FDA Approved Vapes are coming!

FDA announces ‘first authorization’ for marketing of e-cigarette products

The U.S. Food and Drug Administration announced it has authorized the marketing of three new tobacco products, which it noted marks “the first set of electronic nicotine delivery system products ever to be authorized by the FDA through the Premarket Tobacco Product Application – PMTA – pathway.”

The FDA issued marketing granted orders to R.J. Reynolds Vapor Company, a subsidiary of British American Tobacco, for its Vuse Solo closed ENDS device and accompanying tobacco-flavored e-liquid pods, specifically, Vuse Solo Power Unit, Vuse Replacement Cartridge Original 4.8% G1, and Vuse Replacement Cartridge Original 4.8% G2.

“As the RJR Vapor Company submitted data to the FDA that demonstrated that marketing of these products is appropriate for the protection of public health, today’s authorization allows these products to be legally sold in the U.S.,” the FDA stated.

Solar Powered Vuse

Today, the FDA also issued 10 marketing denial orders for flavored ENDS products submitted under the Vuse Solo brand by RJR.

“Due to potential confidential commercial information issues, the FDA is not publicly disclosing the specific flavored products. These products subject to an MDO for a premarket application may not be introduced or delivered for introduction into interstate commerce. Should any of them already be on the market, they must be removed from the market or risk enforcement. Retailers should contact RJR with any questions about products in their inventory.

The agency is still evaluating the company’s application for menthol-flavored products under the Vuse Solo brand,” the FDA stated.

“Today’s authorizations are an important step toward ensuring all new tobacco products undergo the FDA’s robust, scientific premarket evaluation. The manufacturer’s data demonstrates its tobacco-flavored products could benefit addicted adult smokers who switch to these products – either completely or with a significant reduction in cigarette consumption – by reducing their exposure to harmful chemicals. We must remain vigilant with this authorization and we will monitor the marketing of the products, including whether the company fails to comply with any regulatory requirements or if credible evidence emerges of significant use by individuals who did not previously use a tobacco product, including youth. We will take action as appropriate, including withdrawing the authorization,” said Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products.

Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products

Shares to watch: BTI, MO, PM.

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Spectrum Brands shares soar on sale of it’s division

Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B

Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.

Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.

Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.

Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.

The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.

The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.

The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.

I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.

We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.

Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.

After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”

The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.

The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.

Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”

ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania.  In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.

Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.

The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.

ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.

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Shareholder opposes sale of At Home

At Home Group shareholder calls on company to release Q2 interim sales results

CAS Investment Partners, which beneficially owns approximately 17% of the outstanding common stock of At Home Group (HOME), called on the company to release its interim sales results for Q2 in order to provide material information and keep stockholders informed as they consider the $37 per share tender offer made by funds advised by Hellman & Friedman.

As previously disclosed, CAS deems the $37 per share tender offer wholly inadequate and opposes the transaction on its current terms. Clifford Sosin, founder and portfolio manager of CAS, commented:

“We urge At Home to promptly release interim sales results for the second quarter of fiscal year 2022. Rather than keep stockholders in the dark about the Company’s continued momentum, we believe At Home should be providing them with as much information as possible.

Clifford Sosin, founder and portfolio manager of CAS

Stockholders should not be asked to make a decision about whether to tender into the meager H&F offer without first receiving an easily-prepared update on the current quarter. It is not as if At Home has not pre-released sales data in the past.

Stockholders should seriously question why the Company is not releasing this important information at a time when we need it the most?

According to credit card data analyzed by CAS, the Company’s second quarter same store sales are trending approximately 30% above 2019 levels. Sales appear to be remaining very strong even as the economy reopens and the impact of federal stimulus fades.

We contend that this information demonstrates the Company’s recent success is durable and not a temporary byproduct of the pandemic.

It appears to us that At Home and H&F are desperately trying to avoid releasing these numbers, as evidenced by the fact that the tender deadline ends five days before the close of the second quarter on July 20th.

We are concerned that this is due to Chairman and Chief Executive Officer Lee Bird being set up to make more than $100 million in compensation if the proposed transaction is completed.

We are equally concerned that H&F may already be exerting an inappropriate level of influence over the corporate governance decisions at the Company. Given we are At Home’s largest stockholder, we call on the Company to immediately respond to our request to disclose this material information and remind the independent directors of their fiduciary duties to At Home stockholders.”

