SoftBank to invest $2.25B in GM

SoftBank Vision Fund to invest $2.25B in GM Cruise 

 

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SoftBank Vision Fund to invest $2.25B in GM Cruise 

General Motors (GM) announced that the SoftBank Vision Fund will invest $2.25B in GM Cruise Holdings, further strengthening the company’s plans to commercialize AV technology at large scale.

GM will also invest $1.1B in GM Cruise upon closing of the transaction.

“Our Cruise and GM teams together have made tremendous progress over the last two years,” said GM Chairman and CEO Mary Barra.

“Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”

“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers.

“The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”

The SoftBank Vision Fund investment will be made in two tranches.

At the closing of the transaction, the Vision Fund will invest the first tranche of $900M. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second tranche of $1.35B, subject to regulatory approval.

Together, this will result in the SoftBank Vision Fund owning a 19.6-percent equity stake in GM Cruise and will afford GM increased flexibility with respect to capital allocation.

The GM and SoftBank Vision Fund investments are expected to provide the capital necessary to reach commercialization at scale beginning in 2019.

GM (GM) Chairman and CEO Mary Barra confirmed the automaker’s plans to launch an autonomous ride-hailing vehicle in 2019.

President Dan Ammann noted that talks with SoftBank occurred over the course of several months. He said GM wasn’t looking for a partner, but found one that was “uniquely aligned” with it.

Ammann added that the Cruise team has grown to over 800 since the acquisition two years ago. He said the decision to report GM Cruise as a standalone segment is intended to enhance transparency around this part of the business.

ANALYST COMMENTS

Evercore ISI analyst George Galliers upgraded General Motors (GM) to Outperform from In Line after SoftBank’s (SFTBF) Vision Fund agreed to invest in the company’s Cruise autonomous driving unit in a deal that values the unit at $11.5B.

Galliers said he had been assigning no value to the Cruise assets before the announcement.

Under his new sum-of-the-parts valuation, Galliers applies a 6.0x multiple on GM’s core, attributes a value of about $8 per share for the Cruise assets and about 60c per share for GM’s stake in Lyft before applying a 25% discount to both of the latter. He raised his price target on GM shares to $50 from $47.


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Student Transportation sold for $7.50 a share

Student Transportation to be acquired by investors led by CDPQ

Student Transportation sold for $7.50 a share. Stockwinners.com
Student Transportation sold for $7.50 a share.

Student Transportation (STB) announced that it entered into a definitive agreement with a company sponsored by Caisse de depot et placement du Quebec and Ullico Inc. pursuant to which the Purchaser Group will acquire all of the company’s outstanding common shares by way of a plan of arrangement under the Business Corporations Act.

Student Transportation Inc. (STB) provides school bus transportation and management services to public and private schools in North America. The company offers contracted, managed, special needs transportation, direct-to-parent, and charter services. It operates approximately 290 contracts with a fleet of 13,000 vehicles.

Shareholders of STI will receive $7.50 per common share in cash, representing a 27% premium to the 20-day volume weighted average price per common share on the Toronto Stock Exchange for the period ending February 27, 2018, based on an exchange rate of $1.2776 Canadian dollars per U.S. dollars as of February 27, 2018.

Holders of STI’s 6.25% Convertible Unsecured Subordinated Debentures will receive the product of $7.50 and the number of Common Shares that the holders would be entitled to receive upon the conversion of their 2013 Debentures in accordance with their terms immediately following the closing date of the Arrangement, including those issuable upon a “Cash Change of Control”, plus the sum of accrued and unpaid interest on such debentures up to but excluding the Closing Date and the interest that would have otherwise accrued from and including the Closing Date to but excluding 32 days thereafter.

Holders of STI’s 5.25% Convertible Unsecured Subordinated Debentures will receive the product of $7.50 and the number of Common Shares that the holders would be entitled to receive upon the conversion of their 2016 Debentures in accordance with their terms immediately following the Closing Date, including those issuable upon a “Cash Change of Control”, plus the sum of accrued and unpaid interest on such debentures up to but excluding the Closing Date and the interest that would have otherwise accrued from and including the Closing Date to but excluding 32 days thereafter.


