Changes to S&P MidCap 400, S&P SmallCap 600 indices

Changes to S&P MidCap 400, S&P SmallCap 600 indices

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Changes to S&P MidCap 400, S&P SmallCap 600 indices

S&P Dow Jones Indices will make the following changes to the S&P MidCap 400 and S&P SmallCap 600:

S&P SmallCap 600 constituent Boyd Gaming (BYD) will replace CalAtlantic Group (CAA) in the S&P MidCap 400, and Ring Energy (REI) will replace Boyd Gaming in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, February 13.

S&P 500 constituent Lennar (LEN) is acquiring CalAtlantic Group in a deal expected to be completed on or about February 12 pending final approvals.

James River Group Holdings (JRVR) will replace Barracuda Networks (CUDA) in the S&P SmallCap 600 effective prior to the open of trading on Monday, February 12.

Thoma Bravo is acquiring Barracuda Networks in a deal expected to be completed on or about that date pending final conditions.

EVERTEC (EVTC) will replace Sucampo Pharmaceuticals (SCMP) in the S&P SmallCap 600 effective prior to the open of trading on Wednesday, February 14.

S&P 500 constituent Mallinckrodt (MNK) is acquiring Sucampo Pharmaceuticals in a deal expected to be completed on or about that date pending final conditions.


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Lululemon CEO resigns over misconduct accusations

lululemon CEO Potdevin resigns over misconduct accusations 

Lululemon CEO resigns over misconduct accusations. Stockwinners.com
Lululemon CEO resigns over misconduct accusations

Shares of lululemon athletica (LULU) are in focus after the company announced the resignation of chief executive officer Laurent Potdevin for “conduct” issues.

CEO RESIGNATION

lululemon announced yesterday that Laurent Potdevin has resigned as CEO and member of the board of directors, effective immediately. Potdevin had served as CEO since January 2014.

lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Potdevin “fell short of these standards of conduct,” the company said, adding that the board has begun a search for a new CEO.

“While this was a difficult and considered decision, the Board thanks Laurent for his work in strengthening the company and positioning it for the future,” said Glenn Murphy, executive chairman.

“Culture is at the core of lululemon, and it is the responsibility of leaders to set the right tone in our organization. Protecting the organization’s culture is one of the Board’s most important duties.”

Lululemon has promoted three members of its management team — Celeste Burgoyne, Stuart Haselden and Sun Choe — to oversee more day-to-day operations, marketing, e-commerce growth, product innovation and supply chain enhancements.

According to a Bloomberg report, Potdevin’s resignation was over misconduct that spanned a range of incidents involving multiple individuals. The misconduct was not related to finances or operations, the report noted.

GUIDANCE REAFFIRMED

In the wake of Potdevin’s resignation, lululemon looked to reassure investors by backing its fourth quarter guidance of earnings per share between $1.25-$1.27 and revenue of $905M-$915M, which compares to analysts’ estimates of $1.27 and $911.67M, respectively.

In addition, the company’s growth strategies remain on track to achieve $4B in revenue in 2020.

ANALYST COMMENTARY

Following the announcement, Jefferies analyst Randal Konik said the level of management turnover at lululemon during “this critical juncture in the company’s growth trajectory gives us some pause.”

The analyst sees better opportunities elsewhere given lululemon’s “high” valuation and “less plentiful” margin opportunity. He maintained a Hold rating on lululemon with a $72 price target.

Meanwhile, Deutsche Bank analyst Paul Trussell said that while he finds the circumstances of Potdevin’s resignation unfortunate, he has confidence in the remainder of lululemon’s management team, particularly Glenn Murphy.

The analyst recommended using any pullback in the shares as a buying opportunity and reiterated a Buy rating with a $95 price target. Citi analyst Paul Lejuez said he views the resignation as more of a positive for lululemon.

It presents the company with an opportunity to bring in a seasoned executive to take lululemon “to the next level,” the analyst said.

Lejeuz kept a Neutral rating on the shares with an $88 price target.