On May 7, 2021, At Home Group Inc. agreed to be acquired by private equity firm Hellman and Friedman (H&F) for a total cash consideration of $2.8 billion, inclusive of debt assumption. Under the agreement, At Home shareholders will receive $36 in cash for each share held. HOME closed at $36.80.

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Railroad Traffic Points to Growing Economy

North American rail traffic rose 10.6% in week ended June 19, AAR says

The Association of American Railroads, AAR, reported U.S. rail traffic for the week ending June 19.

For this week, total U.S. weekly rail traffic was 514,112 carloads and intermodal units, up 12.5% compared with the same week last year.

Total carloads for the week ending June 19 were 232,144 carloads, up 15.1% compared with the same week in 2020, while U.S. weekly intermodal volume was 281,968 containers and trailers, up 10.4% compared to 2020.

For some rail traffic categories, percentage changes for the current week compared with the same week in 2020 are inflated because of the widespread shutdowns – and subsequent large reduction in rail volumes – that impacted many economic sectors last year at this time.

North American rail volume for the week ending June 19, on 12 reporting U.S., Canadian and Mexican railroads totaled 329,907 carloads, up 11.3% compared with the same week last year, and 369,258 intermodal units, up 10% compared with last year.

Total combined weekly rail traffic in North America was 699,165 carloads and intermodal units, up 10.6%.

North American rail volume for the first 24 weeks of 2021 was 16,805,420 carloads and intermodal units, up 12.1% compared with 2020.

Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Genesee & Wyoming (GWR), Kansas City Southern (KSU), Norfolk Southern (NSC) and Union Pacific (UNP).

Dow Jones Transport Index is up 19 points to 14,959.

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Merger in Senior Housing Industry!

Welltower to acquire Holiday Retirement’s Seniors Housing Portfolio for $1.58B

Welltower (WELL) announced that it has entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties, including 80 nearly identical independent living and six combination independent living/assisted living properties, currently owned by Holiday Retirement.

Additionally, as announced on June 21, upon the closing date of this transaction, which is expected to be in the third quarter, Atria Senior Living will assume operations of the properties and retain Holiday’s in-place senior management and staff.

Through this landmark transaction, the 86-property portfolio will be acquired by Welltower for $1.58B, or $152,000 per unit, representing a discount to estimated replacement cost in excess of 30%.

The transaction is expected to be approximately 10c per diluted share accretive to Welltower’s normalized funds from operations during the first twelve months post-closing.

The portfolio is expected to deliver substantial net operating income growth in future quarters and in coming years as occupancy growth accelerates from near-trough levels of 76.3% as of June 20.

Portfolio occupancy has already increased over 2.7% since bottoming in March.

Additionally, the anticipated recovery in occupancy and Atria’s operational and technological expertise is expected to maximize community level performance and to generate meaningful expansion in operating margins going forward.

Welltower and Atria have agreed to a highly incentivized and strongly aligned enhanced RIDEA 3.0 management contract based on both top and bottom-line financial metrics. The contract will also include substantial promote opportunities to Atria upon achievement of certain long-term financial metrics.

The achievement of such hurdles would imply significant growth in underlying property level performance, resulting in a nominal yield in excess of 9% to Welltower and a net economic yield in excess of 8% to Welltower after capital expenditures and payment of the promote.

Welltower CEO

Atria expects to integrate Holiday’s corporate staff and retain its experienced and reputed management team, thereby de-risking the overall transaction.

Atria has significant experience with Holiday properties, having successfully assumed operations in recent years of two portfolios previously managed by Holiday: a 29-property portfolio across Canada in 2014 and, in April 2021, a 21-property portfolio owned by New Senior Investment Group Inc.

The portfolio is expected to benefit from Atria’s operating model and technology platform, which includes its proprietary Glennis software for staffing optimization, digital marketing, and CRM.

Atria’s digital marketing capabilities and front of house technology suite are also expected to reduce dependency on referral sources and increase organic lead generation.

Holiday’s management team expects that this significant investment in its platform and technology infrastructure will significantly enhance their ability to serve residents going forward.

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Welbilt sold for $4.3B

Middleby to acquire Welbilt in an all-stock transaction

The Middleby Corporation (MIDD) and Welbilt (WBT) have entered into a definitive agreement under which Middleby will acquire Welbilt in an all-stock transaction, enhancing the Middleby Commercial Foodservice platform with an attractive portfolio of products, brands and technologies.

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This transaction will bring together two complementary businesses, accelerate the Middleby growth strategy into key markets globally and increase core capabilities in highly attractive segments.

