some tech still a bargain– For investors looking to buy low, there are a number of good candidates to pick up, such as Qorvo (QRVO) that features in Apple’s (AAPL) iPhone and Finisar (FNSR) that also got the nod from Apple to produce parts for augmented reality and that may be a target for Oclaro (OCLR), Tiernan Ray writes in this week’s edition of Barron’s. Additionally, Ray sees Universal Display (OLED) as the biggest beneficiary of the iPhone rise, while Cisco Systems (CSCO) should get a lift from the new tax law.

PG&E looks like a buy– A sharp drop last week in shares of PG&E (PCG) could present a buying opportunity, Andrew Bary writes in this week’s edition of Barron’s. Shares of California utilities Sempra Energy (SRE) and Edison International (EIX) also fell this past week amid concerns about their liability for this month’s wildfire outbreak in Southern California, Barron’s adds.

Investors should give REITs a chance – Income investors should give real estate investment trusts a chance, Bill Alpert writes in this week’s edition of Barron’s. Among REITs with nice payouts are Macerich (MAC), Simon Property Group (SPG), Agree Realty (ADC), National Retail Props (NNN) and Realty Income (O), he contends

Western Digital (WDC) could be worth $120 – Flash-memory prices are expected to fade in 2018, which has worried investors in Western Digital, Andrew Bary writes in this week’s edition of Barron’s. However, at $83, Western Digital shares look undervalued, as the stock could be worth $120 at $10 a share in free cash flow, Bary notes.

BEARISH  MENTION

 Bitcoin bourses should be avoided by small traders – Derivatives exchanges Chicago Board Options Exchange (CBOE) and CME (CME) recently launched futures trading on the digital cryptocurrency bitcoin, but these securities do not trade actual bitcoin and are instead based on indexes of bitcoin prices that are calculated differently, Theresa Cary writes in this week’s edition of Barron’s. Putting aside the risk reflected in last week’s bitcoin plunge, these are not retail-friendly products in their current form, she notes, adding that market observers expect that to change over the next six months.

Cryptocurrency mania may not end well – Cryptocurrency mania is obvious in the stock market activity of companies like beverage seller Long Island Iced Tea (LTEA), with shares soaring after the company said it would change its name to Long Blockchain, Vito Racanelli writes in this week’s edition of Barron’s. The real risk is regulatory as governments around the world will gradually see the cryptocurrencies as a threat to their fiat currencies and policies, he notes, adding that it is a mania and eventually the bubble will pop amid tears.


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FDA approves drugs for adults with type 2 diabetes

Merck announces FDA approval for STEGLATRO, STEGLUJAN 

https://stockwinners.com/blog
FDA approves drug for Type 2 diabetes

Merck (MRK) and Pfizer (PFE) announced that the U.S. Food and Drug Administration has approved STEGLATROTM tablets, an oral sodium-glucose cotransporter 2 inhibitor, and the fixed-dose combination STEGLUJAN tablets.

https://stockwinners.com/blog/
FDA approves drug for Type 2 diabetes

STEGLATRO is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.

STEGLUJAN is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus when treatment with both ertugliflozin and sitagliptin is appropriate.

STEGLATRO and STEGLUJAN are not recommended in patients with type 1 diabetes mellitus or for the treatment of diabetic ketoacidosis.

STEGLUJAN has not been studied in patients with a history of pancreatitis. It is unknown whether patients with a history of pancreatitis are at increased risk for the development of pancreatitis while using STEGLUJAN.

STEGLATRO and STEGLUJAN are contraindicated in patients with severe renal impairment, end-stage renal disease or on dialysis, or with a history of a serious hypersensitivity reaction to ertugliflozin.

STEGLUJAN is also contraindicated in patients with a history of a serious hypersensitivity reaction to sitagliptin.

These FDA approvals are supported by seven Phase 3 studies of approximately 4,800 patients.

STEGLATRO was studied as monotherapy and in combination with metformin and/or sitagliptin, as well as with insulin and a sulfonylurea, in adults with type 2 diabetes and moderate renal impairment.


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Ignyta sold for $1.7 billion

Roche to acquire Ignyta for $27 per share in cash

Ignyta sold for $1.7B. Stockwinners.com
Ignyta sold for $1.7B

Roche (RHHBY) and Ignyta (RXDX) announced they have entered into a definitive merger agreement for Roche to fully acquire Ignyta at a price of $27.00 per share in an all-cash transaction.

This corresponds to a total transaction value of $1.7B on a fully diluted basis.