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Ply Gem sold for $2.4B

Ply Gem to be acquired by Clayton, Dubilier & Rice in deal valued at $2.4B

Ply Gem to be acquired by Clayton, Dubilier & Rice in deal valued at $2.4B. Stockwinners.com
Ply Gem sold for $2.4B

Ply Gem Holdings (PGEM) and Clayton, Dubilier & Rice announced a definitive agreement under which CD&R funds will acquire all of the outstanding shares of Ply Gem common stock in a go-private transaction valued at approximately $2.4B.

Ply Gem’s board of directors unanimously approved the agreement, which provides for the payment of $21.64 per share in cash to all holders of Ply Gem common stock.

The cash purchase price represents a premium of approximately 20% over Ply Gem’s closing stock price on January 30, 2018.

Promptly following entry into the agreement, stockholders holding greater than 50% of the outstanding shares of Ply Gem common stock executed a written consent to approve the transaction, thereby providing the required stockholder approval.

CD&R has also entered into a definitive agreement to acquire Atrium Windows & Doors and combine the company with Ply Gem to create an exterior building products company with total revenue of more than $2.4B in 2017.

The transactions are expected to close simultaneously in the second quarter of 2018 and are subject to the receipt of customary closing conditions, including regulatory approvals.

Closing of the acquisition of Ply Gem is not subject to the closing of the acquisition of Atrium.

However, assuming both transactions close simultaneously, CD&R funds will own approximately 70% of the new privately-held company, and Atrium shareholders, which include funds managed by Golden Gate Capital, will hold approximately 30%.

The new Ply Gem will continue to be headquartered in Cary, NC, and Gary E. Robinette, currently Chairman and CEO of Ply Gem, will continue as Chairman and CEO. John Krenicki, a CD&R Operating Partner and former Vice Chairman of General Electric Company, will become Lead Director of the Board.

Ply Gem Holdings, Inc. manufactures and sells residential and commercial building products primarily in the United States and Canada.


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Boeing reports tomorrow

What to watch in Boeing’s earnings report 

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Boeing reports tomorrow

Boeing (BA) is scheduled to report results of its fiscal fourth quarter before the market opens on Wednesday, January 30, with a conference call scheduled for 10:30 am ET.

What to watch for:

1. GUIDANCE:

When Boeing reported its fiscal third quarter results on October 25, 2017, the company increased its fiscal 2017 adjusted earnings per share view to $9.90-$10.10 from $9.80-$10.00, against consensus estimates of $10.04 at that time, and reaffirmed its FY17 revenue expectations of $90.5B-$92.5B, against analyst estimates of $92.15B.

Current consensus estimates sit at $10.21 and $92.55B, respectively. The company also backed its FY17 commercial airplane deliveries view of 760-765.

2. CAPITAL RETURNS:

On December 11, 2017, Boeing announced a new $18B share repurchase program and a 20% increase to its quarterly dividend. The board declared the dividend will increase 20% to $1.71 per share.

The board also replaced the existing share repurchase program with a new $18B authorization. The new dividend will be payable March 2, 2018, to shareholders of record as of February 9, 2018.

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Defense spending increase should help Boeing

The company this year has repurchased $9.2B worth of its shares from the $14B authorization approved in December 2016. The new repurchase program replaces the existing one, bringing the total authorization to $18B.

3. ANTI-DUMPING:

On December 20, 2017, U.S. Secretary of Commerce Wilbur Ross announced the affirmative final determinations in the antidumping duty and countervailing duty investigations of 100-seat to 150-seat large civil aircraft from Canada.

“This decision is based on a full and unbiased review of the facts in an open and transparent process.” said Secretary Ross.