The combined company will have approximately $3.7B in combined 2020 sales, 73% of which will come from the Commercial Foodservice segment.

Under the terms of the agreement, Welbilt shareholders will receive a fixed exchange ratio of 0.1240x shares of Middleby common stock for each share of Welbilt common stock in an all-stock transaction, with an implied enterprise value of $4.3B.

Based on Middleby’s volume-weighted average price during the 30 consecutive trading days ending April 20, the offer price represents a 28% premium to Welbilt’s 30-day VWAP.

Upon closing, Middleby shareholders will own approximately 76% and Welbilt shareholders will own approximately 24% of the combined company on a fully diluted basis.

The Boards of both companies have unanimously approved the transaction. In addition, Carl C. Icahn, Welbilt’s largest shareholder with an 8.4% ownership position, has entered into a support agreement in favor of the transaction.

Following closing, Timothy FitzGerald will continue as CEO and as a member of the Middleby Board of Directors. Bryan Mittelman will continue to serve as Middleby’s CFO.

Middleby will expand its Board to include two new directors from the Welbilt board, Chairperson Cynthia Egnotovich and William Johnson. Middleby intends to refinance Welbilt’s existing debt through its committed Senior Secured Facility.

Based on the expected pro forma leverage ratio at closing, the interest on the incremental financing would be approximately L + 162.5 bps.

The transaction is expected to close in late 2021, subject to customary closing conditions, including regulatory and Middleby and Welbilt shareholder approvals.

The Middleby Corporation designs, manufactures, markets, distributes, and services a range of foodservice, food processing, and residential kitchen equipment.

Welbilt, Inc., designs, manufactures, and supplies foodservice equipment for commercial foodservice market worldwide. The company offers commercial upright and undercounter refrigerators and freezers, blast freezers and chillers, and cook-chill systems under the Delfield brand; and walk-in refrigerators, coolers and freezers, and prefabricated cooler and freezer panels under the Kolpak brand. 

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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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Wrike sold for $2.25B cash

Citrix to acquire Wrike for $2.25B in cash

Citrix Systems (CTXS) announced that it has entered into a definitive agreement to acquire Wrike, a rapidly growing, recognized leader in the SaaS collaborative work management space, for $2.25B in cash.

Wrike ended calendar year 2020 with more than $140 million in unaudited SaaS ARR, reflecting more than 30 percent CAGR in SaaS ARR over the prior two years.

Citrix spends $2.55B to expand its offerings

The company is expected to have approximately 30 percent stand-alone growth to between $180M-$190M in SaaS ARR1 in 2021, with the opportunity to accelerate growth over time under Citrix’s ownership.

The addition of Wrike is highly complementary to Citrix’s existing customer base and is expected to accelerate Citrix’s SaaS ARR growth.

Wrike founders cash out

Financing and purchase accounting impacts to deferred revenue will affect 2021 non-GAAP earnings per share. Integration and other costs related to the acquisition are expected to be modestly dilutive to non-GAAP earnings per share in 2021.

The transaction is expected to be neutral to Citrix’s fiscal year 2022 non-GAAP earnings per share and free cash flow, and accretive thereafter.

Citrix expects to fund the transaction with a combination of new debt and existing cash and investments.

Citrix is committed to its investment grade credit ratings and plans to return to historical leverage levels within 24 months.

Citrix has obtained a commitment from JPMorgan Chase Bank, N.A. for a $1.45B senior unsecured 364-day bridge loan facility.

The transaction, which has been unanimously approved by the board of directors of both Citrix and Wrike, is expected to close in the first half of 2021, subject to regulatory approvals and other customary closing conditions.

SaaS is the new trend in software usage

Until close, the companies will continue to operate independently.

Upon closing, Andrew Filev, Wrike CEO will continue to lead the Wrike team and report to Arlen Shenkman, EVP and CFO, Citrix.

CTXS closed at $132.00.

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Aytu BioScience and Neos Therapeutics Merge

Aytu, Neos Therapeutics enter all-stock merger agreement

Aytu BioScience (AYTU) and Neos Therapeutics (NEOS) announced that they have entered into a definitive merger agreement pursuant to which Neos will merge with a wholly owned subsidiary of Aytu in an all-stock transaction.

Upon the effectiveness of the merger, Neos stockholders will be entitled to receive 0.1088 shares of common stock of Aytu for each share of Neos common stock held, after taking into account the one-for-ten reverse split of Aytu’s common stock that was effected on December 8.

