March 12, 2018 – Stock Market Research, Option Picks, Stock Picks,Financial News,Option Research

March 12, 2018

Micron Breaks Out!

Micron shares in ‘early stages of another major breakout

Shares of Micron (MU) are rising after two analysts raised their price targets on the stock, citing memory market changes and potential capital returns.

‘BUY THE BREAKOUT’

On Monday, Nomura Instinet analyst Romit Shah raised his price target for Micron Technology to $100 from $55 citing multiple expansion.

After consolidating over the last four months, Micron shares are in the “early stages of another major breakout,” Shah tells investors in a research note.

The analyst said he sees key catalysts for #Micron, including a resumption of an upward trend in dynamic random-access memory pricing in the second quarter, a first-time dividend and share buyback announcement in May, continued margin expansion in NAND and increased merger and acquisition discussions. #Shah expects another 10% increase in DRAM pricing over the next six months and an announcement by the company for a comprehensive capital return program that will show the management’s confidence in future cash flows.

In addition, Shah expects additional margin expansion in NAND in 2018 and 2019 as weaker prices are offset by a stronger mix and cheaper cost per bit.

The analyst also believes Micron stands out as a potential acquisition target as it is one of the few remaining U.S. chip companies that has scale, it is expanding its presence in NAND and its valuation looks attractive. The analyst kept a Buy rating on the name.

MEMORY MARKET CHANGES

In addition, Evercore ISI analyst C.J. Muse raised his price target on Micron to $80 from $60, stating that he thinks the memory market is “absolutely” different now with the DRAM industry consolidated to three players, all of whom are acting rational, and memory has become increasingly critical while the rising complexity has limited the magnitude of new supply.

His sense is that Micron will move forward with capital returns “regardless of what we hear from the rating agencies” and predicts the company’s analyst day on May 21 should bring more news about planned capital returns starting in fiscal year 2019. #Muse, who thinks Micron can earn $13 or more in earnings per share in calendar 2019, kept an Outperform rating on Micron shares.

PRICE ACTION

Micron rose 7.14%, or $3.90, to $58.49 in Monday morning trading.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

March 12, 2018

Cogentix Medical sold for $239M

Cogentix Medical to be acquired by Laborie Medical for $3.85 per share in cash

Cogentix Medical (CGNT) announced that it has entered into a definitive merger agreement, under which Laborie Medical Technologies will acquire all of the outstanding shares of Cogentix Medical for a total consideration of approximately $239M.

Under the terms of the definitive merger agreement, LABORIE (through its wholly-owned subsidiaries LM US Parent, Inc. and Camden Merger Sub, Inc. will commence a tender offer for all outstanding shares of Cogentix Medical common stock for $3.85 per share in cash.

The offer of $3.85 per share in cash represents a premium of 28% over the average closing price of Cogentix Medical common stock over the last thirty days. Cogentix Medical currently anticipates the transaction will close in the first half of the second quarter of 2018.

Upon completion of the transaction, Cogentix Medical will become a wholly owned subsidiary of LABORIE.

Accelmed Growth Partners LP and Lewis Pell, who collectively beneficially own shares representing approximately 60% of Cogentix Medical’s outstanding common stock, have entered into tender and support agreements in favor of Parent and Merger Sub, pursuant to which those stockholders, among other things, will agree to tender all of their shares of Cogentix Medical common stock beneficially owned by them to Merger Sub in response to the tender offer, as well as restrictive covenant agreements in favor of Parent and Merger Sub.

Under the terms of the merger agreement, following the successful completion of the tender offer, the transaction will be completed by a second-step merger in which all outstanding shares of Cogentix Medical common stock not tendered in the tender offer will be converted into the right to receive $3.85 per share of common stock, in cash.

Closing of the tender offer and merger is subject to certain customary conditions, including the tender in the tender offer of more than 50% of all outstanding shares of Cogentix Medical common stock.

The transaction is also subject to other customary closing conditions.

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March 12, 2018

United Community Bancorp sold for $26.22 per share

Civista to acquire United Community Bancorp for $26.22 per share

Civista Bancshares (CIVB) and United Community Bancorp (UCBA), the parent company of United Community Bank, announced the signing of a definitive merger agreement pursuant to which Civista will acquire United.