This price represents a premium of 74% to Ignyta’s closing price on December 21 and a premium of 71% and 89% to Ignyta’s 30-day and 90-day volume weighted average share price on December 21, respectively.

The merger agreement has been unanimously approved by the boards of Ignyta and Roche.

Under the terms of the merger agreement, Roche will promptly commence a tender offer, to acquire all outstanding shares of Ignyta common stock, and Ignyta will file a recommendation statement containing the unanimous recommendation of the Ignyta board that Ignyta’s shareholders tender their shares to Roche.

Ignyta will continue its operations in San Diego and be responsible for the ongoing pivotal study of #entrectinib to ensure this important medicine reaches patients without delay.

Under the terms of the merger agreement, Roche will promptly commence a tender offer to acquire all of the outstanding shares of Ignyta’s common stock at a price of $27.00 per share in cash.

The closing of the tender offer will be subject to a majority of Ignyta’s outstanding shares being tendered in the tender offer.

Following completion of the tender offer, Roche will acquire all remaining shares at the same price of $27.00 per share through a second step merger.

The closing of the transaction is expected to take place in the first half of 2018.

RXDX closed at $15.55. RHHBY closed at $31.06.


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Celgene’s Revlimid fails in lymphoma patients

Celgene’s Revlimid in follicular lymphoma shows no superiority vs. standard

Celgene tumbles
Celgene’s Revlimid fails in lymphoma patients

Celgene (CELG) and the Lymphoma Academic Research Organisation reported results from a phase III, randomized, open-label, international clinical study evaluating Revlimid plus rituximab – R2 – followed by R2 maintenance compared to the standard of care with rituximab plus chemotherapy followed by rituximab maintenance in patients with previously untreated follicular lymphoma.

The R2 treatment arm did not achieve superiority in the co-primary endpoints of complete response or unconfirmed complete response at 120 weeks and progression-free survival during the pre-planned analysis. Neither arm was superior for either of the co-primary endpoints.

The safety findings were consistent with the known profiles of the regimens investigated. Additional analyses are ongoing and planned.

ANALYST  REACTION

Piper cuts Celgene target to $100 on second Revlimid failure in lymphoma – Piper Jaffray analyst Christopher Raymond lowered his price target for Celgene to $100 from $109 after the Phase 3 Relevance trial evaluating Revlimid plus Rituximab in front line follicular lymphoma failed to show superior efficacy versus standard-of-care.

This is the second Revlimid failure in lymphoma following last year’s disappointment in diffuse large B-cell lymphoma,

#Raymond tells investors in a research note. This latest failure could have a near-term negative impact on Revlimid’s revenue trajectory since a “decent chunk” of off-label use in the U.S. likely stems from lymphoma, the analyst contends. He sees a “new element of uncertainty” and keeps a Neutral rating on Celgene.

Jefferies analyst Michael Yee says the failed Phase III Relevance study announced tonight by Celgene is irrelevant. The study had somewhat low expectations and it also makes Revlimid “less big,” which isn’t necessarily a bad problem, Yee tells investors in a research note.

The analyst says his thesis on the stock is unchanged and keeps a Buy rating on Celgene with a $125 price target.

The stock in after-hours trading is down 4% to $103.76. It has a 52-week trading range of $94.55 – $147.17.

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Insys Therapeutics sued by N. Carolina

N. Carolina AG Stein files lawsuit against Insys Therapeutics over Subsys

N. Carolina files lawsuit against Insys. Stockwinners.com
N. Carolina files lawsuit against Insys Therapeutics 

North Carolina Attorney General Josh Stein filed a lawsuit against drug manufacturer Insys Therapeutics (INSY) alleging an extensive scheme involving kickbacks, deception and fraud in marketing its drug #Subsys.

Subsys is a spray form of the synthetic opioid fentanyl, which is approximately 50 times stronger than heroin and 100 times more potent than morphine.

Subsys is approved only for adult cancer patients who are already on round-the-clock opioids for pain, but experience additional, breakthrough pain and for whom no other pain medications are effective.

The lawsuit alleges that Insys gave illegal kickbacks to doctors for promoting and prescribing Subsys for non-cancer patients, including through a multi-million dollar speaker program that rewarded physicians who wrote prescriptions for the drug.

Insys employees also allegedly pushed doctors to switch patients who were being prescribed non-equivalent fentanyl prescriptions to Subsys, and often at a starting dose of up to twelve or sixteen times larger than the label directed.

