CBS and Viacom to merge

CBS, Viacom to combine in all-stock merger to create ViacomCBS

CBS Corp. (CBS) and Viacom (VIA, VIAB) announced they have entered into a definitive agreement to combine in an all-stock merger, creating a combined company with more than $28B in revenue.

The combined company, ViacomCBS, “will be a leading global, multiplatform, premium content company, with the assets, capabilities and scale to be one of the most important content producers and providers in the world,” the companies stated.

Viacom, an acronym of Video & Audio Communications to merge with CBS, Stockwinners

Bob Bakish, President and CEO, Viacom, will become President and Chief Executive Officer of the combined company.

Joe Ianniello, President and Acting CEO, CBS, will become Chairman and CEO of CBS and will oversee all CBS-branded assets in his new role.

CBS to merge with Viacom to compete with Disney, Netflix, Stockwinners

The merger agreement was approved by the boards of directors of both CBS and Viacom by unanimous vote of those present, upon the unanimous recommendations of the Special Committees of the CBS and Viacom Boards of Directors, respectively.

Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis.

Under the terms of the merger agreement, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively.

NAI, which holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively, has agreed to deliver consents sufficient to assure approval of the transaction.

More than two-thirds of the CBS directors unaffiliated with NAI, and all of those unaffiliated directors who voted on the transaction, have approved the transaction, as required in order to permit NAI to consent to the transaction under the terms of the 2018 settlement agreement entered into among CBS, NAI and certain other parties thereto.

The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the 2019 calendar year end.

Sumner Redstone is the majority owner and chairman of the board of the National Amusements (NAI) theater chain. Through National Amusements, Redstone and his family are majority voting shareholders of CBS Corporation and Viacom (itself the parent company of Viacom Media Networks, BET Networks, and the film studio Paramount Pictures). Redstone was formerly the executive chairman of both CBS and Viacom. 

ANALYST COMMENTS

Bernstein

Bernstein analyst Todd Juenger downgraded CBS (CBS) to Underperform from Market Perform following the company’s confirmation earlier of a deal to combine in an all-stock merger with Viacom (VIAB). Any synergies produced “will pale in comparison” to inheriting Viacom’s structural problems, Juenger tells investors.

Imperial Capital

 Imperial Capital analyst David Miller lowered his price target for CBS (CBS) to $62 from $72. The analyst says that while this is generally consistent with where both names had been trading for the last 90 days, the ratio is below what he had been hoping for from the Viacom side, which was a ratio of 0.7. Nonetheless, Miller keeps an Outperform rating on shares of CBS.

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Netflix, a battle of bulls and bears!

Netflix lost more than $18 billion in market capitalization in 2 days

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more
Netflix subscribers grew less than expected. Stockwinners

On Wednesday, Netflix (NFLX) reported 2nd Quarter June 2019 earnings of $0.60 per share on revenue of $4.9 billion. The consensus earnings estimate was $0.56 per share on revenue of $4.9 billion. Revenue grew 26.0% on a year-over-year basis.

The company said in its shareholders letter it expects third quarter earnings of approximately $1.04 per share on revenue of approximately $5.25 billion. The current consensus earnings estimate is $1.04 per share on revenue of $5.25 billion for the quarter ending September 30, 2019.

Bears vs Bulls, Stockwinners

The company saw its first loss in US subscribers last quarter, and a 2.7 million paid customers added globally, nearly half of what was forecast.

Competition

At the same time, the company is facing a steeper path than ever in the United States. Netflix lost subscribers this quarter for the first time in years, a combination of the price hike and a content loss. As the US market becomes oversaturated with streaming services — with WarnerMedia, Disney, and Apple all launching streaming services — the only way to ensure growth is going outside the United States. Netflix currently has 60 million paying domestic subscribers, and company believes they can get to 90 million, but the risk of market saturation is real, and raises difficult questions for the company’s content strategy.

BMO Capital

BMO Capital analyst Daniel Salmon lowered his price target on Netflix (NFLX) to $440 after its reported shortfall on subscriber addition in Q2, which he expects to “fuel the debate” about the company’s pricing power and the role of new content. Given the sequential decline in its U.S. markets and the approaching launch of Disney+ (DIS), the analyst contends that this may be a “more than just the usual” earnings-miss driven debate. Longer term however, Salmon believes that the company’s revenue trend remains on track, keeping his Outperform rating on the stock and recommending Netflix, Amazon (AMZN), and Disney as a “collective investment” in the global streaming race.

