Month: March 2022

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Crane to split into two companies!

Crane plans to split into two independent public companies

Crane (CR) announced that its Board of Directors has unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment and capital allocation, accelerate growth, and unlock shareholder value.

Upon completion, Crane Co.’s shareholders will benefit from ownership in two focused and simplified businesses that are both leaders in their respective industries and well-positioned for continued success:

Crane Co. will be a leading global provider of mission-critical, highly engineered products and solutions, with differentiated technology, respected brands, and leadership positions in its markets.

After the separation, Crane Co. will include the Aerospace & Electronics and Process Flow Technologies businesses.

This year, these businesses are expected to generate approximately $1.9B in annual sales with a pre-corporate Adjusted EBITDA margin of approximately 18.5%.

The company will be well-positioned to accelerate organic growth in its large and attractive end markets, benefit from favorable secular trends, and apply its proven processes to drive growth through new product development and commercial excellence.

Richard Teller Crane, Founder of Crane Co.

Crane Co. is expected to have a strong, well-capitalized balance sheet underpinning a capital deployment strategy focused on supporting the company’s organic and inorganic strategic growth objectives, while providing a dividend in-line with peers.

Crane Co. will be led by Max Mitchell, who will continue to serve as President and Chief Executive Officer, with Rich Maue continuing to serve as Chief Financial Officer.

The company intends to continue to be listed on the NYSE under its current ticker symbol, “CR”.

Crane NXT will be a premier Industrial Technology business with substantial global scale, a best-in-class margin profile, and strong free cash flow generation.

This year, the Payment and Merchandising Technologies business that will become Crane NXT is expected to achieve approximately $1.4 billion in sales with a pre-corporate Adjusted EBITDA margin of approximately 28%.

In addition to its market leading brands, Crane NXT will differentiate itself through its technology leadership, positioning it to leverage long-term secular drivers including automation, security and productivity, across several high-growth adjacent markets.

After the separation, Crane NXT will be positioned to drive earnings growth through continued investment in the business and value-enhancing bolt-on acquisitions. Its balance sheet and strong free cash flow will also allow it to support a robust and differentiated level of capital return to shareholders that is expected to include a competitive dividend.

Crane NXT’s shares are expected to be listed on the NYSE under the ticker symbol “CXT”. A process is currently underway to identify Crane NXT’s chief executive, including evaluation of both internal and external candidates.

The executives currently leading Crane’s PMT business will continue to serve in senior positions with Crane NXT.

The separation is expected to occur through a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to the Company’s shareholders.

Payment & Merchandising Technologies will be renamed Crane NXT concurrent with the separation, and the Aerospace & Electronics and Process Flow Technologies businesses will retain the Crane Co. name.

Upon completion of the separation, shareholders will own 100% of the equity in both of the publicly traded companies.

The separation is expected to be completed within approximately 12 months of this announcement, subject to the satisfaction of customary conditions and final approval of the separation by Crane Co.’s Board of Directors. Shareholder approval is not required.

Crane Co. will maintain its current capital deployment policies until the separation is completed.

CR is up $2.50 to $112.63.

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Nielsen sold for $16 billion

Brookfield Business Partners enters partnership to acquire Nielsen in $16B deal

Brookfield Business Partners (BBU) announced it has entered into a partnership to acquire Nielsen Holdings plc (NLSN) in an all-cash transaction valued at approximately $16B.

Nielsen Holdings operates as a measurement and data analytics company worldwide. The company provides viewership and listening data, and analytics principally to media publishers and marketers, and advertising agencies for television, computer, mobile, CTV, digital, and listening platforms.ย 

The companies said, investment highlights include, “Market-leading position. Nielsen is a global leader in audience measurement and a trusted partner to its customers across the entire media ecosystem.

The Company has more than 50 years of statistically significant historical data and its scale is unmatched by competitors.

Nielsen’s measurement data underpins the $100+ billion video and audio advertising markets and its measurement data is the established industry standard by which video and audio advertising spend transacts. Resilient performance and outlook.

