SmileDirectClub shares tumble on new California law

SmileDirectClub says nothing in AB1519 requires ceasing or modify operations

SmileDirectClub (SDC) issued a statement on California Assembly Bill 1519, stating in part:

“We are pleased with the Governor’s signing statement for AB1519.

New California law sends shares lower, Stockwinners

While the authorizing nature of AB1519 made it difficult to veto the bill, the Governor clearly indicated that he expects all stakeholders to come to together to find a better way to create policy around teledentistry.

While this bill does not preclude SmileDirectClub’s continued operations in California, it will create unnecessary hurdles and costs to Californians that need care but struggle to afford it. The undebated, clinically unsupported, and ill-advised policy changes that are included in this bill – a bill that was intended to reauthorize the Dental Board of California until last-minute policy additions were added – have created arbitrary barriers to technological innovation…Simply put, this bill represents the dental lobby’s thinly-veiled attempt to protect traditional dentistry at the expense of Californians, and Governor Newsom made the correct choice in issuing his strongly-worded rebuke of the tactics and policy that this bill represents.

California law may require a dentist at every SDC shop, Stockwinners

Nothing in AB1519 requires SmileDirectClub to cease or modify its operations, and nothing regarding teledentistry in this legislation can take effect until the Board has given all stakeholders the opportunity to submit public comment and debate the merits of any proposed rules with clinically-based data – as the Governor has requested in his signing statement. To that effect, SmileDirectClub will be reaching out to our partners in the field to coordinate efforts so that a positive outcome for the industry – and for the California consumers – can be reached…To be clear, SmileDirectClub will continue to legally operate in California, we will be an active participant in the administration-directed public debates surrounding teledentistry, and we will continue to provide affordable orthodontic care to thousands of smiling Californians.

Moving forward, SmileDirectClub welcomes transparent policy debates that include all stakeholders.”

Heavy lobbying by both sides made AB-1519 national news, Stockwinners

UBS Comments

UBS analyst Kevin Caliendo noted that California Governor Gavin Newsom signed bill AB-1519 over the weekend and the law is expected to go into effect on January 1, 2020.

He thinks that SmileDirectClub may need to place dentists inside its shops due to the new law, though it is less clear if the bill will mean that patients will need to get x-rays as well as iTero scans, which may eventually be determined in court.

The analyst, who noted that SmileDirect is scheduled to report Q3 results on November 12, noted that he has received questions on if the company might pre-announce, but he has “no insight or precedent into whether the company will opt to do that or not.” Caliendo has a Buy rating and $24 price target on SmileDirectClub shares.

SDC shares are down 9% to $10.12 in Monday’s trading.

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Enterprise Spending Drought

Forescout pummeled, Cisco falls amid weakening enterprise spending view

Shares of publicly-traded companies in the network security space are trading lower after Forescout Technologies (FSCT) announced preliminary results for its third quarter.

Forescout slashed its view on sales and profit for the quarter, as sales are seen getting pushed out to future quarters amid a weakening in the global macroeconomic environment.

Forescout shares tumble on weak demand, Stockwinners

EXPECTATIONS FALL

Forescout now sees total Q3 revenue of $90.6M-$91.6M as compared to its prior view of $98.8M-$101.8M. Non-GAAP operating loss for Q3 is expected to be in the range of $1.6M-$1.4M, compared to the company’s prior guidance range for an operating profit of $2.6M-$3.6M.

Forescout CEO Michael DeCesare said, “Q3 results were impacted by extended approval cycles which pushed several deals out of the third quarter.

This was most pronounced in EMEA against the backdrop of a challenging macro-economic environment. These deals were not lost to competitors and we are working to get them over the finish line.” JPMorgan analyst Sterling Auty downgraded ForeScout to Neutral from Overweight after the company announcement.

Auty cut his price target for ForeScout shares to $35 from $54. He also called this the “first notable negative preannouncement” in the software sector and thinks investors will be watching carefully to see if there are further issues that will cause multiples in the space to contract further.

ENTERPRISE SPENDING DROUGHT

Adding to the negativity in the Enterprise space was a Cisco Systems (CSCO) downgrade from Goldman Sachs.