Credit Suisse

Credit Suisse analyst Douglas Mitchelson lowered his price target for Netflix to $440 from $450 after the company posted its worst subscriber miss ever, short by 2.3M net adds, while revenue was in line and EBIT well ahead. The analyst reiterates an Outperform rating on the shares.

Disney to end Netflix distribution agreement in 2019. See Stockwinners.com Market Radar for details
Disney ended Netflix distribution agreement this year. See Stockwinners.com

Deutsche Bank

Deutsche Bank analyst Bryan Kraft views post-earnings selloff in shares of Netflix as a buying opportunity. The analyst keeps a Buy rating on the streaming service.

KeyBanc

KeyBanc analyst Andy Hargreaves says that despite soft Q2 results, he believes Netflix retains competitive advantages that should support excellent revenue and profit growth well into the future. The likely decline in the stock price improves the risk/reward, but increased confidence in the potential for upside to his estimates is likely needed for a more positive view of the shares, he contends. Hargreaves reiterates a Sector Weight rating on the shares.

WarnerMedia streaming service hurts Netflix, Stockwinners

JPMorgan

JPMorgan analyst Doug Anmuth to $425 from $450 while keeping an Overweight rating on the shares. The Q2 net adds miss was meaningful, but the company’s Q2 results are often volatile and this quarter contained a number of moving pieces, Anmuth tells investors in a research note. Netflix’s back half of the year content slate is strong and the company is seeing significantly better trends quarter-to-date, adds the analyst. History suggests that Q2 is a “difficult quarter from which to extrapolate NFLX’s trajectory,” says Anmuth.

Stifel

Stifel analyst Scott Devitt said Netflix shares may be range bound until the company reports Q3 earnings following its miss in Q2 on its domestic and international paid net sub add guidance. He believes management’s explanations for the current quarter miss “appear reasonable,” though Netflix “will have to prove, as it has done many times, that its value proposition remains one of the best,” Devitt tells investors in a post-earnings research note. Following last night’s report, Devitt lowered his price target on Netflix shares to $400 from $425 and keeps a Buy rating on the stock.

Wedbush

Wedbush analyst Michael Pachter raised his price target for Netflix to $188 from $183, while reiterating an Underperform rating on the shares after the company reported quarterly results. The analyst expects content spending to trigger substantial cash burn for many years, and notwithstanding four Netflix price increases in the last five years, he notes that cash burn continues to grow. Content migration and price hikes could cause a deceleration in subscriber growth, and consistently negative free cash flow makes DCF valuation impossible, he adds.

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Ford launches new business model in Europe

Ford to cut 12,000 jobs in Europe by end of 2020

Ford to realign its European operations, Stockwinners

Ford (F) said in a statement that it is launching a new business model and fresh vehicle line-up as part of the most comprehensive redesign in the history of its business in Europe.

The company also is on track to significantly improve its financial results in Europe this year, paving the way to sustainable profitability and its longer-term goal of delivering a 6% EBIT margin.

The new European operating model and resulting organization are effective July 1.

Three new business groups – Commercial Vehicles, Passenger Vehicles and Imports – are being established to facilitate fast decision-making centered on customer needs, Ford said.

Ford Kuga will now be manufactured in China instead of Europe, Stockwinners

Ford is freshening and expanding its vehicle line-up in Europe, introducing at least three new nameplates in the next five years as it continues to grow its utility vehicle portfolio, including the all-new Mustang-inspired fully electric performance utility.

The new nameplates are in addition to all-new Kuga, Puma and Explorer Plug-In Hybrid coming by early 2020.

Manufacturing efficiency is being improved through the previously announced proposed or confirmed closure or sale of six assembly and component manufacturing plants by the end of next year: Proposed closure of Bridgend Engine Plant in South Wales; Closure of Ford Aquitaine Industries Transmission Plant in France; Closure of Naberezhnye Chelny Assembly, St. Petersburg Assembly and Elabuga Engine Plant in Russia; Sale of the Kechnec Transmission Plant in Slovakia to Magna.

This Ford Mustang designed for the European market, Stockwinners

As a result, Ford’s manufacturing footprint in Europe will be reduced to a proposed 18 facilities by the end of 2020, from 24 at the beginning of 2019.

In the U.K., the Ford of Britain and Ford Credit Europe headquarters in Warley also will close later this year and operations consolidated in Dunton.

In addition, Ford is implementing shift reductions at its assembly plants in Saarlouis, Germany, and Valencia, Spain, as well as a more streamlined management structure and marketing and sales operations.

In total, approximately 12,000 jobs will be impacted at Ford’s wholly owned facilities and consolidated joint ventures in Europe by the end of 2020, primarily through voluntary separation programs.