The Company’s history of consistent growth is driven by its valued offering and longstanding customer relationships.

Nielsen’s scale and existing market position should support the Company’s ability to consistently grow its measurement business.

Value creation potential. Nielsen is well positioned to be the leader in cross-media measurement as audience viewership behavior continues to evolve.

The development and adoption of Nielsen ONE, Nielsen’s cross-media measurement service, will deliver a unified measure of consumer viewership across all media and support the Company’s growth strategy.”

Brookfield will invest approximately $2.65B by way of preferred equity, convertible into 45% of Nielsen’s common equity. Brookfield will be actively involved in the Company’s governance.

Brookfield Business Partners expects to invest approximately $600M, and the balance of Brookfield’s investment will be funded from institutional partners.

Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

The transaction is subject to customary closing conditions and is expected to close in the second half of 2022.

NLSN is up $4.58 to $26.81.

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Poly sold for $3.3 billion

HP Inc. to acquire Poly in all-cash transaction for $40 per share

HP Inc. (HPQ) announced a definitive agreement to acquire Poly (POLY), a global provider of workplace collaboration solutions, in an all-cash transaction for $40 per share, implying a total enterprise value of $3.3B, inclusive of Poly’s net debt.

The company said, “The acquisition accelerates HP’s strategy to create a more growth-oriented portfolio, further strengthens its industry opportunity in hybrid work solutions, and positions the company for long-term sustainable growth and value creation.

The rise of hybrid work is creating sustained demand for technology that enables seamless collaboration across home and office environments.

Approximately 75% of office workers are investing to improve their home setups to support new ways of working. Traditional office spaces are also being reconfigured to support hybrid work and collaboration, with a focus on meeting room solutions.

Currently, there are more than 90 million rooms, of which less than 10% have video capability. As a result, the office meeting room solutions segment is expected to triple by 2024.

Poly will help drive the growth and scale of HP’s peripherals and workforce solutions businesses.

Peripherals represent a $110B segment opportunity growing 9% annually, driven by the need for more immersive experiences.

Workforce solutions represent a $120B segment opportunity that is growing 8% annually, as companies invest in digital services to set up, manage, and secure more distributed IT ecosystems.

Poly’s devices, software and services, combined with HP’s strengths across compute, device management, and security, creates a robust portfolio of hybrid meeting solutions.

Poly, previously known as Plantronics, is a leader in video conferencing solutions, cameras, headsets, voice and software.

Together, HP and Poly will deliver a complete ecosystem of devices, software, and digital services to create premium employee experiences, improve workforce productivity, and provide enterprise customers with better visibility, insights, security, and manageability across their hybrid IT environments.”

HP expects the transaction to be immediately accretive to HP’s revenue growth, margins, and non-GAAP EPS at close.

With the expanded value proposition of a complete hybrid work solution, combined with HP’s scale and go-to-market capabilities, HP expects to realize substantial revenue synergies in peripherals as well as meeting room and workforce solutions.

HP will be able to cross-sell across its global commercial and consumer sales channels, while driving incremental sales from combining Poly’s products with HP’s PC portfolio.

As a result, HP expects to achieve $500 million of revenue synergies by FY25 and accelerate Poly’s revenue growth to an approximately 15% CAGR over the first three years after closing.

In addition, HP expects the transaction to improve Poly’s operating margins by approximately six percentage points from current levels by FY25, driven by scale efficiencies across supply chain, manufacturing and overhead. The transaction is expected to close by the end of calendar 2022, subject to Poly stockholder approval, required regulatory clearances, and the satisfaction of other customary closing conditions.

HP will finance the transaction through a combination of balance sheet cash and new debt. This transaction is consistent with HP’s capital returns program target.

HP remains committed to aggressively buying back shares of at least $4B in FY22, and to returning significant capital to shareholders while continuing to invest in growth.

POLY is up $13.14 to $39.34.

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Alleghany sold for $11.6 billion

Berkshire Hathaway to acquire Alleghany for $848.02 per share

Berkshire Hathaway (BRK.A) and Alleghany (Y) jointly announced they have entered into a definitive agreement under which Berkshire Hathaway will acquire all outstanding Alleghany shares for $848.02 per share in cash.