Goldman Sachs downgrades Cisco Systems, Stockwinners

Goldman Sachs analyst Rod Hall downgraded Cisco Systems to Neutral from Buy with a price target of $48, down from $56.

Large enterprise spending will continue to weaken and telecom spending activity will remain depressed in the near term, Hall stated.

The analyst noted that Goldman’s Enterprise Activity Index deteriorated in September, while his latest reseller survey was also incrementally negative on enterprise spending trends. PRICE ACTION: Shares of Forescout are down over 35.5% to $25.26 while Cisco is down over 2%.

OTHER STOCKS TO WATCH

Other companies to watch in the enterprise and security space include A10 Networks (ATEN), Check Point (CHKP), CyberArk (CYBR), Cyren (CYRN), and Fortinet (FTNT).

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Sarepta reports positive results for muscular dystrophy Type 2E treatment

Sarepta announces results from gene therapy trial for beta sarcoglycanopathy

Sarepta Therapeutics (SPRT) announced the nine-month functional results from three Limb-girdle muscular dystrophy Type 2E ,LGMD2E, clinical trial participants who received SRP-9003. SRP-9003 is an investigational gene therapy intended to transduce skeletal and cardiac muscle with a gene that codes for the full-length, native beta-sarcoglycan protein, the lack of which is the sole cause of LGMD2E.

Sarepta drops after U.K. trial halt,
Sarepta rises on muscular dystrophy data, Stockwinners

In Cohort 1 of the SRP-9003 study, three participants ages 4-13 were treated with an infusion of SRP-9003 at a dose of 5x1013vg/kg.

Improvements in functional outcomes were observed at day 270 for all three participants.

“We have now observed consistent functional improvements, in addition to high levels of expression of the missing protein of interest and strong results in related biomarkers, in both of our first cohorts for Duchenne muscular dystrophy and LGMD2E. We intend to test one higher dose of SRP-9003 in LGMD2E participants, select our clinical dose and then advance our SRP-9003 program, along with our other five LGMD programs, as rapidly as possible,” said Doug Ingram, Sarepta’s president and chief executive officer.

“With the results of our first LGMD2E cohort, Sarepta continues to build its gene therapy engine, an enduring model created to design, develop and bring to the medical and patient community transformative therapies for those living with, and too often dying from, rare genetic disease.”

No new safety signals were observed and the safety profile seen to date supports the ability to dose escalate in the next cohort of the study. As previously disclosed, two participants in the study had elevated liver enzymes, one of which was designated a serious adverse event (SAE), as the participant had associated transient increase in bilirubin. Both events occurred when the participants were tapered off oral steroids and, in both instances, elevated liver enzymes returned to baseline and symptoms resolved following supplemental steroid treatment.

SPRT is up $5.52 to $86.86.

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Aptiv, Hyundai Motor to form autonomous driving joint venture

Aptiv, Hyundai Motor to form autonomous driving JV

Aptiv (APTV) and Hyundai Motor Group (HYMTF) announced that they will be forming an autonomous driving joint venture.

This partnership brings together one of the industry’s most innovative vehicle technology providers and one of the world’s largest vehicle manufacturers.

Aptiva scores a victory by forming JV with Hyundai, Stockwinners

The joint venture will advance the design, development and commercialization of SAE Level 4 and 5 autonomous technologies, furthering the partners’ leadership position in the global autonomous driving ecosystem.

The joint venture will begin testing fully driverless systems in 2020 and have a production-ready autonomous driving platform available for robotaxi providers, fleet operators, and automotive manufacturers in 2022.

As part of the agreement, Hyundai Motor Group and Aptiv will each have a 50 percent ownership stake in the joint venture, valued at a total of $4B.

Hyundai forms autonomous driving joint venture, Stockwinners

Aptiv will contribute its autonomous driving technology, intellectual property, and approximately 700 employees focused on the development of scalable autonomous driving solutions.

Hyundai Motor Group affiliates – Hyundai Motor, Kia Motors and Hyundai Mobis – will collectively contribute $1.6B in cash at closing and $0.4B in vehicle engineering services, R&D resources, and access to intellectual property.