The transaction will result in Neos stockholders owning approximately 30% of the fully diluted common shares of Aytu.

The all-stock transaction is valued, on a fully diluted basis, at approximately $44.9M based on the 10-day volume weighted average price of Aytu stock for the period ended December 9.

The combined entity will have an increased footprint in the prescription pediatric market, an established multi-brand ADHD portfolio addressing the $8.5B ADHD market and combined revenue scale.

For the 12-month period ending September 30, Neos generated $57M in revenues. On a combined pro-forma basis for this same period, Aytu and Neos’ aggregate net revenue is over $100M.

In addition, this merger facilitates operational and commercial synergies that can be harnessed to accelerate the path to profitability for the combined entity, with estimated annualized cost synergies of approximately $15M beginning FY22.

The combined company will be led by Josh Disbrow, CEO of Aytu and will be headquartered in Englewood, Colorado.

The board of the combined company will consist of six members designated by Aytu and two members designated by Neos, including Neos CEO and director Jerry McLaughlin and Neos director Beth Hecht.

The merger is currently expected to close by Q2 of 2021, subject to certain approvals by both Aytu and Neos stockholders and the satisfaction of other customary closing conditions.

As part of the transaction, Aytu has agreed to provide Neos with access to up to $5M cash for working capital needs for the period prior to the closing of the merger.

In addition, upon closing of the merger, $15M in principal of Neos’s existing senior secured debt facility with affiliates of Deerfield Management will be repaid, and Deerfield has agreed to allow the remaining debt under the facility to remain outstanding with the combined company following the merger.

Indebtedness under Neos’s existing ABL agreement with Encina Business Credit will also remain outstanding.

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Consolidation in digital healthcare continues!

GigCapital2 to combine with UpHealth, Cloudbreak Health in $1.35B merger

GigCapital2 (GIX) announced that it has entered into two separate definitive business combination agreements with each of UpHealth and Cloudbreak Health to form a combined entity that will create a publicly traded, global digital healthcare company.

Digital healthcare has become more prevalent during the pandemic

Upon the closing of the transaction, the combined company will be named UpHealth and will continue to be listed on the NYSE under the new ticker symbol (UPH).

Following the combination, UpHealth will be a global digital healthcare company serving an entire spectrum of healthcare needs and will be established in fast growing sectors of the digital health industry.

With its combinations, Upon closing the pending mergers and the combination with Cloudbreak, UpHealth will be organized across four capabilities at the intersection of population health management and telehealth: Integrated Care Management, Global Telehealth, Digital Pharmacy, and Tech-enabled Behavioral Health.

Following the consummation of the transactions, UpHealth will have agreements to deliver digital healthcare in more than 10 countries globally.

These various companies are expected to generate approximately $115M in revenue and over $13M of EBITDA in 2020 and following the combination, UpHealth expects to generate over $190M in revenue and $24M in EBITDA in 2021.

The business combinations were unanimously approved by the boards of directors of all parties, valuing the combined company at a combined pro forma enterprise value of approximately $1.35B.

The proposed business combinations are expected to be completed in Q1 2021, subject to, among other things, the approval by GigCapital2 stockholders, regulatory approvals, and the satisfaction or waiver of other customary closing conditions.

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Could Li Auto be China’s Tesla?

 Li Auto delivers 8,000 vehicles in Third Quarter

Li Auto Inc. designs, develops, manufactures, and sells smart electric sport utility vehicles (SUVs) in China.

It offers Li ONE, a six-seat electric SUV that equipped with a range of extension system and cutting-edge smart vehicle solutions. 

Reports Q3 revenue $369.8M, consensus $290.17M.

Vehicle sales were $363M in Q3, representing an increase of 28.4%.

Li Auto logo

Vehicle margin was 19.8% in Q3, compared with 13.7% in Q2. In October, the company delivered 3,692 Li Ones, representing an increase compared to September.

As of October 31, the company had 41 retail stores covering 36 cities.

Xiang Li, founder, chairman and CEO of Li Auto, commented, “This is our first quarterly earnings release as a public company, and we are pleased to announce robust third quarter results reflecting not only our strong growth momentum driven by the outstanding value proposition of our products, but also our relentless pursuit of operating efficiencies.

We delivered 8,660 Li ONEs in the third quarter, representing a 31.1% quarter-over-quarter increase and setting a new quarterly record.