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally.ย 

The transaction, which was unanimously approved by both boards of directors, represents a total equity value of approximately $11.6B.

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Buffett buys Alleghany

The acquisition price represents a multiple of 1.26 times Alleghany’s book value at December 31, 2021, a 29% premium to Alleghany’s average stock price over the last 30 days and a 16% premium to Alleghany’s 52-week high closing price.

The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by Alleghany stockholders and receipt of regulatory approvals.

Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway after closing.

Chairman Jefferson Kirby, who controls 2.5% of Alleghany common shares, intends to vote his shares for the transaction.

Under the terms of the definitive merger agreement, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day “go-shop” period.

Alleghany has the right to terminate the merger agreement to accept a superior proposal during the go-shop period, subject to the terms and conditions of the merger agreement.

There can be no assurances that the “go-shop” process will result in a superior proposal, and Alleghany does not intend to communicate developments regarding the process unless and until Alleghany’s board of directors makes a determination requiring further disclosure.

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Investor seeks sale of Everbridge

Ancora pushes Everbridge for sale, sees over $70 per share takeout value

Everbridge, Inc. (EVBG) operates as a software company, providing enterprise software applications that automate and accelerate organizations operational response to critical events in the United States and internationally. The company has a market cap of around $1.6B.

Ancora Holdings Group, which owns approximately 4% of Everbridge’s outstanding common stock, issued an open letter to the company’s board.

It states in part: “We have spent a considerable amount of time reviewing Everbridge’s corporate governance, executive compensation, operations and sales, and overall strategy.

Given the immense destruction of shareholder value that has occurred under the current leadership team, we call on the Board of Directors to commence an immediate exploration of strategic alternatives.

We believe Everbridge is dramatically undervalued at current stock prices, and a sale to a well-capitalized acquirer could deliver more than $70 per share, or a more than 90% premium, for shareholders based on recent valuation multiples for both public and private company peers…

We believe Everbridge is a valuable strategic asset addressing a mission critical need in a large market with vast upside potential.

We believe Everbridge is dramatically undervalued at current share prices, representing an attractive acquisition target to both strategic and financial buyers.

In our view, the issues the Company is facing are not structural, but rather self-inflicted due to incompetent leadership that has failed to execute.”

EVBG is up $3.53 to $40.12.

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Investor demands replacing IAA CEO

Ancora urges IAA to replace CEO or run sale process

IAA, Inc. (IAA) operates a digital marketplace that connects vehicle buyers and sellers. The company’s platform facilitates the marketing and sale of total loss, damaged, and low-value vehicles for a range of sellers. It provides buyers with various bidding/buying digital channels, vehicle merchandising, evaluation services and online bidding tools, and replacement part inventory.ย 

IAA operates a car auction platform

Ancora Holdings Group, which beneficially owns approximately 2% of IAA’s outstanding common stock, sent a letter to the company’s board which stated in part,

“Given IAA’s underperformance and the fact that the Company’s market capitalization has plummeted by roughly 40% since reporting third quarter earnings in November 2021, the status quo cannot persist. We believe there are two strategic actions for the Board of Directors to consider at this point:

1. Replace Mr. Kett with a new CEO who is more dynamic and equipped to reinvigorate the organization. In our view, IAA needs a leader with a vision for achieving organic market share growth, improved margins and effective capital allocation.

2. If the Board is unwilling to act with urgency to improve leadership, it should run a formal sale process to sell the Company. ”

IAA salvage auction lot

The activist added, “In light of IAA’s attractive attributes and business model, we anticipate the Company would obtain a significant premium relative to its current share price if taken private by one of the many well-capitalized potential acquirers in the marketplace.

Ancora owns 5% of shares or $250M

We estimate a takeout price of $55 or more is achievable based on a trailing 12-month EBITDA of 15.5x and an analysis of peers’ valuations and precedent transactions.