The partnership reinforces the companies’ shared vision of making mobility more safe, green, connected, and accessible by advancing the development and commercialization of the highest-performing and safest autonomous vehicles.

Shares of Aptiva are up 1.6% to $88.50.

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Assurance IQ sold for $2.35 billion

Prudential acquires Assurance IQ for $2.35B plus additional earnout up to $1.5B

Prudential Financial (PRU) announced that it has signed a definitive agreement to acquire Assurance IQ, “a profitable, fast-growing direct-to-consumer platform that transforms the buying experience for individuals seeking personalized health and financial wellness solutions.”

Prudential Financial (PRU) announced that it has signed a definitive agreement to acquire Assurance IQ, "a profitable, fast-growing direct-to-consumer platform that transforms the buying experience for individuals seeking personalized health and financial wellness solutions."
Prudential pays $2.35 B for Assurance. Stockwinners

Terms of the acquisition include a total upfront consideration of $2.35 billion, plus an additional earnout of up to $1.15 billion in cash and equity, contingent upon Assurance achieving multi-year growth objectives.

Under the terms of the agreement, Assurance will become a wholly owned subsidiary of Prudential under the U.S. Businesses division.

Prudential buys Assurance IQ for $2.5B, Stockwinners

Assurance co-founders Michael Rowell and Michael Paulus will continue to focus on the growth of Assurance.

Rowell will remain CEO of Assurance and report to Andrew Sullivan, who will assume the role of executive vice president and head of U.S. Businesses as of December 1.

Paulus will remain president of Assurance.

The acquisition is expected to be modestly accretive to EPS and ROE starting in 2020.

In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition is expected to generate cost savings of $50 million to $100 million, in addition to the $500 million of expected margin expansion by 2022 discussed at Prudential’s June Investor Day.

Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019. Prudential’s Board of Directors unanimously approved the transaction.

Prudential’s Board of Directors has authorized a $500 million increase to its share repurchase authorization for calendar year 2019.

As a result, the share repurchase authorization for the full year 2019 is $2.5 billion.

As of June 30, Prudential had repurchased $1.0 billion of shares of its common stock under this authorization.

Prudential expects to fully utilize this increased share repurchase authorization by the end of 2019.

PRU +$2.21 to $81.85

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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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Pancreatic cancer data sends shares of Tyme Technologies higher

Tyme Technologies presents updated data from TYME-88-Panc Phase II study

Tyme Techs. shares jump of data, Stockwinners

Tyme Technologies (TYME) announced that its multicenter open-label Phase II TYME-88-Panc study evaluating SM-88 as an oral monotherapy in patients with advanced pancreatic cancer continues to demonstrate encouraging results and a well-tolerated safety profile.

The data from the TYME-88-Panc study were presented at the European Society of Medical Oncology 21st World Congress on Gastrointestinal Cancer.

The Annual meeting is held in Barcelona this year, Stockwinners

Updated results from the ongoing multicenter open-label Phase II TYME-88-Panc study involved 49 heavily pretreated patients with radiographically progressive metastatic pancreatic cancer who had significant disease related morbidity before receiving TYME’s investigational agent SM-88.

More than 80% of patients had received at least two prior lines of therapy. Of the 49 patients, 38 patients were evaluable for efficacy, as defined in the protocol.

Pancreatic cancer, Stockwinners

TYME-88-Panc is a two-part study in which Part 1 was intended to determine optimal dosing and assess if early clinical benefit supported further development of SM-88 in pancreatic cancer.

This study is being performed under a TYME IND with input from the FDA prior to study initiation. In this study, based on information available as of April 25, 2019, the median overall survival of evaluable patients was 6.4 months.

Certain efficacy indicators correlate A RECIST clinical benefit rate of stable disease or better was achieved by 44% of patients with available imaging. Notably, patients achieving stable disease or better demonstrated a statistically significant improvement in survival with a 92% reduction in risk of death.

The CBR was durable with majority of these patients remaining in stable disease or better at more than 7 months after receiving treatment with SM-88.