Around 2,000 of those are salaried positions, which are included among the 7,000 salaried positions Ford is reducing globally.

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Barnes & Noble sold for $683M

Barnes & Noble to be acquired by Elliott for $6.50 per share in all cash deal

Barnes & Noble sold for $683M, Stockwinners

Barnes & Noble (BKS) announces that it has entered into a definitive agreement to be acquired by funds advised by Elliott Advisors for $6.50 per share in an all-cash transaction valued at approximately $683M, including the assumption of debt.

Barnes & Noble has faced continued pressure from Amazon and independent booksellers. Its shares had fallen roughly 25% year to date before the news leak. Within the past five years, Barnes & Noble has lost more than $1 billion in market value.

Elliott’s acquisition of Barnes & Noble, the largest retail bookseller in the United States, follows its June 2018 acquisition of Waterstones, the largest retail bookseller in the United Kingdom.

James Daunt, CEO of Waterstones, will assume also the role of CEO of Barnes & Noble following the completion of the transaction and will be based in New York.

The $6.50 per share purchase price represents a 43% premium to the 10-day volume weighted average closing share price of Barnes & Noble’s common stock ended June 5, the day before rumors of a potential transaction were reported in the media.

As a private company, Barnes & Noble will likely be more free to make the changes and investment that can be unwieldy under a public spotlight. Part of the bookseller’s turnaround plan has included closing some of its more than 600 stores across the U.S. and relocating to smaller spaces that receive a fresh and modern look. The company has said its prototype stores encourage shoppers to buy books online or from a tablet.

The retailer has shown small signs of upturn. In March, it reported that over the holidays, sales at locations open for at least a year during the quarter rose 1.1 percent — its best quarterly performance in three years. As of January, it had $15 million in cash and cash equivalents.

The announced transaction with Elliott is the culmination of an extensive Strategic Alternative Review conducted by the Special Committee of the Barnes & Noble board, which was announced on October 3, 2018.

The board of Barnes & Noble unanimously approved the transaction and recommend the transaction to Barnes & Noble shareholders.

Leonard #Riggio, the Founder and Chairman of Barnes & Noble, has also entered into a voting agreement in support of the transaction.

The transaction is subject to customary closing conditions, including the receipt of regulatory and stockholder approval, and is expected to close in Q3.

The merger agreement provides for the acquisition to be consummated through a merger structure. However, the parties expect to amend the agreement to utilize a tender offer structure, which is expected to reduce the time to closing by a number of weeks.

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Sinclair scores a homerun!

Sinclair Broadcast to acquire 21 Regional Sports Networks from Disney at valuation of $10.6B


Sinclair Broadcast buys Fox College Sports from Disney, Stockwinners

Sinclair Broadcast (SBGI) and The Walt Disney Company (DIS) announced that they have entered into a definitive agreement under which Sinclair will acquire the equity interests in 21 Regional Sports Networks and Fox College Sports, which were acquired by Disney in its acquisition of Twenty-First Century Fox.

Sinclair scores a home run by this purchase, Stockwinners

The transaction ascribes a total enterprise value to the RSNs equal to $10.6B, reflecting a purchase price of $9.6B, after adjusting for minority equity interests.

That’s far cheaper than the $15 billion to $25 billion range most analysts had predicted Disney could get.

Disney assets do not fetch the price that was expected for the assets, Stockwinners

Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice.

The RSN portfolio, which excludes the YES Network, is the largest collection of RSNs in the marketplace today, with an extensive footprint that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams.

In calendar year 2018, the RSN portfolio delivered a combined $3.8B in revenue across 74M subscribers.

The RSNs will be acquired via a newly formed indirect wholly-owned subsidiary of Sinclair, Diamond Sports Group.

Byron Allen has agreed to become an equity and content partner in a newly formed indirect wholly-owned subsidiary of Sinclair and an indirect parent of Diamond.

Allen, who bought The Weather Channel in 2018, is the Founder, Chairman, and CEO of Entertainment Studios, a global media, content and technology company.

Byron Allen who bought the Weather Channel in 2018 invests in the transaction, Stockwinners

Sinclair expects to capitalize Diamond with $1.4B in cash equity, comprised of a combination of approximately $0.7B of cash on hand and a contribution of $0.7B in the form of new fully committed debt at Sinclair Television Group.

In addition, the purchase price will be funded with $1B of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of Sinclair and direct parent of RSN Holding Company.