Finally, the suit alleges that Insys deceived health insurers into covering Subsys prescription claiming Insys employees often posed as prescribers or their staff and invented medical histories for patients to ensure the drug would be covered.

Only about 10% of prescriptions for which Insys sought prior authorization from insurers were for patients with breakthrough cancer pain, the only use the FDA had approved.

INSY is down 18 cents to $7.02.


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Long Island Iced Tea to rebrand as ‘Long Blockchain Corp.’

Long Island Iced Tea to rebrand as ‘Long Blockchain Corp.’

Long Island Iced Tea to rebrand as 'Long Blockchain Corp.' Stockwinners.com
Long Island Iced Tea to rebrand as ‘Long Blockchain Corp.’

Long Island Iced Tea Corp. (LTEA) announced that the parent company is shifting its primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology.

In connection with the shift in strategic direction, the company has approved changing its name from “Long Island Iced Tea Corp.” to “Long Blockchain Corp.” and has reserved the web domain www.longblockchain.com.

The company intends to request Nasdaq to change its trading symbol in connection with the name change.

The company will continue to operate Long Island Brand Beverages, LLC as a wholly-owned subsidiary and maintain the focus of this business on the ready-to-drink segment of the beverage industry, specifically, premium, ‘better-for-you’ brands marketed at an affordable price.

In conjunction with the shift in business strategy, the company has submitted a request to the SEC to withdraw its previously filed S-1 registration statement relating to a proposed underwritten public offering, which was filed on November 11, Long Island noted.

LTEA closed at $2.44. It last traded at $12.05 in pre-market trading. This seems to be the bubble mentality at its worse!


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Biogen’s BAN2401 fails to achieve results

 Biogen’s BAN2401 did not meet primary endpoint in Phase II clinical study

 Biogen says BAN2401 did not meet primary endpoint. Stockwinners.com
Biogen says BAN2401 did not meet primary endpoint

Eisai and Biogen (BIIB) announced that an Independent Data Monitoring Committee has determined that BAN2401, an anti-amyloid beta protofibril antibody, did not meet the criteria for success based on a Bayesian analysis at 12 months as the primary endpoint in an 856-patient Phase II clinical study.

Following the predefined study protocol, the blinded study will continue and a comprehensive final analysis will be conducted at 18 months seeking to demonstrate clinically significant results.

The results of the final analysis are expected to be obtained during the second half of 2018.

Study 201 is a placebo-controlled, double-blind, parallel-group, randomized study in patients with prodromal or mild Alzheimer’s disease and with positive biomarkers for brain amyloid pathology.

The study design included 16 interim analyses that assessed potential for futility or stopping for safety. Neither of these conditions was met and the study continues to a full analysis at 18 months.

The efficacy of five dose groups of BAN2401 was evaluated at 12 months based on Eisai’s in-house developed novel endpoint Alzheimer’s disease Composite Score.

According to the Bayesian analysis at 12 months, success was judged as an 80% or higher probability of achieving a Clinically Significant Difference. In the final analysis at 18 months, a comprehensive evaluation which includes assessing changes from baseline in the clinical evaluation indicators ADCOMS and Clinical Dementia Rating Sum of Boxes, as well as changes in biomarkers such as brain amyloid levels as measured by amyloid PET and total hippocampal volume using vMRI, will be assessed. BAN2401 is a humanized monoclonal antibody for Alzheimer’s disease that is the result of a strategic research alliance between Eisai and BioArctic.

Since March 2014, Eisai and Biogen have been jointly developing BAN2401.

BIIB closed at $333.47. It last traded at $319.94.


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Helios and Matheson jumps as MoviePass exceeds estimates

Helios and Matheson jumps as MoviePass tops 1M subscribers 

Helios and Matheson jumps as MoviePass exceeds initial projections

Shares of Helios and Matheson (HMNY) jumped in afternoon trading after the company said its MoviePass theater subscription services surpassed 1M paying monthly subscribers this month.

MOVIEPASS EXCEEDS 1M MONTHLY SUBSCRIBERS

Helios and Matheson, a majority owner of MoviePass, said this morning that the subscriber base for the movie theater subscription service surpassed 1M paying monthly subscribers, compared to more than 600,000 as of October 18 and approximately 20,000 as of August 14, the day before MoviePass announced its new $9.95 per month subscription price.

In a statement, the company said MoviePass has increased its subscriber base by over 6,500% since the introduction of the $9.95 per month pricing model.