The measurement of CTCs is emerging as an important prognostic indicator in patients with pancreatic cancer. This is now the second TYME study in cancer patients showing that SM-88 reduces CTCs.

In a previous study of patients with prostate cancer, SM-88 treatment was also associated with a reduction in CTC count. In the TYME-88-Panc study, a median reduction of 63% in CTC burden was observed in evaluable patients. Importantly, patients with available results reaching an 80% reduction or greater in CTCs demonstrated a 60% decrease in risk of death.

In addition to these findings from the TYME-88-Panc study, data were also presented on subgroup analyses. TYME identified several screening criteria that were associated with rapidly declining prognostic factors defined as greater than 2 lines of prior therapy; age greater than 75 years old; albumin less than 3.5 g/dl. Patients with no indicators of poor prognosis had a better trend in survival.

TYME identified key sub-groups of patients who performed better. Patients with 1 or 2 prior lines of therapy had a better trend in survival. Female patients had a statistically significant trend toward better survival. These encouraging findings warrant further clinical evaluation of these subgroups. As of April 25, 2019, the study reported that SM-88 was well tolerated with only 4.0% of patients who experienced serious adverse events deemed at least possibly related to SM-88. One patient with reported SAEs continued on treatment.

The TYME-88-Panc research results are from an investigational study. SM-88 is not approved for the treatment of patients with any disease condition.

TYME is up 30 cents to $1.52.

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Allergan sold for $63 billion

AbbVie to acquire Allergan in cash, stock deal valued around $63B

Watch Allergan into better botox data. See Stockwinners.com
Allergan sold for $63 billion, Stockwinners

AbbVie (ABBV) and Allergan (AGN) announced that the companies have entered into a definitive transaction agreement under which AbbVie will acquire Allergan in a cash and stock transaction for a transaction equity value of approximately $63B, based on the closing price of AbbVie’s common stock of $78.45 on June 24.

Stocks to buy, stocks to watch, Stock upgrades, downgrades, earnings, Stocks to Avoid, Stocks to Buy on Margin, Stock to Follow
Abbvie to pay $63B to buy Allergan, Stockwinners

Upon completion of the transaction, AbbVie will continue to be incorporated in Delaware as AbbVie Inc. and have its principal executive offices in North Chicago, IL.

AbbVie will continue to be led by Richard Gonzalez as chairman and CEO.

Two members of Allergan’s board, including chairman and CEO, Brent Saunders, will join AbbVie’s board upon completion of the transaction.

Under the terms of the Transaction Agreement, Allergan Shareholders will receive 0.8660 AbbVie Shares and $120.30 in cash for each Allergan Share that they hold, for a total consideration of $188.24 per Allergan Share.

The transaction represents a 45% premium to the closing price of Allergan’s Shares on June 24.

AbbVie anticipates that the Acquisition will provide annual pre-tax synergies and other cost reductions of at least $2B in year three while leaving investments in key growth franchises untouched.

Botox is one of Allergan’s leading products, Stockwinners

The synergies and other cost reductions will be a result of optimizing the research and early stage portfolio, and reducing overlapping R&D resources, driving efficiencies in SG&A, including sales and marketing and central support function costs, and eliminating redundancies in manufacturing and supply chain, and leveraging procurement spend.

The synergies estimate excludes any potential revenue synergies.

AbbVie is expected to generate significant annual operating cash flow, which will support a debt reduction target of $15B to $18B before the end of 2021, while also enabling a continued commitment to Baa2/BBB or better credit rating and continued dividend growth.

It is expected that, immediately after the closing of the Acquisition, AbbVie Shareholders will own approximately 83% of AbbVie on a fully diluted basis and the Allergan Shareholders will own approximately 17% of AbbVie on a fully diluted basis.

PIPER COMMENTS

Piper Jaffray analyst Christopher Raymond said his first reaction to the deal could be summed up with the phrase “two turkeys don’t make an eagle,” but he is “willing to listen” despite his skepticism about the transaction.

Though he cannot say he is “excited at the prospect of AbbVie entering the field of medical aesthetics,” EPS accretion of 10% in year one and over 20% at peak, and the potential for meaningful deleveraging and cost cutting, has his attention, Raymond said. He keeps a Neutral rating on AbbVie based on his initial reaction to the deal announcement.