Additionally, KeyBanc analyst Edward Yruma said he views the departure negatively, and notes it comes after creative director Lee Holman’s departed in November.

The analyst believes Potdevin has been an integral part of the company’s stabilized performance in recent quarters.

Canaccord analyst Camilo Lyon said he does not see the departure as a major setback, but notes there is a level of uncertainty until the position is filled. Lyon reiterated his Hold rating and $75 price target.

Furthermore, Morgan Stanley analyst Kimberly Greenberger said it is likely that investors will speculate the top two contenders for the job are Murphy, executive chairman and ex-CEO of The Gap (GPS), and Stefan Larsson, the ex-CEO Ralph Lauren (RL). If lululemon picks either, Greenberger would expect the stock to react positively.

The analyst kept an Equal Weight rating and $73 price target on lululemon.

PRICE ACTION

lululemon is down 0.75% to $76.85.


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8point3 Energy sold for $977 million

8point3 Energy to be acquired by Capital Dynamics for $977M in equity value 

8point3 Energy sold for $977 million. Stockwinners.com
8point3 Energy sold for $977 million 

8point3 Energy Partners (CAFD) announced it has entered into an Agreement and Plan of Merger and Purchase Agreement with CD Clean Energy and Infrastructure V JV, LLC, an investment fund managed by Capital Dynamics, Inc., and certain other co-investors – collectively, “Capital Dynamics” – pursuant to which Capital Dynamics will acquire 8point3 through an acquisition of 8point3 General Partner, LLC, the general partner of the Partnership, all of the outstanding Class A shares in the Partnership and all of the outstanding common and subordinated units and incentive distribution rights in 8point3 Operating Company, LLC, the Partnership’s operating company.

Pursuant to the Proposed Transactions, the Partnership’s Class A shareholders and First Solar, Inc. ( FSLR) and SunPower Corporation (SPWR), as holders of common and subordinated units in OpCo, will receive $12.35 per share or per unit in cash, plus a preset daily amount representing cash expected to be generated from December 1, 2017 through closing less any distributions received after the execution of the Merger Agreement and prior to closing.

No consideration will be received by the Sponsors for the incentive distribution rights and the GP Transfer.

CAFD closed at $13.83.


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Midstates Petroleum proposes merger with SandRidge Energy

Midstates Petroleum proposes all-stock combination with SandRidge Energy

Midstates Petroleum calls for merger with SandRidge Energy. Stockwinners.com
Midstates Petroleum calls for merger with SandRidge Energy

Midstates Petroleum Company (MPO) announced that it has proposed to combine with SandRidge Energy (SD) in an all-stock merger that would create the leading exploration and production company in the Mississippian Lime play.

Earlier today, Midstates sent a letter to the Board of Directors of SandRidge detailing the merger proposal and its strong desire to negotiate a friendly transaction.

Given the highly complementary nature of the businesses, significant shareholder overlap, and the substantial operational synergies, Midstates believes that the proposed combination is attractive strategically and financially for the shareholders of both companies.

Under the terms of the proposal, SandRidge shareholders would own approximately 60% of the combined company and Midstates shareholders would own 40%.

David J. Sambrooks, Midstates President and Chief Executive Officer, stated, “We are ready to move forward immediately to negotiate a merger agreement to form a stronger, more formidable company.

The combined company will have zero net debt, strong liquidity, and forecasted free cash flow generation of up to $480 million over the next five years.”

Sambrooks continued, “Combining these two businesses in an at-market merger would bring undeniable benefits to shareholders of both companies.

The strategic fit and geographic overlap of both companies’ assets in the Miss Lime and NW STACK builds critical mass, creates significant synergies, and generates superior, risk-adjusted returns.”

Midstates is making this proposal public to inform both Midstates and SandRidge shareholders of the compelling value creation potential of the combination and to encourage SandRidge’s board to move towards a negotiated transaction.

MPO closed at $15.45. SD closed at $16.50.


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