“The United States is committed to a free, fair, and reciprocal trade and will always stand up for American workers and companies being harmed by unfair imports.”

Commerce determined that exporters from Canada sold 100- to 150-seat large civil aircraft in the United States at 79.82% less than fair value.

Commerce also determined that Canada is providing unfair subsidies to its producers of 100- to 150-seat large civil aircraft at a rate of 212.39%. Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on the final rates.

Bombardier (BDRBF), the Government of Canada, and Petitioners agreed that the proposed transaction between Bombardier and Airbus (EADSY) does not impact these investigations.

4. EMBRAER

Boeing confirmed takeover talks with Embraer (ERJ) during the quarter. The Brazilian government, which owns a golden share in Embraer, represents a potential hurdle in the deal.

Investors should look for more guidance on this topic when Boeing reports. BA last traded at $337.10.


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HSBC to pay more than $100M to resolve fraud charges

HSBC agrees to pay more than $100M to resolve fraud charges 

HSBC to pay more than $100M to resolve fraud charges. Stockwinners.com
HSBC to pay more than $100M to resolve fraud charges

HSBC Holdings (HSBC) has entered into a deferred prosecution agreement and agreed to pay a $63.1M criminal penalty and $38.4M in disgorgement and restitution to resolve charges that it engaged in a scheme to defraud two bank clients through a multi-million dollar scheme commonly referred to as “front-running,” the DOJ confirmed.

The DPA, which was filed in connection with a two-count criminal information charging wire fraud in the United States District Court for the Eastern District of New York, is pending review by the Court.

According to HSBC’s admissions, on two separate occasions in 2010 and 2011, traders on its foreign exchange desk misused confidential information provided to them by clients that hired HSBC to execute multi-billion dollar foreign exchange transactions involving the British Pound Sterling.

After executing confidentiality agreements with its clients that required the bank to keep the details of their planned transactions confidential, traders on HSBC’s foreign exchange desk transacted in the Pound Sterling for the traders and HSBC’s own benefit in their HSBC “proprietary” accounts.

In total, HSBC admitted to making profits of approximately $38.4M on the first transaction in March 2010, and approximately $8M on the Cairn Energy transaction in December 2011.

HSBC did not receive credit for voluntarily disclosing the misconduct.

HSBC received substantial cooperation credit because, although as detailed in the DPA, the bank’s initial cooperation with the government’s investigation was deficient in certain respects, after being notified of the Department’s concerns, HSBC changed course and its cooperation improved substantially.


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Amazon names 20 finalists in race for second headquarters

Amazon names 20 finalists in race for second headquarters

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Amazon names 20 finalists in race for second headquarters

Shares of Amazon.com (AMZN) are in focus in morning trading after the company shortlisted 20 metropolitan areas for its new headquarters.

Among the candidates are New York City, Boston, Toronto, and Atlanta.

AMAZON NARROWS CHOICES FOR NEW HQ

Amazon on Thursday announced a narrowed down list of 20 metropolitan cities for its planned second headquarters.

The finalists, whittled down from 283 places that applied in October, include New York City, Boston, Atlanta and Chicago, which all have access to airports and mass transportation.

Other candidates include Dallas, Columbus, Denver, Newark, Philadelphia, Miami, Washington D.C., Toronto, Chicago, Los Angeles, Nashville and Indianapolis.

Amazon said it expects to create as many as 50,000 jobs that will be “high-paying” and generate more than $5B in investments over the next 10-15 years.

In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community, Amazon said.

In a statement, Holly Sullivan of Amazon Public Policy, said that “getting from 238 to 20 was very tough — all the proposals showed tremendous enthusiasm and creativity. Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”

WHAT’S NOTABLE

Amazon solicited proposals in September for its second corporate headquarters.

In its request for proposals, Amazon said it was looking for a metro area with at least 1M residents, proximity to an international airport, mass transit and amenities that give it the “potential to attract and retain strong technical talent.”

The company plans to make a decision this year and will continue discussions with the 20 finalists, it said.