Cumulative deliveries in 2020 at the end of October reached 21,852 vehicles.

This is a strong testament to the competitiveness of the Li ONE.

“For the fourth quarter of 2020, we expect our growth momentum to continue with deliveries reaching 11,000 to 12,000 vehicles.”

In September 2020, the Company entered a three-way strategic cooperation with NVIDIA Corporation, the world’s leading artificial intelligence computing company, and NVIDIA’s Chinese partner, Huizhou Desay SV Automotive.

Through this strategic cooperation, Li Auto will be the first OEM equipping its vehicles, the full-size extended-range premium smart SUV to be launched in 2022, with the powerful NVIDIA Orin system-on-a-chip (“SoC”) chipset. Through this cooperation, the Company plans to further increase its R&D investment and accelerate the development of autonomous driving.

LI last traded at $34.10, up 7.1 percent.

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Spotify reports tomorrow

What to watch in Spotify earnings report

Spotify (SPOT) is scheduled to report third quarter results before market open on Thursday, October 29, with a conference call scheduled for 8:00 am ET. What to watch:

Spotify reports results on October 29th

1. USER METRICS: Spotify’s monthly active users, or MAUs, are a measure of its popularity and growth potential. In the second quarter, Spotify reported 299M MAUs, up 29% year-over-year and 5% quarter-over-quarter.

The company also reported 170M ad-supported MAUs, up 31% year-over-year and 4% quarter-over-quarter. In addition, the company reported that Premium Subscribers grew to 138M, up 27% year-over-year and 6% quarter-over-quarter.

Along with the report, the company said, “Early in the quarter, we observed some COVID related softness in several countries across our emerging regions. Parts of Latin America and Rest of World saw slower than expected growth in April and May as we saw lower intake, an increase in churn, and increases in payment failures from our Premium users.

Spotify is now available in Russia and most of Eastern Europe

Encouragingly, things rebounded significantly in June as we saw increased reactivations and a step down in churn. While we finished below forecast in aggregate across these regions, our strength in North America and other areas more than offset the slow start to the quarter.”

2. GUIDANCE: With its last report, Spotify guided to Q3 revenue of EUR1.85B-EUR2.05B. The company also forecast Q3 total MAUs of 312M-317M and total Premium Subscribers of 140M-144M.

3. INITIATIVES, PARTNERSHIPS: In July, Spotify launched in 13 new markets across Europe, including Russia and the Ukraine. The company also announced in July a podcast with former first lady Michelle Obama and the launch of video podcasts with select creators.

Special Podcasts have helped Spotify

Additionally in July, Spotify signed a multi-year global license agreement with Universal Music Group, a Vivendi (VIVHY) company. In August, the company announced a multi-year deal with Riot Games, a subsidiary of Tencent (TCEHY), as its exclusive audio streaming partner for League of Legends events.

Spotify uses partnerships to expand its footprint

In September, the company launched virtual event listings on artist profiles and in the Concerts hub and also announced it was testing a new Polls feature for podcasts. Additionally in September, Spotify announced a multi-year first look partnership with Chernin Entertainment.

4. ANALYST VIEW: On Tuesday, Deutsche Bank analyst Lloyd Walmsley raised the firm’s price target on Spotify to $250 from $240 and kept a Hold rating on the shares. The analyst said he expects “solid” Q3 results for Spotify with strong monthly active user growth driven by new markets and podcast launches as well as improving churn.

Meanwhile, Morgan Stanley analyst Benjamin Swinburne raised the firm’s price target on Spotify to $300 from $275 and kept an Overweight rating on the shares.

Results from U.S. digital audio competitor Pandora last week were “encouraging” and suggest his current 5%-6% growth estimate for Spotify’s ad revenue could be conservative, Swinburne said. He also pointed to recent data that suggest Spotify is taking market share and evaluating price increases.

SPOT last traded at $276.70

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Acorn International sold for $21 per share

Acorn International enters merger agreement for going private transaction

Acorn International (ATV) announced that it has entered into a definitive agreement and plan of merger with First Ostia Port, a Cayman Islands exempted company and its wholly owned subsidiary Second Actium Coin, a Cayman Islands exempted company, pursuant to which, the merger sub will merge with and into the company thereby becoming a wholly-owned subsidiary of the controlling shareholder.

Acorn taken private

Acorn International, Inc. develops, promotes, and sells a portfolio of proprietary-branded products in the People’s Republic of China. The company operates through two segments, Direct Sales and Distribution Sales.