2 At this point, a sale seems like the best risk-adjusted path forward for stockholders.”

IAA is up $2.51 to $38.83.

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LazyDays Receives Take Over Offer

B. Riley Financial proposes to acquire the retailer for $25.00 per share cash

In a letter to Lazydays CEO Robert DeVincenzi , Bryant Riley (RILY), Chairman, Co-CEO of B. Riley Financial stated, in part,

“This non-binding letter is intended to summarize the principal terms of a proposal by B. Riley Financial or a subsidiary thereof regarding its possible acquisition of Lazydays Holdings.

The possible acquisition of the outstanding capital stock of the company is referred to as the ‘Transaction’ and Buyer and the company are referred to collectively as the ‘Parties.’

As you know, we are one of the company’s largest investors holding over one million shares of common stock. First, we want to thank you for initially meeting with us in January and for taking the time to hear our thoughts on the company’s direction soon after the resignation of the company’s longtime CEO and Chairman.

We have also had constructive conversations with other board members. We acknowledge and support recent increases to the share buyback program, but note that the market continues to discount company’s ability to grow.

After significant analysis and diligence based on publicly available information, we have concluded that the company would be better served away from the glare of the public markets in an environment where the necessary investments in growth can be made without market fixation on short-term results.

We are proposing a take-private transaction at a healthy premium to the current share price. The purchase price would be $25.00 per share payable in cash.”

Lazydays Holdings, Inc. operates recreation vehicle (RV) dealerships under the Lazydays name in the United States. It provides RV sales, RV-repair and services, financing and insurance products, third-party protection plans, after-market parts and accessories, and RV camping facilities.

The company also operates the Lazydays RV resort at Tampa, Florida.ย 

Lazydays Holdings, Inc. (LAZY) is up 22% to $21.90.

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Google buys Mandiant for $5.4B

Google to acquire Mandiant for $23.00 per share in cash

Alphabet’s Google (GOOGL) announced that it has signed a definitive agreement to acquire Mandiant (MNDT) for $23.00 per share, in an all-cash transaction valued at approximately $5.4B, inclusive of Mandiant’s net cash.

Upon the close of the acquisition, Mandiant will join Google Cloud.

With the addition of Mandiant, Google Cloud will enhance offerings to deliver an end-to-end security operations suite with even greater capabilities to support customers across their cloud and on-premise environments.

The acquisition of Mandiant is subject to customary closing conditions, including the receipt of Mandiant stockholder and regulatory approvals, and is expected to close later this year.

Piper Sandler

Piper Sandler analyst Thomas Champion said he thinks the deal makes strategic sense given Google’s move further into the Enterprise. The Mandiant acquisition should complement Google Cloud Platform’s current security offerings, which include BeyondCorp Enterprise and VirusTotal, said Champion, who reiterates his Overweight rating and $3,475 price target on Alphabet shares.

Wedbushย 

ย Wedbush analyst Daniel Ives notes that this deal is all about Mandiant being further integrated into Google Cloud with more cyber threats facing enterprises/governments on the transformational shift to cloud and Mandiant establishing itself as “the Navy Seals of cyber security” over the last decade, the analyst contends.

#Ives believes this deal will have a major ripple impact across the cyber security space as cloud stalwarts Amazon (AMZN) and Microsoft (MSFT) will now be pressured into M&A and further bulk up its cloud platforms.

The analyst thinks cyber names such as Varonis (VRNS), Tenable (TENB), CyberArk (CYBR), Qualys (QLYS), Rapid7 (RPD), SailPoint (SAIL), and Ping (PING) standout as potential M&A candidates in cyber security given these vendors laser focus on protecting next generation cloud workloads from cyberattacks.

MNDT is down 50 cents to $21.99.

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Rig Counts Unchanged as Crude Soars

Baker Hughes reports U.S. rig count unchanged at 650 rigs

Baker Hughes (BKR) reports the U.S. rig count is unchanged from last week at 650, with oil rigs down 3 to 519, gas up 3 to 130, and miscellaneous rigs unchanged at 1.