The remainder of the purchase price is being funded by $8.2B of fully committed secured and unsecured debt incurred by Diamond.

The transaction will be treated as an asset sale for tax purposes, with Sinclair receiving a full step-up in basis.

The transaction has been unanimously approved by the Board of Directors of both Sinclair and Disney.

In March, Sinclair, Blackstone and Amazon backed the New York Yankees’ $3 billion re-purchase of the 80% of YES Network the team had sold to Fox in 2014. YES Network was the 22nd channel in the former Fox portfolio, and was seen as the crown jewel.

And back in February, Sinclair partnered with the Chicago Cubs to create a new RSN in Chicago, to be called Marquee Sports Network, that will air all local Cubs games beginning in 2020.

Sinclair also own the Tennis Channel, Stockwinners

Sinclair is the largest owner of local television stations (it owns 200) in the country. SBG also owns the Tennis Channel. (It is also a partner in the joint venture sports streaming platform Stadium.) By 2020, it will operate 22 regional sports networks, plus a minority ownership stake in YES.

SBGI closed at $44.95. DIS closed at $134.33.

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Investors unhappy with Bed Bath & Beyond

Investor group outlines strategic plan for Bed Bath & Beyond

Bed Bath & Beyond tumbles on competition. Stockwinners.com

Investor group outlines strategic plan for Bed Bath & Beyond , Stockwinners

Legion Partners Holdings, Macellum Advisors GP and Ancora Advisors released a presentation outlining the Investor Group’s Strategic Plan for Bed Bath & Beyond (BBBY).

The group said, “The plan outlines the path forward to modernizing Bed Bath’s retail practices and delivering a significant earnings per share improvement which could drive $5.00 per share of annual earnings – a level that Bed Bath achieved just a few short years ago.

The Investor Group’s Strategic Plan includes the following highlights: Revamp executive management – recruiting a top-flight CEO to lead Bed Bath going forward and instill a world-class winning culture.

We plan to launch a search in the near term to address this key position. Reverse sales weakness – fixing the merchandise over-assortment problem through a detailed SKU rationalization process as well as developing a merchandise architecture that will better resonate with customers.

Making the in-store experience something that drives traffic to the stores will be a major priority.

Turn around Company culture – increase focus on employee training and education to improve motivation; empower employees to better use technology and improve customer experience.

Significantly expand gross margins – improve vendor relations and drive profits by establishing a direct sourcing strategy and private label program as well as fixing mix issues created by the Company’s shift to commoditized and lower margin products.

Implement cost cutting – conducting an extensive reassessment of the increases in expenses over the last five years, including the explosion of the Company’s advertising budget, seemingly endless array of initiatives that have failed to produce meaningful results and extensive use of consultants.

Improve inventory – increasing inventory turns which would result in a substantial release of cash tied up in slow moving goods. Fix capital allocation – reviewing all non-core businesses and assessing their value as part of the business or their potential value to other parties.

Excess cash created could be applied to share or debt repurchases, both of which are significantly accretive given discounted trading levels.

Lastly, the increase in capital expenditures will be addressed. Above all, the Investor Group’s director nominees have the relevant experience and commitment to execute on these priorities and hold management accountable for delivering results.”

BBBY last traded at $16.68

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Alliance Data sells Epsilon for $4.4 billion

Publicis to acquire Epsilon for $4.40B in cash

Publicis (PUBGY) announced it has entered into an agreement with Alliance Data Systems (ADS) under which Publicis will acquire Alliance Data’s Epsilon business for a net purchase price of $3.95B after tax step-up – total cash consideration of $4.40B – and build a strategic partnership with Alliance Data remaining business.


Publicis to acquire Epsilon for $4.40B in cash , Stockwinners

The acquisition gives Publicis access to Epsilon’s data capabilities. The company says, for example, it has more than 250 million unique consumers identified in the U.S. The company says it can build on top of a client’s first-party data with its own assets, like behavioral and transactional data.

The Directoire, or Management Board, and the Conseil de Surveillance, or Supervisory Board, of Publicis have unanimously approved this transaction.

Alliance Data sells Epsilon for $4.4 billion, Stockwinners

Arthur Sadoun, Chairman and CEO of Publicis, said that, “Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative.”

Edward Heffernan, Alliance Data Systems’ President and CEO, added that, “I’m pleased to say today’s announcement represents a trifecta win for Alliance Data, Epsilon and Publicis Groupe.

The announcement of this transaction represents the culmination of an extensive assessment of strategic options for our Epsilon business.

With this transaction, we have found what we believe to be the right home for Epsilon’s technology, data assets and associates.