MoviePass shifted to the lower price subscription model on August 15, and noted today that it has reached the 1M subscriber mark in less time than Netflix (NFLX) or Hulu (DIS, CMCSA, CMCSK, FOX, FOXA).

MoviePass CEO Mitch Lowe said:

“Our focus on creating the best movie theater subscription service experience for our subscribers has propelled our growth to date. We believe that growth will continue as we further develop our application, improve customer service, enhance exhibitor relations and fill movie theater seats for incredible films to be released in the future.”

WHAT’S NOTABLE

Helios and Matheson announced plans in November to raise its stake in MoviePass from the 53.71% it held in October. After MoviePass dropped its subscription price to $9.95, analysts predicted the service would hit 1M subscribers by the end of the year.

In October, MoviePass said its continued growth trajectory “exceeded MoviePass’ initial projections, and now MoviePass projects that it will acquire at least 3.1 million additional paying subscribers through August 18, 2018, exceeding its previous estimate of 2.5 million subscribers.

“Earlier this month, MoviePass and streaming service Fandor partnered with Costco (COST) to offer a one-year subscription plan for a flat fee of $89.99.

CITRON CAUTIOUS

Citron Research has expressed cautious comments on Helios and Matheson, saying in October that the stock will “trade back to $20…You might like product but $1+bill it isn’t. Giving away $1 for .90 no biz.” Helios and Matheson has also been mentioned cautiously by TheStreetSweeper.

PRICE ACTION

Shares of Helios and Matheson are up about 5% in Wednesday’s trading to $6.51.


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AbbVie reports positive rheumatoid arthritis data

ABT-494 met primary endpoints in Phase 3 trial

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ABT-494 met primary endpoints in Phase 3 trial

AbbVie (ABBV) announced top-line results from the Phase 3 SELECT-MONOTHERAPY clinical trial.

This ongoing study evaluated upadacitinib — ABT-494, an investigational oral JAK1-selective inhibitor, as a monotherapy treatment in patients with moderate to severe rheumatoid arthritis who did not adequately respond to treatment with methotrexate.

Results showed that after 14 weeks of treatment, both once-daily doses of upadacitinib met the study’s primary endpoints of ACR20 and low disease activity versus continuing prior stable methotrexate therapy. Both doses also achieved all ranked and all key secondary endpoints. Upadacitinib is not approved by regulatory authorities and its safety and efficacy have not been established.”

The positive results from the SELECT-MONOTHERAPY study are encouraging, as they are the first evidence to support the potential of upadacitinib as a therapy without the need for background methotrexate,” said Michael Severino, M.D., executive vice president, research and development and chief scientific officer, AbbVie.

“These findings add to the growing body of data showing the potential for upadacitinib as a meaningful treatment option for patients suffering from rheumatoid arthritis. We look forward to sharing additional data from the upadacitinib Phase 3 rheumatoid arthritis program with the scientific community in 2018.”

The study showed that at week 14, 68/42/23 percent of patients switched to 15 mg once-daily upadacitinib and 71/52/33 percent of patients switched to 30 mg once-daily upadacitinib achieved an ACR20/50/70 response, compared to 41/15/3 percent of patients continuing on methotrexate.

These results were statistically significant compared to patients who continued on their baseline methotrexate dose.

ABBV closed at $97.92.


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Metropolitan Bank invests in bitcoin

Metropolitan Bank discloses $110M in bitcoin deposits

Metropolitan Bank converts deposits into bitcoin. Stockwinners.com
Metropolitan Bank converts deposits into bitcoin.

Metropolitan Bank (MCB) said in its quarterly regulatory filing yesterday, “In response to the recent articles published in certain investor websites regarding the impact of cryptocurrencies on our financial statements, we are providing further details regarding our involvement in this area.

Metropolitan Commercial Bank maintains a diversified approach to generating deposits through a number of verticals including borrowing relationships, retail relationships and debit card issuing relationships.

As a part of this strategy, we also have a relationship with a cryptocurrency exchange.

This customer maintains two different types of accounts with us. One account is for its general corporate purposes and the other account is for settlement activities for the benefit of its customers.

The funds deposited by this customer consist of U.S. dollars, not cryptocurrency.

During the three months ended September 30, 2017, this customer maintained an average balance of $108 million in its corporate non-interest bearing account with us. We use these funds in the normal course of business and realize a net interest margin on them.

During the three months ended September 30, 2017, the customer maintained an average balance of approximately $137 million in its non-interest bearing settlement account with us.