The U.S. rig count is up 247 rigs from last year’s count of 403 with oil rigs up 209 gas rigs up 38 and miscellaneous unchanged at 1.

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

The U.S. offshore rig count is unchanged at 12, down 2 year-over-year.

Canada Oil Rig Count is at a current level of 134, down from 138 last week and up from 92 one year ago. This is a change of -2.90% from last week and 45.65% from one year ago.

Goldman Sachs

Meanwhile, Goldman Sachs raised it’s target price on the West Texas Intermediate (WTI) to $150 per barrel by this Summer as pressure builds up to sanction Russian crude oil imports.

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 $7.71 to $115.39 per barrel. Brent crude is up $7.36 to $117.92 per barrel. Gasoline last traded at $3.524 per gallon up 24.1 cents on the day. Get ready to pay substantially more at the pump.

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Short Seller Targets Core Scientific

Culper Research short Core Scientific on ‘rigged deals,’ oversold businesses

In a recently published report titled “Core Scientific, Inc. (CORZ): Rigged Deals,” Culper Research says it is “short Core, as we think Core has wildly oversold both its mining and hosting businesses, which it cobbled together in a series of questionable transactions before dumping onto the public markets via SPAC.

Core’s acquired mining business, Blockcap, was formed in December 2020 with just $58.5 million, then flipped to Core for just 7 months later for $1.46 billion in connection with Core’s go-public.

We estimate Blockcap insiders made 20-25x their money.

On Monday, Core disclosed that its board waived the 180- day lockup on over 282 million shares, making them free to be dumped just 5 trading days from today.

We believe this shows insiders have abandoned any pretense of care for minority shareholders.”

“We think Core is no exception to what’s become a steady drumbeat of egregious projections made by many SPACs. We think both Core’s hosting business and its self-mining business have been wildly overhyped, and it’s no wonder that insiders can’t even wait 6 months to clamor for the exits,” the report reads.

“We also think Core has wildly overhyped the profitability of its self-mining business, where we estimate all-in breakeven costs of $41,723 per BTC (Bitcoin) vs. the Company’s SPAC claims of $2,700 just in power costs per BTC.

As such, we see Core as effectively using public markets to throw good money after bad while insiders set themselves up to dump billions worth of stock.”

In Thursday trading, shares of Core Scientific have dropped almost 3% to $7.50.

According to Wikipedia, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional “long” position, where the investor will profit if the value of the asset rises.

There are a number of ways of achieving a short position. The most fundamental method is “physical”ย selling shortย orย short-selling, which involves borrowing assets (oftenย securitiesย such asย sharesย orย bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender.

Core Scientific, Inc. (CORZ) last traded at $7.15.

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Rate Hikes are Coming!

Fed Chair confirmed a 25 bp rate hike this month

Fed’s Beige Book was released a few minutes ago. The report reiterated the economy expanded at a “modest to moderate” pace. Many Districts reported that the surge in Covid cases and severe winter weather disrupted businesses. Some firms noted a “temporary” weakening in demand in the hospitality sector to Covid.

The Beige Book reports an expanding economy

“All Districts” said supply chain issues and low inventories continued to restrain growth, especially in construction.

The overall outlook for the next 6 months remained one of stable and general optimism, though with elevated uncertainty.

Powell, FOMC Chair, Stockwinners
Fed Chief Jerome Powell

For the labor market, the widespread strong demand for labor was hampered by “equally widespread reports of worker scarcity.”

Meanwhile, ย Fed Chair Powell’s testified before the Congress today. He confirmed a 25 basis points rate hike is in the cards for the March 15-16 meeting.

FOMC as policymakers look to address “indisputably” high inflation pressures. He also suggested more aggressive increases could be warranted down the road. Powell said liquidity has been functional thanks to a number of measures and facilities put in place, including swap lines and the standing repo facility.

FOMC is looking to soak up liquidity

The Fed has “institutionalized liquidity provisions” — hence the geopolitical pressures have not added stresses in the funding markets.

The markets are sharply higher across all sectors.

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