Humira is AbbVie’s blockbuster drug, Stockwinners

Wells Fargo

Wells Fargo analyst David #Maris said he views the deal as a good alternative for Allergan versus the current share price, but he is not convinced its a better long term alternative given the eventual biosimilar threat to Abbvie’s blockbuster drug Humira.

With that said, Maris tells investors that “deals at such premiums are rarely killed because of a bad strategic fit or longer -term value outlook in the absence of other bidders.” Though he would not completely rule out an activist investor disrupting the deal, he thinks it is unlikely given there has been a strategic review of the company for some time. Maris, who said he thinks the deal could go through, keeps an Outperform rating on Allergan shares.

Leerink 

SVB Leerink analyst Marc Goodman is not surprise that one of the large pharma companies has made a bid on Allergan (AGN) given the multi-year stock weakness.

Juvederm is another one of Allergan’s top selling products. Stockwinners

However, he believes a $188 price is “too low,” as he “can’t believe that Allergan is not being taken out at least at $200,” which “begs the question” whether this was a process or is AbbVie (ABBV) “opportunistically pursuing a wounded stock.” If it is the latter, Goodman believes this bid could initiate others to pursue Allergan as well. He has an Outperform rating on Allegan’s shares.

STOCKWINNERS

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US Ecology and NRC Group to merge

US Ecology, NRC Group to merge in all-stock transaction

US Ecology and NRC Group to merge, Stockwinners

US Ecology (ECOL) announced that it has entered into a definitive merger agreement with NRC Group Holdings (NRCG) in an all-stock transaction with an enterprise value of $966M.

U.S. Ecology and NRC Group to merge, Stockwinners

The transaction is expected to close in the fourth quarter and is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, respective stockholder approvals and other customary closing conditions.

The transaction will create a nationwide leader in industrial and hazardous waste management services and is projected to be mid-single digit accretive to US Ecology’s 2020 adjusted earnings per share, before synergies.

The transaction has been approved by both companies’ Boards of Directors.

Upon completion of the transaction, US Ecology stockholders will own approximately 70% of the combined company, and NRCG stockholders will own approximately 30% on a fully diluted basis.

The combined company will use the US Ecology name, and its shares will continue to be listed on the Nasdaq Global Select Market under the ticker ECOL.

Jeffrey Feeler will continue to serve as President, CEO and Chairman of the Board of Directors.

The company will maintain its headquarters in Boise, Idaho with regional support centers in Boise, Detroit, New York and Houston.

Under the terms of the merger agreement, US Ecology will form a new holding company which will take the name of US Ecology, Inc. immediately upon the closing of the transaction and will own both US Ecology and NRCG.

US Ecology stockholders will receive 1 share of common stock of the new holding company for each share of US Ecology common stock they own upon closing of the transaction.

NRCG common stockholders will receive 0.196 shares of common stock of the new holding company for each share of NRCG common stock they own upon closing of the transaction.

The exchange ratio represents a price of $12.00 per share of NRCG stock, based on the US Ecology average share price over the last 15-trading days.

The $12.00 price per share represents a premium of approximately 36% to NRCG’s June 21 closing price of $8.83.

Each share of NRCG’s 7.00% Series A Convertible Cumulative Preferred Stock is expected to be converted in the merger into approximately 1.8 common shares of the new holding company.

NRCG’s 19.249M outstanding Warrants to purchase NRCG common stock will be converted to 3.773M Warrants to purchase common stock of the new holding company, with a strike price of $58.67 each.

The transaction will provide NRCG stockholders with continued participation in the future prospects expected to result from the combination through their ownership of approximately 30% of the stock of the new holding company, on a fully diluted basis.

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Nanometrics and Rudolph Technologies to merge

Nanometrics, Rudolph Technologies to combine in an all-stock merger of equals

Nanometrics and Rudolph to merge, Stockwinners

Nanometrics (NANO) and Rudolph Technologies, Inc. (RTEC) announced that they have agreed to combine in an all-stock merger of equals transaction.