Amazon is also planning to grow in Seattle. In an interview with The Wall Street Journal in late 2017, Jeff Wilke, Amazon’s CEO of Worldwide Consumer, said the company planned to add 2M square feet and 6,000 people over 12 months to the Seattle headquarters.

RECENT TRUMP COMMENTS

President Donald Trump tweeted critically about the company on December 29, calling on the U.S. Postal Service to charge the online retailing giant “much more” for shipping.

Trump tweeted, “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”

Stockwinners.com believers Toronto will be the winning city, given Trump’s hostile immigration policy. Amazon hires a large number of technical staff from other countries and an immigration-friendly policy of Canada makes a lot of sense for the company. The company already has a huge presence in that city.


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CSX shares downgraded following CEO’s death

CSX CEO death raises questions about strategy, M&A potential

CSX CEO passes away
Shares of CSX (CSX) are off their worst levels of the session and trading fractionally higher following the death of the company’s CEO over the weekend.

 

While the news prompted a stock downgrade to Hold at TD Securities, JPMorgan analyst Brian Ossenbeck argued that Hunter #Harrison’s legacy will continue at CSX and that he sees downside in the stock being limited.
Meanwhile, Cti analyst Christian #Wetherbee pointed out that the death of the company CEO may increase the likelihood of a merger with Canadian Pacific (CP).

 

MOVING TO THE SIDELINES:

Following the unexpected medical leave of absence and subsequent death of CEO Hunter Harrison, TD Securities downgraded CSX to Hold from Buy and lowered its price target on the shares to $54 from $63. The firm argued that senior management now lacks a member with an operating background.

 

LIMITED DOWNSIDE:

Meanwhile, JPMorgan’s #Ossenbeck told investors that he believes Hunter Harrison’s legacy will continue at CSX, reiterating an Overweight rating and $63 price target on the shares. The analyst said he estimates downside in the stock to be limited to $45-$48 based on his below consensus forecasts, with U.S. tax reform and a “tighter truck market” providing positive near-term catalysts.

 

Nonetheless, Ossenbeck acknowledged that the lack of a defined management succession plan remains a near-term hurdle for CSX, and will not likely be addressed until the investor day in first quarter of 2018.

 

Voicing a similar opinion, Baird analyst Benjamin #Hartford said he believes the shares should find support in the $48-$50 level, which is where shares traded during previous periods of transition for the company.

 

While Hunter Harrison’s passing “undoubtedly” introduces incremental risk and uncertainty to the trajectory of CSX’s operating ratio improvement, and it is even more so a “show-me” story given the absence of his leadership, Hartford noted that the PSR model has been put into place, the company employs the talent needed to execute the plan, and there is no reason to diminish CSX’s expectations regarding the pace and magnitude of future progress. He reiterated an Outperform rating and $58 price target on the shares.

 

MERGER WITH CANADIAN PACIFIC

In a research note of his own, Citi’s Wetherbee told investors that he believes the death of Harrison may increase the likelihood of CSX attempting to merge with Canadian Pacific. However, the analyst noted that he is not sure a deal could be accomplished due to elevated regulatory risk.

 

Canadian Pacific and CSX may merge. Stockwinners.com
Canadian Pacific and CSX may merge.
A “large portion of the heavy lifting” related to the start of CSX’s turnaround occurred in 2017, allowing 2018 to be a year focused on executing, he contended, adding that he still believes in the company’s long-term potential. Wetherbee also pointed out that he sees Jim Foote as capable of executing Hunter’s vision, while noting that CSX’s board could move to add seasoned executives in the coming months. The analyst reiterated a Buy rating and $58 price target on the shares.

 

PRICE ACTION

In Monday afternoon trading, shares of CSX are fractionally lower to about $53 per share.