The company will be acquired in an all-cash transaction by the controlling shareholder.

Pursuant to the terms of the merger agreement, each ordinary share, par value 1c per share, of the company, including shares represented by American Depositary Shares, each representing twenty shares, issued and outstanding immediately prior to the effective time, other than the excluded shares shall be cancelled in exchange for the right to receive $1.05 in cash per share without interest.

As each ADS represents twenty shares, each ADS issued and outstanding immediately prior to the effective time, other than ADSs representing excluded shares, shall represent the right to receive $21.00 in cash without interest pursuant to the terms and conditions set forth in the merger agreement.

The per share merger consideration represents a premium of 44.1% over the company’s closing price of $14.57 per ADS as quoted on the New York Stock Exchange, or NYSE, on August 17, the last trading day prior to the day when the company received a non-binding “going private” proposal from the controlling shareholder.

The merger consideration also represents an increase of approximately 38.0% over the $15.22 per ADS offered by the controlling shareholder in its revised going-private proposal on August 18 and a premium of approximately 39.4% over the company’s closing price of $15.07 per ADS on October 9, the last trading day prior to issuance of this press release.

The controlling shareholder intends to fund a substantial portion of the consideration for the merger in the form of debt funding from a third-party lender and has delivered to the company duly executed copies of the loan and security agreement.

The board, acting upon the unanimous recommendation of a committee of independent directors established by the board, approved the merger agreement and the merger.

The special committee negotiated the terms of the merger agreement with the assistance of its independent financial and legal advisors.

The merger, which is currently expected to close during the last quarter of 2020, is subject to customary closing conditions, including the approval of the merger agreement by a requisite company vote of shares representing at least two-thirds of the voting power of the shares present and voting in person or by proxy at a meeting of the company’s shareholders which will be convened to consider the approval of the merger agreement and the merger. 

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Safe Harbor Marinas sold for $2.1B

Sun Communities to acquire Safe Harbor Marinas for $2.1B

Sun Communities (SUI) announced that it has entered into a definitive merger agreement to acquire Safe Harbor Marinas. Safe Harbor’s full operating team, led by Baxter Underwood, will run Safe Harbor as a subsidiary of the Company independently from Sun’s manufactured home and recreational vehicle community business.

Safe Harbor is the largest and most diversified marina owner and operator in the United States.

It owns and operates 101 marinas, manages five marinas on behalf of third parties and has an approximate 40,000-member network of boat owners across 22 states.

Safe Harbor’s portfolio of high quality, prime coastal market marinas generates recurring rental income from annual and seasonal leases and further diversifies Sun’s geographic and demographic footprint.

Safe Harbor has a proven ability to generate organic and external growth. The acquisition, which is expected to be accretive to 2021 Core FFO per share, will comprise approximately 15% of the Company’s pro forma total annual rental revenue.

Safe Harbor marinas located throughout the Nation

Subject to closing adjustments, the aggregate purchase price for Safe Harbor is approximately $2.11B.

At the closing, the Company will assume debt in the estimated amount of approximately $808M, issue the sellers REIT operating partnership common and preferred OP units in the estimated amount of approximately $130M, and pay the balance of the purchase price in cash.

The mix of consideration will depend on the amount of common and preferred OP units the sellers elect to receive and other factors. The actual amounts of each component of the merger consideration may be materially higher or lower than the foregoing estimates.

The transaction is subject to customary closing conditions and is expected to close in the fourth quarter 2020.

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Walmart to partner with Microsoft on TikTok deal

Walmart backs TikTok U.S. partnership with Microsoft

Walmart (WMT), which was previously said to have been working with SoftBank (SFTBY) on a potential acquisition of TikTok’s U.S. business, has now confirmed its involvement in a potential TikTok deal in partnership with Microsoft (MSFT), according to CNBC’s Alex Sherman.

“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets.

We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.

We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of US government regulators,” a Walmart spokesperson told CNBC.

TikTok is nearing an agreement to sell its U.S., Canadian, Australian and New Zealand operations in a deal that could be announced as soon as next week, sources say. The deal is likely to be in the $25 billion to $30 billion range, sources say.

Earlier this week, TikTok filed a lawsuit against Trump Administration claiming that the Executive Order issued by the Administration on August 6, 2020 has the potential to strip the rights of that community without any evidence to justify such an extreme action, and without any due process.

WMT shares are up 5% on the news while MSFT is better by 3.5%.

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