Nanometrics and Rudolph Technologies to merge, Stockwinners

Nanometrics Incorporated provides process control metrology and inspection systems for use primarily in the fabrication of semiconductors and other solid-state devices, and industrial and scientific applications worldwide.

Rudolph Technologies, Inc. designs, develops, manufactures, and supports process control defect inspection and metrology, advanced packaging lithography, and process control software systems used by microelectronic device manufacturers. 

The merged company will be a premier end-to-end metrology, inspection, process control software, and lithography equipment provider for the semiconductor industry and other advanced markets.

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Rudolph stockholders will receive 0.8042 shares of Nanometrics common stock for each Rudolph share.

Upon completion of the merger, current Nanometrics stockholders will own approximately 50% and current Rudolph stockholders will own approximately 50% of the combined company.

Rudolph CEO Michael Plisinski will serve as Chief Executive Officer and Rudolph CFO Steven Roth will serve as Chief Financial Officer of the combined company, alongside a highly experienced leadership team comprised of executives from both companies.

The Board of Directors will be led by Nanometrics director Christopher Seams and will have 12 directors, consisting of six from each existing Board.

The combined company will be headquartered in Wilmington, Massachusetts and will maintain a strong presence at Nanometrics’ headquarters in Milpitas, California.

The transaction is expected to close in the second half of 2019, subject to the completion of customary closing conditions, including receipt of regulatory approvals, and approval by the stockholders of each company.

STOCKWINNERS

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HP Enterprise to acquire Cray for $35 per share

HP Enterprise to acquire Cray in deal valued at $1.3B

HP Enterprise to buy Cray Research, Stockwinners

Hewlett Packard Enterprise (HPE) and Cray (CRAY) announced that the companies have entered into a definitive agreement under which HPE will acquire Cray for $35.00 per share in cash, in a transaction valued at approximately $1.3B, net of cash.

Cray Inc. designs, develops, manufactures, markets, and services computing products for high-performance computing, data analytics, and AI markets. It operates through Supercomputing, Storage and Data Management, Maintenance and Support, and Engineering Services and Other segments. 

Cray sold to HPE for $1.3 billion, Stockwinners

“Bringing together HPE and Cray enables an enhanced financial profile for the combined company that includes several revenue growth opportunities and cost synergies.

The companies expect the combination to drive significant revenue growth opportunities by:

Capitalizing on the growing HPC segment of the market and Exascale opportunities; Enhancing HPE’s customer base with a complementary footprint in federal business and academia and the company’s ability to accelerate commercial supercomputing adoption; Introducing new offerings in AI / ML and HPC-as-a-service with HPE GreenLake; We also expect to deliver significant cost synergies through efficiencies and by leveraging proprietary Cray technology, like the Slingshot interconnect, to lower costs and improve product performance.”

As a result of the enhanced financial profiles of the combined companies, the deal is expected to be accretive to HPE non-GAAP operating profit and earnings in the first full year following the close.

As part of the transaction, HPE expects to incur one-time integration costs that will be absorbed within HPE’s FY20 free cash flow outlook of $1.9B-$2.1B that remains unchanged.

The transaction is expected to close by the first quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions.

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Tesla higher after raising money

Tesla offers $650M of shares, $1.35B of notes to ‘strengthen’ balance sheet

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla higher after raising money, Stockwinners

Tesla (TSLA) confirmed in a press release that it disclosed this morning offerings of $650M of common stock and $1.35B aggregate principal amount of convertible senior notes due in 2024 in concurrent underwritten registered public offerings.

In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.

Elon Musk, Tesla’s CEO, will participate by purchasing $10M of common stock.

The aggregate gross proceeds of the offerings, assuming full exercise by the underwriters of their option to purchase additional securities, would be approximately $2.3B before discounts and expenses.

Concurrently with this offering of common stock and pursuant to a separate prospectus supplement, Tesla is offering convertible senior notes due 2024 to the public in an aggregate principal amount of $1.35B, or $1.55B if the underwriters for the concurrent convertible notes offering exercise in full their option to purchase additional notes.