Publicis Groupe will be the ideal cultural and strategic fit for Epsilon and its Conversant business, and will help drive Publicis Groupe’s own transformation in today’s data-driven digital world.

Furthermore, the unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward.”

Under the terms of the agreed transaction, Publicis will acquire Epsilon for a cash consideration of $4.40B, representing a net purchase price of $3.95B after deducting the benefit of acquisition-related tax step-up.

This implies an 8.2-times multiple, based on a 2018 Adjusted EBITDA of $485M.

According to Publicis, the transaction will be double digit accretive to its headline EPS and free Cash Flow per share from year one.

Publicis also said that it “remains committed” to its 45% dividend payout ratio and will put on hold its share repurchase program in the context of this acquisition.

The transaction remains subject to customary approvals and is expected to close in Q3 2019.

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Zoosk sold for $255 million

Spark Networks to acquire Zoosk, sees adjusted EBITDA to exceed $50M in 2020

Spark Networks (LOV) announced its entry into a definitive agreement to acquire Zoosk.

Zoosk shareholders will receive $95 million in cash, Stockwinners

The combination will drive a meaningful increase in Spark’s scale, with over one million monthly paying subscribers across the two platforms. Spark expects the transaction to drive meaningful margin expansion in 2020 and beyond.

“Zoosk is one of the strongest dating apps in the North American market, which comprises half of the $5B global online dating opportunity,” said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE.

“Similarly, North America has been a key strategic market for Spark, and the focal point for our growth initiatives. Our deal with Zoosk creates the second largest online dating platform in North America and the second largest publicly-listed dating company in the world.

Spark buys Zoosk for $255 million, Stockwinners

Over the past 18 months, our management team has successfully integrated acquisitions and developed new brands. As a result of these efforts, our brand portfolio now includes SilverSingles, which continues to exceed our expectations, and the Christian Mingle, Jdate and JSwipe brands, which have all shown significant improvement since they were acquired in late 2017.

Our acquisition of Zoosk is the most transformative deal in our history, and we expect the transaction to immediately strengthen our position in the online dating market. With the increased scale that results from the combination, we see a clear path to profitability improvements and greater opportunity to invest in innovation and growth initiatives that will drive shareholder value.”

With the addition of Zoosk, Spark will more than double in size and the combined business will be considerably more valuable than the two stand-alone entities: Following the completion of its integration plans, Spark expects to drive significant Adjusted EBITDA margin expansion.

In 2020, Spark expects Adjusted EBITDA to exceed $50M. Under the terms of the agreement, Spark will acquire 100% of Zoosk’s shares with a combination of cash and stock valuing the company at approximately $255M based on the closing price of Spark Networks SE stock on March 20.

Spark will issue 12.98M American Depository Shares valued at approximately $150M based on the closing price of Spark Networks SE stock of $11.53 on March 20.

Additionally, Zoosk shareholders will receive net cash consideration of $95M at closing and $10M via a deferred cash payment in December 2020, which will be funded through a new $120M senior secured debt facility.

The transaction is expected to close early in the third quarter of 2019.

LOV closed at $11.90.

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Multi-Color sold for $2.5 billion

Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash

Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash, Stockwinners
Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash, Stockwinners

Multi-Color Corporation (LABL) announced that it has entered into a definitive merger agreement to be acquired by an affiliate of Platinum Equity LLC.

Under the terms of the agreement, which has been unanimously approved by Multi-Color Corporation’s Board of Directors, Multi-Color Corporation shareholders will receive $50.00 in cash for each share of common stock they own, in a transaction valued at $2.5B including the assumption of $1.5B of debt.

The cash purchase price represents a premium of approximately 32 percent over Multi-Color Corporation’s 30-day volume weighted average share price prior to January 22, 2019, the last trading day prior to media speculation regarding a potential transaction involving Multi-Color Corporation.

The transaction will be financed through a combination of committed equity financing provided by Platinum Capital Partners IV, L.P., as well as debt financing that has been committed to by Bank of America Merrill Lynch, Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Securities Inc.

The transaction is expected to be completed by Q3 FY 2019 and is subject to Multi-Color Corporation shareholder approval, regulatory clearances and other customary closing conditions.

Upon the completion of the transaction, Multi-Color Corporation will become a privately held company and shares of Multi-Color Corporation common stock will no longer be listed on any public market.

Constantia Flexibles Holding GmbH and affiliates of Diamond Castle Partners, who together currently own 5,889,093 shares of Multi-Color Corporation common stock, representing approximately 28.7 percent of Multi-Color Corporation’s outstanding shares, have each separately entered into a voting and support agreement to vote its shares in favor of the transaction as provided in each agreement.