We do not use funds in the settlement account for our general funding purposes. These balances are transactional in nature and are kept in the overnight funds with the Federal Reserve Bank. Income realization on these funds is limited to the overnight Fed Funds rate.

As of September 30, 2017, Metropolitan Commercial Bank had total deposits of $1.5 billion.

Deposit balances related to the cryptocurrency corporate account represents roughly 7% of our total deposit base while that of the settlement account represents 9% of our total deposit base.

Since the settlement account is not used for funding purposes, it does not constitute a material source of income or, we believe, liquidity risk for Metropolitan Commercial Bank.

In addition, in the normal course of its business, we provide cash management solutions to our customers including wire transfers, ACH and foreign exchange conversion which are also offered to the cryptocurrency exchange customer.

These solutions are provided at the normal fee that is charged to all other customers. An increase in transactions results in an increase in our non-interest income.”

ANALYST COMMENTS

Piper Jaffray analyst Matthew #Breese raised his earnings estimates for Metropolitan Bank by 6% after the company detailed its exposure to a cryptocurrency exchange.

Metropolitan’s exposure to a cryptocurrency exchange averaged $245M in Q3, or 16% of total deposits, Breese tells investors in a research note.

He estimate these items aggregate to 7% of net interest income and 9%-11% of earnings. Yesterday’s disclosure is important on both the impact of earnings, the percentage of deposits tied to one customer, and that the bank has exposure to a “controversial industry,” Breese tells investors in a research note.

The analyst, despite raising his earnings estimates, keeps a Neutral rating on Metropolitan Bank shares with a $46 price target. He views the company’s cryptocurrency exposure as a “double-edged sword for the stock.” On the one hand, cryptocurrencies represent a “unique source of potential earnings growth” for Metropolitan, Breese writes. On the other, the volatility and potential regulatory concerns surrounding cryptocurrencies may cause some trepidation for traditional depository investors, the analyst adds.

MCB closed at $44.50.


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Kindred Healthcare sold for $9 a share

Kindred Healthcare sold to consortium for $9 per share in cash

Kindred Health sold for $9 a share. Stockwinners
Kindred Health sold for $9 a share.

Kindred Healthcare (KND) announced that its Board of Directors has approved a definitive agreement under which it will be acquired by a consortium of three companies: TPG Capital, Welsh, Carson, Anderson & Stowe and Humana (HUM) for approximately $4.1B in cash including the assumption or repayment of net debt.

Under the terms of the agreement, Kindred stockholders will receive $9.00 in cash for each share of Kindred common stock they hold, representing a premium of approximately 27% to Kindred’s 90-day volume weighted average price for the period ending December 15, 2017, the last trading day prior to media reports regarding the potential transaction.

Immediately following the acquisition of Kindred, the home health, hospice and community care businesses will be separated from Kindred and operated as a standalone company owned 40% by Humana, with the remaining 60% owned by TPG and WCAS.

Humana will have a right to buy the remaining ownership interest in Kindred at Home over time through a put/call arrangement.

Kindred’s LTAC hospitals, IRFs and contract rehabilitation services businesses will be operated as a separate specialty hospital company owned by TPG and WCAS.Upon completing the transaction, Benjamin Breier, president and CEO of Kindred, will serve as CEO of the specialty hospital company, Kindred Healthcare. David Causby, currently EVP and president of Kindred at Home, will serve as CEO of Kindred at Home.

Under a shared services agreement, Kindred Healthcare will continue to provide certain support functions to Kindred at Home for a transitional period. The transaction is expected to close during the summer of 2018.

KND closed at $9.50. HUM closed at $246.38.


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Jack in the Box sold Qdoba for $305 million

Jack in the Box to sell Qdoba to Apollo affiliates for $305M

Qdoba sold for $305M. Stockwinners.com
Qdoba sold for $305M.

Jack in the Box (JACK) announced that it has entered into a definitive agreement to sell Qdoba Restaurant Corporation, a wholly owned subsidiary of the company which operates and franchises more than 700 QDOBA MEXICAN EATS restaurants, to certain funds managed by affiliates of Apollo Global Management (APO).

Under the terms of the agreement, the Apollo funds will purchase Qdoba for approximately $305M in cash, subject to customary closing conditions and adjustments.

The transaction is expected to close by April 2018.

The Company expects to use the net cash proceeds after tax and transaction costs to retire outstanding debt under its term loan, as required by the terms of its credit facility.