Tesla intends to use the net proceeds from the offerings to “further strengthen its balance sheet, as well as for general corporate purposes.”

The notes in the offering will be convertible into cash and/or shares of Tesla’s common stock at Tesla’s election. The interest rate, conversion price and other terms of the notes are to be determined.

Goldman Sachs and Citigroup are acting as lead joint book-running managers for the offering, with BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse acting as additional book-running managers, and Societe Generale and Wells Fargo Securities acting as co-managers.

Wolfe Research

#Wolfe Research analyst Daniel Galves downgraded Tesla to Peer Perform from Outperform and cut his price target for the shares to $265 from $375. Tesla’s product is “truly differentiated” with a multi-year sustainable advantage in long-range electric powertrains and highly-assisted driving, Galves told investors in a research note. However, the analyst says it is now clear that “broad consumer awareness doesn’t happen overnight.”

In the interim, he believes shares of Tesla will be driven by investor confidence in the company’s medium-term demand and earnings power. And #Galves no longer has confidence in substantial free cash flow at Tesla until its Model 3 volumes rise to 7,000 per week. As such, the analyst moves to the sidelines saying he can no longer recommend the shares.

Shares of Tesla are up 4%, or $9.09, to $243.55 in Thursday’s trading following the news.

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Mustang Bio soars on its gene therapy data

NEJM reports ‘medical breakthrough’ in Mustang Bio cell and gene therapy

Mustang Bio (MBIO) announced that the New England Journal of Medicine has published data from St. Jude Children’s Research Hospital, the nation’s “leading hospital” for understanding, treating and curing childhood cancer and other life-threatening diseases.

Mustang Bio soars on its gene therapy data, Stockwinners

The data comes from a Phase 1/2 clinical trial of a lentiviral gene therapy for the treatment of newly diagnosed infants under two years old with XSCID, also referred to as SCID-X1 and commonly known as “bubble boy disease.”

Under a licensing agreement with St. Jude, Mustang will develop the lentiviral gene therapy for commercial use as MB-107.

The multi-center Phase 1/2 clinical trial is evaluating the safety and efficacy of a lentiviral vector to transfer a normal copy of the IL2RG gene to bone marrow stem cells in newly diagnosed infants under the age of two with XSCID, preceded by low exposure-targeted busulfan conditioning.

A total of 10 infants have received the therapy to date in this clinical trial. Among the data highlights, bone marrow harvest, busulfan conditioning and cell infusion were well tolerated.

In seven of the eight cases, normalization of naive T-cell and natural killer cell numbers occurred within three to four months after treatment, accompanied by vector marking in T, B, NK and myeloid cells and marrow progenitors.

All patients cleared previous infections and are growing normally. Seven of the eight infants treated have developed normal IgM levels to date.

Most patients were discharged from the hospital within one month.

Data Highlights:

  • Bone marrow harvest, busulfan conditioning and cell infusion were well tolerated.
  • In seven of the eight cases, normalization of CD3+, CD4+ and CD4+ naïve T-cell and natural killer (“NK”) cell numbers occurred within three to four months after treatment, accompanied by vector marking in T, B, NK and myeloid cells and marrow progenitors.
    • The eighth infant had insufficient T cells initially, but normalization of T cells occurred following an unconditioned boost of gene-corrected cells, and the patient is progressing favorably.
  • All patients cleared previous infections and are growing normally.
  • Seven of the eight infants treated have developed normal IgM levels to date.
    • Four of these seven infants have discontinued monthly infusions of intravenous immunoglobulin (IVIG) therapy to date.
    • Three of those four infants that discontinued monthly IVIG infusions have responded to vaccines to date.

MBIO closed at $2.66, it last traded at $8.91.

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Electronics for Imaging sold for $1.7 billion

Siris Capital affiliate to acquire Electronics for Imaging for $37.00 per share

Electronics for Imaging (EFII), or EFI, announced that it has entered into a definitive agreement to be acquired by an affiliate of Siris Capital in an all-cash transaction valued at approximately $1.7B.