The Multi-Color Corporation Board has unanimously recommended that all of Multi-Color Corporation’s shareholders vote to approve and adopt the merger agreement at an upcoming special meeting of Multi-Color Corporation’s shareholders.

LABL closed at $48.55.


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Retail Sales Plunged in December

U.S. retail sales dropped 1.2% in December with ex-autos plunging 1.8%.

Retail sales plunge in December, Stockwinners
Retail sales plunge in December, Stockwinners

November’s 0.2% headline gain was revised down to 0.1%, while the 0.2% ex-auto figure was unrevised after strong gains in October of 1.0% (revised from 1.1%) and 0.8% (revised from 1.0%), respectively.

Sales excluding autos, gas, and building materials tumbled 1.6% versus the prior 0.7% jump (revised from 0.6%). Motor vehicle sales climbed 1.0% after a 0.7% prior gain (revised from 0.2%).

Gas station sales declined 5.1% from -4.4% (revised from -2.3%). Food, beverage prices were down 0.4% compared to 0.1% previously (revised from 0.4%).

Building materials edged up 0.3% from -1.5% (revised from -0.3%). Furniture sales dropped 1.3% from 0.5% (revised from 1.2%).

Clothing sales fell 0.7% from 0.4% (revised from -0.2%). Nonstore retailers were down 3.9% from 2.8% (revised from 2.3%).

Miscellaneous sales crashed down 4.1% from 4.0% (revised from 0.4%). This is a very disappointing result and should knock yields and equities lower.

Some analysts blame the drop on the government shutdown while others are seeing a worrying consumers above the situation in Washington as the main reason.

Retailer Stocks to Watch: FIVE, OLLI, ULTA, and BOOT.

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Levi’s coming to NYSE

Levi Strauss & Co. said in a regulatory filing that it intends to seek listing on the New York Stock Exchange under the symbol “LEVI” via an initial public offering.

Levis coming to NYSE – Stockwinners.com

“Today we design, market and sell products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under our Levi’s, Dockers, Signature by Levi Strauss & Co. and Denizen brands.

With $5.6 billion in net revenues and sales in more than 110 countries in fiscal year 2018, we are one of the world’s leading apparel companies, with the Levi’s brand having the highest brand awareness in the denim bottoms category globally,” the company disclosed.

The underwriters on the deal include Goldman Sachs, J.P. Morgan, Morgan Stanley, Evercore, BNP Paribas, Citigroup, Guggenheim, HSBC, Drexel Hamilton, Telsey Advisory and The Williams Capital Group.


Levi Strauss was founded in May 1853  when German immigrant Levi Strauss came from Bavaria, to San Francisco, California to open a west coast branch of his brothers’ New York dry goods business. 

Levi Strauss & Co. introduces its first bicycle pants in 1895. It took another 116 years for the company to come out with Levi’s® Commuter, a multi-functional performance product designed for the modern cyclist. When Levi Strauss passes away in September, his four nephews take over the business and carry out his numerous bequests to Bay Area charities serving children and the poor. On April 18, The San Francisco earthquake and fire destroy the headquarters and two factories of Levi Strauss & Co.

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Tribune Media sold for $6.4 billion

Nexstar to acquire Tribune Media for $46.50 per share

Nexstar agrees to acquire Tribune Media, Stockwinners
Nexstar agrees to acquire Tribune Media, Stockwinners

Nexstar Media Group (NXST) and Tribune Media (TRCO) announced that they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4B including the assumption of Tribune Media’s outstanding debt.
The transaction reflects a 15.5% premium for Tribune Media shareholders based on its closing price on November 30, 2018, and a 45% premium to Tribune Media’s closing price on July 16, 2018, the day the FCC Chairman issued a public statement regarding his intention to circulate a Hearing Designation Order for Tribune Media’s previously announced transaction with a third party.
Tribune Media shareholders will be entitled to additional cash consideration of approximately 30c per month if the transaction has not closed by August 31, 2019, pro-rated for partial months and less an adjustment for any dividends declared on or after September 1, 2019.
The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.
Upon closing, the transaction is expected to be immediately accretive to Nexstar’s operating results inclusive of expected operating synergies of approximately $160M in the first year following the completion of the transaction and planned divestitures.
The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank. Completion of the transaction is subject to approval by Tribune’s shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions.

Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.