Based on financial data as of December 31, 2017, the combined company would have total assets of $2.1B, total loans of $1.5B and total deposits of $1.7B. United operates an eight branch network in southeastern Indiana, five of which are located in the Cincinnati MSA.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, the consideration United shareholders will receive is equivalent to 1.027 shares of Civista common stock and $2.54 in cash per share of United common stock.

This implies a deal value per share of $26.22 or approximately $114.4M based on the 15-day average closing price of Civista’s common stock on March 9, 2018 of $23.06.

Civista and United anticipate that the transaction will qualify as a tax-free reorganization to the extent that United shareholders receive Civista common stock in the merger.

The transaction is expected to close in the third quarter of 2018, subject to each company receiving the required approval of its shareholders, receipt of all required regulatory approvals and fulfillment of other customary closing conditions.

Under terms of the agreement, the directors of Civista and the directors and executive officers of United have agreed to vote all shares that they own in their respective organizations in favor of the merger.

In addition, a total of three existing United directors will join the Civista Bank Board of Directors and two of those directors will join the Civista Bancshares, Inc. Board of Directors. E.G. McLaughlin is expected to be one of the directors to join both boards. In preparation for the merger, extensive due diligence was performed over a multi-week period.

Under the proposed merger terms, the acquisition of United is expected to be immediately accretive to Civista’s earnings in 2018 and thereafter.

In addition, any tangible book value dilution created in the transaction is expected to be earned back in approximately 3.5 years after closing.

Post-closing, Civista’s capital ratios are expected to continue to exceed “well-capitalized” regulatory standards.

“This acquisition will allow Civista to bring its enhanced commercial lending platform to United’s demographically strong markets.

United will provide Civista with low cost core deposit funding and excess liquidity,” the bank stated.

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March 12, 2018

Clorox to acquire Nutranext for $700M

Clorox agrees to acquire Nutranext

Clorox (CLX) announced that it has entered into a definitive agreement to acquire Nutranext, a health and wellness company based in Sunrise, Florida, which manufactures and markets leading dietary supplement brands in the retail and e-commerce channels as well as in its direct-to-consumer business.

The Nutranext acquisition brings significant scale and breadth to Clorox’s dietary supplements business.

It follows the company’s May 2016 acquisition of the RenewLife brand, a leader in digestive health. Clorox’s brand-building capabilities and retail execution behind the RenewLife brand have led to strong growth in the e-commerce channel and expanded distribution in the retail channel. In calendar year 2017, Nutranext generated sales of about $200M.

Clorox will pay $700M to acquire Nutranext, with the purchase price representing about 3.5 times calendar year 2017 sales.

The company expects to fund the transaction through a combination of available cash and debt financing, while maintaining a Debt/EBITDA ratio within its target range of 2.0x to 2.5x.

The transaction is subject to certain closing conditions, including customary regulatory approvals, and is expected to close in the company’s fiscal fourth quarter, which ends June 30, 2018.

Clorox’s preliminary estimates indicate the acquisition will dilute earnings per share by 7-11c in the fourth quarter of its current fiscal year, ending June 30, 2018, and by 8c-12c in fiscal year 2019 and be accretive to earnings per share in fiscal year 2020.

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March 12, 2018

Lumentum to acquire Oclaro for $1.8B

Lumentum to acquire Oclaro for $1.8B in cash and stock

Lumentum Holdings (LITE) and Oclaro (OCLR) announced that the two companies have signed a definitive agreement, unanimously approved by the boards of both companies, pursuant to which Lumentum will acquire all of the outstanding common stock of Oclaro. For each share of Oclaro stock held, Oclaro stockholders will be entitled to receive $5.60 in cash and 0.0636 of a share of Lumentum common stock, subject to the terms of the definitive agreement.

The transaction values Oclaro at $9.99 per share or approximately $1.8B in equity value, based on the closing price of Lumentum’s stock on March 9, of $68.98.

The transaction value represents a premium of 27% to Oclaro’s closing price on March 9 and a premium of 40% to Oclaro’s 30 day average closing price.

Oclaro stockholders are expected to own approximately 16% of the combined company at closing.

The transaction is expected to generate more than $60M of annual run-rate synergies within 12 to 24 months of the closing and be immediately accretive to non-GAAP earnings per share.

Lumentum intends to fund the cash consideration with a combination of cash on hand from the combined companies’ balance sheets and $550M in debt financing. The transaction is expected to close in the second half of calendar 2018, subject to approval by Oclaro’s stockholders, antitrust regulatory approval in the U.S. and China, and other customary closing conditions.

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