EFI sold for $1.7 billion, Stockwinners

Electronics for Imaging, Inc. provides industrial format display graphics, corrugated packaging and display, textile, and ceramic tile decoration digital inkjet printers worldwide. Its Industrial Inkjet segment offers VUTEk format display graphics, Nozomi corrugated packaging and display, Reggiani textile, and Cretaprint ceramic tile decoration and building material industrial digital inkjet printers; digital ultra-violet curable, light emitting diode curable, ceramic, water-based, thermoforming, and specialty inks; various textile inks, including dye sublimation, pigmented, reactive dye, acid dye, pure disperse dye, and water-based dispersed printing inks, as well as coatings; digital inkjet printer parts; and professional services. 

Under the terms of the agreement, which has been unanimously approved by EFI’s board, an affiliate of Siris will acquire all the outstanding common stock of EFI for $37.00 per share in cash.

The purchase price represents an approximately 45% premium over EFI’s 90-day volume-weighted average price ended on April 12. EFI may solicit alternative acquisition proposals from third parties during a “go-shop” period over the next 45 calendar days.

EFI will have the right to terminate the agreement to enter into a superior proposal subject to the terms and conditions of the agreement.

There is no guarantee that this process will result in a superior proposal and the agreement provides Siris with a customary right to attempt to match a superior proposal.

EFI does not intend to disclose developments with respect to the solicitation process unless and until it determines such disclosure is appropriate or is otherwise required.

EFI’s board has unanimously recommended that its shareholders adopt the agreement with Siris.

Subject to the go-shop, a special meeting of EFI’s shareholders will be held as soon as practicable following the filing of the definitive proxy statement with the U.S. Securities and Exchange Commission and subsequent mailing to shareholders.

Subject to the go-shop, the proposed transaction is expected to close by Q3 and is subject to approval by EFI’s shareholders, along with the satisfaction of customary closing conditions including antitrust regulatory approvals.

The transaction is not subject to any financing conditions. Upon completion of the acquisition, EFI will become wholly owned by an affiliate of Siris.

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Altaba to dissolve itself

Altaba board approves plan of complete liquidation and dissolution

Altaba to dissolve itself, Stockwinners

Altaba (AABA) announced last night that the fund’s board of directors has approved the liquidation and dissolution of the fund pursuant to a plan of complete liquidation and dissolution, subject to stockholder approval.

Altaba Inc. is a non-diversified, closed-end management investment company based in New York City that was formed from the remains of Yahoo! Inc. after Verizon acquired Yahoo’s Internet business  The company that remained after the purchase changed its name to Altaba Inc. on June 16, 2017.

Verizon completed its acquisition of Yahoo!’s core internet business on June 13, 2017, and put the assets under a new subsidiary named Yahoo! Holdings within its newly created division, Oath.

The only Yahoo!-branded interest held by Altaba was its stake in the joint venture Yahoo! Japan but this stake has since been sold to SoftBank Group.

The fund intends to file a proxy statement with the U.S. Securities and Exchange Commission with respect to a special meeting of stockholders to seek stockholder approval of the liquidation and dissolution pursuant to the plan.

Altaba said the fund “has pursued a number of strategies with the goal of achieving its investment objective, including by repurchasing the shares, both in the open market and through an exchange offer of American Depository Shares of Alibaba Group Holding Limited (BABA) and cash for shares, the simplification of the fund through the disposition of assets other than its position in Alibaba and the resolution of certain actual and contingent liabilities, and through other means.

After carefully considering the risks, timing, viability and potential impact on the fund’s stockholders of additional strategies potentially available to the fund to achieve its investment objective, as well as the recommendation of management, and in consultation with the fund’s advisors, the board unanimously determined that the liquidation and dissolution pursuant to the plan is advisable and in the best interests of the fund and its stockholders.

” If the liquidation and dissolution pursuant to the plan is approved by the fund’s stockholders, the fund expects to sell or otherwise dispose of all of the remaining ordinary shares and ADSs of Alibaba held by the fund, other than Alibaba ADSs, if any, to be distributed in kind, and its equity interests in Excalibur IP, to the extent any such assets have not been sold or disposed of by the fund before the special meeting, Altaba stated.

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