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Altria to buy stake in Juul Labs

Altria, under pressure from FDA, said in talks to buy stake in Juul Labs

 

Altria to buy stake in Juul Labs, Stockwinners
Altria to buy stake in Juul Labs, Stockwinners

Following a report that Altria Group (MO) is in talks to take a “significant” stake in Juul Labs, an analyst said that an agreement could make strategic sense for the tobacco giant to gain exposure to a fast-growing product that poses a threat to its cigarette business.

The Wall Street Journal said Altria is in talks to take a “significant” minority interest in Juul Labs, a controversial e-cigarette startup.

According to people familiar with the matter, any deal is likely several weeks away. Juul was last valued at $16B in a private fundraising round this summer.

Altria has an agreement with Philip Morris (PM) to market IQOS, subject to regulatory approval. Philip Morris is already selling it in 43 countries and has said it could get approved for the U.S. by the end of the year.

Juul has drawn criticism over its products’ popularity with teens.

Juul, whose products are sold online and in convenience stores, gas stations and vape shops, accounted for about three-quarters of the U.S. e-cigarette market in the four-week period ended November 17, according to the Wells Fargo analysis of Nielsen data.

Earlier this month, the U.S. Food and Drug Administration announced plans to place restrictions on sales of flavored e-cigarettes.

Juul also said it would restrict sales of nearly all its flavored pods to the internet, and stop most social media promotion to combat youth vaping.

“More than 99% of all social media content related to JUUL Labs is generated through third-party users and accounts with no affiliation to our company. Nevertheless, we understand that many young people get their information from social media. To remove ourselves entirely from participation in the social conversation, we have decided to shut down our U.S.-based social media accounts on Facebook (FB) and Instagram. We have never used Snapchat (SNAP),” the company stated.

WHAT’S NOTABLE

Following the FDA statement on the agency’s proposed steps against underage smoking, Altria General Counsel Murray Garnick said it “welcomed” the FDA’s efforts to address the underage use of e-vapor products and said it believes Congress should raise the legal age of purchase for all tobacco products to 21.

Last month, Altria said it would pull its pod-based e-vapor products from the market until approved by FDA.

The company said Nu Mark will remove MarkTen Elite and Apex by MarkTen pod-based products from the market “until these products receive a market order from the FDA or the youth issue is otherwise addressed,” and that for the remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties.

Nu Mark will discontinue the sale of all other flavor variants of our cig-a-like products until these products receive a market order from the FDA.

The FDA is also pursuing a ban on menthol cigarettes, which could remove nearly a third of the roughly 250B cigarettes sold annually in the U.S., The Wall Street Journal said.

A rule could take a year or more to finalize, the FDA said. The FDA concluded in 2013 that menthols are harder to quit and likely pose a greater health risk than regular cigarettes.

ANALYST COMMENTARY

Morgan Stanley analyst Pamela Kaufman said she has no knowledge of a potential deal between Altria and Juul but that taking such a stake could make strategic sense for Altria to gain exposure to a fast growing product that poses a threat to its cigarette business.

Altria does not have a robust reduced risk product portfolio and Juul’s e-cigs could significantly enhance its competitive position, stated Kaufman, who also believes Altria would likely be buying in at a lower valuation than the previously reported $15B given the FDA recently prohibited flavored pods sales in convenience stores.

 OTHERS TO WATCH

Publicly traded companies in the tobacco products space also include Philip Morris and British American Tobacco (BTI).


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Cinedigm to acquire ComicBlitz 

Cinedigm to acquire ComicBlitz 

 

Cinedigm to acquire ComicBlitz , Stockwinners
Cinedigm to acquire ComicBlitz , Stockwinners

Cinedigm (CIDM) announced an agreement to acquire the digital comic book service ComicBlitz, which will provide access to approximately 10,000 digital comic books, with more than 175,000 pages of content from a growing network of 30 or more publishers.

#ComicBlitz content will be distributed globally as a licensed offering for mobile carriers, OTT providers and other media companies.

It will also be integrated with Cinedigm’s existing and planned OTT services, including the fandom lifestyle network CONtv.

Cinedigm expects that the acquisition will close before the end of the year. Cinedigm plans on rapidly enhancing ComicBlitz’s content and services offering by leveraging Cinedigm’s forthcoming, next-generation technology platform and expects to service global distribution of the ComicBlitz content and platform offerings alongside Cinedigm’s existing footprint of nine OTT channel offerings.

From a business perspective, the transaction is expected to generate revenues through content licensing, subscription and advertising revenues, new distribution platform partnerships and by accelerating global expansion of Cinedigm’s OTT business.

