Fly Leasing sold for $2.36B

Carlyle Aviation to acquire Fly Leasing for $17.05 per share

Fly Leasing (FLY) announced that it has entered into a definitive agreement to be acquired by an affiliate of Carlyle Aviation Partners, the commercial aviation investment and servicing arm within The Carlyle Group’s (CG) $56B Global Credit platform.

Fly Leasing sold for $2.36B

Under the terms of the Merger Agreement, FLY shareholders will receive $17.05 per share in cash, representing a total equity valuation of approximately $520M.

The total enterprise value of the transaction is approximately $2.36B.

FLY’s portfolio of 84 aircraft and seven engines is on lease to 37 airlines in 22 countries.

The per share cash consideration represents a premium of approximately 29% to FLY’s closing price on March 26, 2021 and a 43% premium to the volume-weighted average share price during the last 30 trading days.

The Board of Directors of FLY has approved the Merger Agreement, acting upon the recommendation of a special committee appointed by the Board of Directors and consisting solely of independent and disinterested directors, and has recommended that FLY shareholders vote in favor of the transaction.

The transaction is expected to close in the third quarter of 2021 and is subject to customary closing conditions, including applicable regulatory clearance and the approval of FLY’s shareholders.

Given the pending transaction, FLY will not host a first quarter earnings call.

FLY closed at $13.25.

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Merger in the railroad space!

Canadian Pacific to buy Kansas City Southern in $29B deal

Canadian Pacific Railway (CP) and Kansas City Southern (KSU) announced they have entered into a merger agreement, under which CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29B, which includes the assumption of $3.8B of outstanding KCS debt.

The transaction, which has the unanimous support of both boards of directors, values KCS at $275 per share, representing a 23% premium, based on the CP and KCS closing prices on March 19, 2021.

Following the closing into a voting trust, common shareholders of KCS will receive 0.489 of a CP share and $90 in cash for each KCS common share held.

Following final approval from the Surface Transportation Board, the transaction will combine the two railroads to create the first rail network connecting the U.S., Mexico, and Canada.

Canadian Pacific Rails

Joining seamlessly in Kansas City, Mo., in America’s heartland, CP and KCS together will connect customers via single-network transportation offerings between points on CP’s system throughout Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’ system throughout Mexico and the South Central U.S.

While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

Combined Companies Rails

The combination is expected to be accretive to CP’s adjusted diluted EPS in the first full year following CP’s acquisition of control of KCS, and is expected to generate double-digit accretion upon the full realization of synergies thereafter.

To fund the stock consideration of the merger, CP will issue 44.5 million new shares.

The cash portion will be funded through a combination of cash-on-hand and raising approximately $8.6B in debt, for which financing has been committed.

As part of the merger, CP will assume approximately $3.8B of KCS’ outstanding debt.

Following the closing into trust, CP expects that its outstanding debt will be approximately $20.2B. Pro forma for the transaction, CP estimates its leverage ratio against 2021E street consensus EBITDA to be approximately 4.0-times with the assumption of KCS debt and issuance of new acquisition-related debt.

In order to manage this leverage effectively, CP will be temporarily suspending its normal course issuer bid program, and expects to produce approximately $7B of levered free cash flow over the next three years.

CP estimates its long-term leverage target of approximately 2.5x to be achieved within 36 months after closing into trust.

The combined company will remain committed to maintaining strong investment grade credit ratings while continuing to return capital for the benefit of shareholders.

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Rig Count North America at 544!

Baker Hughes reports U.S. rig count up 1 to 403 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 1 from last week at 403 with oil rigs up 1 to 310, gas rigs unchanged at 92, and miscellaneous rigs unchanged at 1.

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The U.S. Rig Count is down 390 rigs from last year’s count of 793, with oil rigs down 372, gas rigs down 17 and miscellaneous rigs down 1.

The U.S. Offshore Rig Count is down 3 to 14, down 9 year-over-year.

The international offshore rig count for April 2018 was 194. Stockwinners

The Canada Rig Count is down 22 from last week to 141, with oil rigs down 12 to 80, gas rigs down 10 to 61.

The Canada Rig Count is down 62 rigs from last year’s count of 203, with oil rigs down 54, gas rigs down 8.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets. The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is up $2.12 to $66.00 per barrel. Brent crude is up $2.42 to $69.20 per barrel. Gasoline last traded at $2.06 per gallon, up 6 gallons on the day.

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FDA Approves J&J’s one shot Covid-19 Vaccine

Johnson & Johnson Covid vaccine granted emergency approval from FDA 

The Food and Drug Administration issued an emergency use authorization for the third vaccine for the prevention of coronavirus disease. The FDA has determined that the Janssen COVID-19 Vaccine has met the statutory criteria for issuance of an EUA. The totality of the available data “provides clear evidence that the Janssen COVID-19 Vaccine may be effective in preventing COVID-19,” the agency said in a statement.

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The Janssen COVID-19 Vaccine is manufactured using a specific type of virus called adenovirus type 26. The vaccine uses Ad26 to deliver a piece of the DNA, or genetic material, that is used to make the distinctive “spike” protein of the SARS-CoV-2 virus, the FDA said. While adenoviruses are a group of viruses that are relatively common, Ad26, which can cause cold symptoms and pink eye, has been modified for the vaccine so that it cannot replicate in the human body to cause illness, it added. After a person receives this vaccine, the body can temporarily make the spike protein, which does not cause disease, but triggers the immune system to learn to react defensively, producing an immune response against SARS-CoV-2.

The EUA allows Johnson & Johnson’s (JNJ) Janssen COVID-19 vaccine to be distributed in the U.S for use in individuals 18 years of age and older.

Meanwhile, Johnson & Johnson also announced that the U.S. Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices has recommended its single-shot COVID-19 vaccine.

The ACIP recommendation will be forwarded to the Director of the CDC and the U.S. Department of Health and Human Services for review and adoption.

Johnson & Johnson has begun shipping its COVID-19 vaccine and expects to deliver enough single-shot vaccines by the end of March to enable the full vaccination of more than 20M people in the U.S.

The company plans to deliver 100M single-shot vaccines to the U.S. during the first half of 2021. The U.S. government will manage allocation and distribution of the vaccine in the U.S.

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Berkshire Hathaway reports record profit

Buffett also said in his annual shareholder letter to “never bet against America.”

Warren Buffett Berkshire Hathaway’s (BRK.A, BRK.B) fourth quarter profits rose, with its net earnings rising to $38.5B, or $23,015 a Class A share equivalent, up almost 23% from the previous year’s profit of $29.2B, or $17,909 a share.

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Operating earnings, which exclude some investment results, rose to $5 billion from $4.4 billion the year before.

Buffett also said in his annual shareholder letter to “never bet against America.”

“In its brief 232 years of existence… there has been no incubator for unleashing human potential like America,” he added.

“Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.” Buffett said the conglomerate owns the biggest amount of U.S. assets by value than any other company in the country.

Berkshire Hathaway also bought back a record amount of company stock last year. During the fourth quarter, the company bought back about $9B shares for a total 2020 repurchase of $24.7B.

Buffett said in his annual shareholder letter that repurchases have continued since year-end and “is likely to further reduce its share count in the future.”

“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” the letter reads.

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