Lenny #Comma, chairman and CEO of Jack in the Box Inc., said, “For the past several months, we have worked closely with our financial advisors and evaluated various strategic alternatives with respect to Qdoba, including a sale or spin-off, as well as opportunities to refranchise company restaurants.

Following the completion of this robust process, our Board of Directors has determined that the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with the Company’s desire to transition to a less capital-intensive business model.

The Company intends to provide guidance for fiscal 2018 in connection with its presentation at the ICR Conference on January 9, 2018.

JACK closed at $100.34. It last traded at $103.00. APO closed at $32.63.


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CSX shares downgraded following CEO’s death

CSX CEO death raises questions about strategy, M&A potential

CSX CEO passes away
Shares of CSX (CSX) are off their worst levels of the session and trading fractionally higher following the death of the company’s CEO over the weekend.

 

While the news prompted a stock downgrade to Hold at TD Securities, JPMorgan analyst Brian Ossenbeck argued that Hunter #Harrison’s legacy will continue at CSX and that he sees downside in the stock being limited.
Meanwhile, Cti analyst Christian #Wetherbee pointed out that the death of the company CEO may increase the likelihood of a merger with Canadian Pacific (CP).

 

MOVING TO THE SIDELINES:

Following the unexpected medical leave of absence and subsequent death of CEO Hunter Harrison, TD Securities downgraded CSX to Hold from Buy and lowered its price target on the shares to $54 from $63. The firm argued that senior management now lacks a member with an operating background.

 

LIMITED DOWNSIDE:

Meanwhile, JPMorgan’s #Ossenbeck told investors that he believes Hunter Harrison’s legacy will continue at CSX, reiterating an Overweight rating and $63 price target on the shares. The analyst said he estimates downside in the stock to be limited to $45-$48 based on his below consensus forecasts, with U.S. tax reform and a “tighter truck market” providing positive near-term catalysts.

 

Nonetheless, Ossenbeck acknowledged that the lack of a defined management succession plan remains a near-term hurdle for CSX, and will not likely be addressed until the investor day in first quarter of 2018.

 

Voicing a similar opinion, Baird analyst Benjamin #Hartford said he believes the shares should find support in the $48-$50 level, which is where shares traded during previous periods of transition for the company.

 

While Hunter Harrison’s passing “undoubtedly” introduces incremental risk and uncertainty to the trajectory of CSX’s operating ratio improvement, and it is even more so a “show-me” story given the absence of his leadership, Hartford noted that the PSR model has been put into place, the company employs the talent needed to execute the plan, and there is no reason to diminish CSX’s expectations regarding the pace and magnitude of future progress. He reiterated an Outperform rating and $58 price target on the shares.

 

MERGER WITH CANADIAN PACIFIC

In a research note of his own, Citi’s Wetherbee told investors that he believes the death of Harrison may increase the likelihood of CSX attempting to merge with Canadian Pacific. However, the analyst noted that he is not sure a deal could be accomplished due to elevated regulatory risk.

 

Canadian Pacific and CSX may merge. Stockwinners.com
Canadian Pacific and CSX may merge.
A “large portion of the heavy lifting” related to the start of CSX’s turnaround occurred in 2017, allowing 2018 to be a year focused on executing, he contended, adding that he still believes in the company’s long-term potential. Wetherbee also pointed out that he sees Jim Foote as capable of executing Hunter’s vision, while noting that CSX’s board could move to add seasoned executives in the coming months. The analyst reiterated a Buy rating and $58 price target on the shares.

 

PRICE ACTION

In Monday afternoon trading, shares of CSX are fractionally lower to about $53 per share.


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Rosetta Genomics sold for $10 million

Rosetta Genomics to be acquired by Genoptix for $10M in cash

Rosetta Genomics sold for $10M. Stockwinners.com
Rosetta Genomics sold for $10M.

Genoptix and Rosetta Genomics (ROSG) jointly announced on Friday that they have entered into a definitive merger agreement under which Genoptix will acquire all of the outstanding shares of Rosetta Genomics for a total gross purchase price of $10M.

After deducting expected payments for outstanding debt, convertible debentures, warrant termination payments, professional fees, expenses and other items, this purchase price equates to an amount that is preliminarily estimated to be 60c, in cash, for each ordinary share of Rosetta Genomics outstanding at closing.

Genoptix is a portfolio company of Ampersand Capital Partners and 1315 Capital.

Barrington analyst Michael Petusky downgraded Rosetta Genomics to Market Perform after the company announced that it has agreed to be acquired by Genoptix.


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