Cinedigm expects the acquisition will be accretive within the first quarter following closing, pending certain license deals currently in negotiation. The deal could be expected to generate more than $5M in incremental annual digital revenues within 18-24 months after closing, if new platform and licensing agreements related to this acquisition are consummated.

This deal will support Cinedigm’s strategy to provide high quality turn-key offerings to third party platforms on a global scale through acquisition and partnerships.

It will also provide a deep portfolio of quality comic book offerings that significantly broadens the company’s content portfolio for highly sought after fandom audiences worldwide.

The worldwide digital comic book and graphic novel market is estimated at over $1B in annual sales. Launched in 2015, ComicBlitz has a distribution footprint of over 133 countries, with key penetration in North America and major territories including the United Kingdom, Australia, India, Mexico, Brazil and Germany.


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JP Morgan is positive on NY Times

NY Times rises on subscriber growth, Analyst Comments

JP Morgan is positive on NY Times, Stockwinners
JP Morgan is positive on NY Times, Stockwinners

Shares of New York Times (NYT) have jumped after the company reported better than expected third quarter results and strong subscriber growth.

Notably, the Times’ 203,000 total net new digital-only subscriptions represents the highest gain in digital subscribers in a quarter since the “Trump bump” in the fourth quarter of 2016 and the first quarter of 2017 after the presidential election.

Commenting on the announcement, JPMorgan analyst Alexia Quadrani told investors that she is “extremely encouraged” by the results and sees momentum continuing on digital subscriber additions.

QUARTERLY RESULTS

New York Times reported third quarter adjusted earnings per share of 15c and revenue $417.35M, both above consensus of 11c and $408.54M, respectively.

The number of digital subscribers showed a net increase of roughly 203,000, with 143,000 of those signing on for digital new products and the remainder paying for the company’s cooking and crossword features.

Operating profits rose 30% to $41.4M in the period.

Mark Thompson, president and CEO, said, “This was a strong third quarter for the company. […] We passed two significant milestones, and now have more than 3M digital-only subscriptions and more than 4M total subscriptions. We’re executing on our subscription-first strategy; this quarter, subscription revenues accounted for nearly two-thirds of the company’s revenues. We’re investing aggressively in our journalism, product and marketing and are seeing tangible results in our digital growth.

Turning to advertising, as expected, we are seeing a much stronger second half of the year. We had an exceptional third quarter with digital advertising up 17% and growth of 7% in total advertising.”

Responding to a question during its earnings conference call from JPMorgan’s Quadrani regarding potential subscription drivers, including stories that may have caused a spike in adds, the company highlighted the “important role” played by the $1 per week promotion.

NY Times also acknowledged that “there were some spikes” during the quarter related to specific stories, namely “the anonymous editorial, the story about family separation at the border and the one on the Trump family.”

MOMENTUM TO CONTINUE

In a post-earnings note, JPMorgan‘s Quadrani pointed out that NY Times reported third quarter earnings with revenue, adjusted operating profit, and EPS all ahead of consensus and her estimates.

Most notably, the analyst noted that digital subscriber net adds in the quarter were 203,000 compared to her 130,000 estimate, with the core news product adding 143,000 and digital other adding 60,000.

The 143,000 net adds for news compares to 68,000 in the second quarter, and is the best quarter for the company since the “Trump bump” driven first quarter of 2017, Quadrani contended.

Overall, the analyst said she is “extremely encouraged” by these results and sees momentum continuing on digital subscriber additions helped by the current elevated news cycle and the midterm elections. Quadrani has an Outperform rating on the shares.

FAILING’ NEW YORK TIMES

Last month, Trump criticized a NY Times investigation into his and his family’s use of “dubious tax schemes” over the years and the origins of his own wealth, calling the article an “old, boring and often told hit piece.”

In a tweet, the President said “The Failing New York Times did something I have never seen done before. They used the concept of “time value of money” in doing a very old, boring and often told hit piece on me. Added up, this means that 97% of their stories on me are bad. Never recovered from bad election call!”

This is not the first time Trump called the publication the “failing New York Times.”

Denouncing what he referred to as a “gutless editorial” posted by the New York Times in September, in which an unnamed administration official alleged that advisers to the President were intentionally attempting to thwart his misguided impulses from the inside, Trump tweeted: “Does the so-called “Senior Administration Official” really exist, or is it just the Failing New York Times with another phony source? If the GUTLESS anonymous person does indeed exist, the Times must, for National Security purposes, turn him/her over to government at once!”

PRICE ACTION

In Thursday’s trading, shares of New York Times gained 7.5% to $28.39.


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