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Teva Pharmaceutical suspends its dividend

Teva to cut over 25% of workforce, suspends dividend 

14,000 people will lose their jobs

Teva suspends its dividend

Teva Pharmaceutical Industries (TEVA) announced a restructuring plan intended to “significantly reduce its cost base, unify and simplify its organization and improve business performance, profitability, cash flow generation and productivity.”

The two year restructuring plan is intended to reduce Teva’s total cost base by $3B by the end of 2019, out of an estimated cost base for 2017 of $16.1B.

More than half of the reduction is expected to be achieved by the end of 2018.

The company expects to record a restructuring charge as a result of the implementation of the plan in 2018 of at least $700M, mainly related to severance costs, with additional charges possible following decisions on closures or divestments of manufacturing plants, R&D facilities, headquarters and other office locations.

These steps are expected to result in the reduction of 14,000 positions globally – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.

The majority of the reductions are expected to occur in 2018, with most of the affected employees being notified within the next 90 days.

Restructuring efforts will be done in accordance with applicable local requirements.

Consultations with the relevant employee representatives will begin in the near term.

In addition to the restructuring plan, Teva is announcing the following measures to address the company’s financial situation: The company will immediately suspend dividends on ordinary shares and ADSs, while dividends on mandatory convertible preferred shares will be evaluated on a quarterly basis per current practice; Teva’s annual bonus for 2017 will not be paid due to the fact that the company’s financial results are significantly below our original guidance for the year; The company will continue to review the potential for additional divestment of non-core assets;

Teva will provide full guidance for 2018 in February with the annual results and will share a longer-term strategic direction for the company later in 2018.

TEVA closed at $15.70. It last traded at $17.65.


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Canadian Solar receives go-private offer

Canadian Solar announces receipt of ‘go-private’ offer of $18.47 per share

canadian-solar receives going private offer. Stockwinners.com
Canadian Solar receives going private offer

Canadian Solar (CSIQ) announced that its board has received a preliminary, non-binding proposal letter, dated December 9, from its Chairman, President and CEO Shawn Qu, to acquire all of the outstanding common shares of the company not already beneficially owned by Dr. Qu and his wife, Hanbing Zhang, in a “going-private” transaction for cash consideration of $18.47 per common share.

The board has formed a special committee of independent and disinterested directors to consider the proposed transaction.

The company expects that the Special Committee will retain independent advisors, including independent legal and financial advisors, to assist it in this process.

“The Board cautions the Company’s shareholders and others considering trading in the Company’s securities that the Board has just received the Proposal Letter and has not had an opportunity to carefully review and evaluate the Proposed Transaction or make any decision with respect to the Company’s response to the Proposal Letter.

The Board also cautions that there can be no assurance that any definitive offer relating to the Proposed Transaction or any other transaction will be made by Dr. Qu or any other person, that any definitive agreement with respect to the Proposed Transaction or any other transaction will be executed or that the Proposed Transaction or any other transaction will be approved or consummated,” the company stated.

ANALYST COMMENTS

Coker Palmer analyst Brad Meikle believes the offer to take Canadian Solar private by its CEO and Founder “puts in a floor value for the company.” The analyst, however, believes Canadian Solar’s fair value is “significantly higher” than the $18.47 per share offer. If the company does end up going private, it will be at a “significantly” higher price than today’s offer, Meikle tells investors. The analyst notes his fair value estimate for Canadian Solar is $32 per share and his upside target is $45 per share.

CSIQ closed at $18.20.


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International rig counts decline

Baker Hughes reports November international rig count 942, down 9 rigs

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Oil Rig counts decline

Baker Hughes (BHGE), a GE company, announced that the Baker Hughes international rig count for November 2017 was 942, down 9 from the 951 counted in October 2017, and up 17 from the 925 counted in November 2016.

The international offshore rig count for November 2017 was 183, down 21 from the 204 counted in October 2017, and down 28 from the 211 counted in November 2016.

The average US rig count for November 2017 was 911, down 11 from the 922 counted in October 2017, and up 331 from the 580 counted in November 2016.

The average Canadian rig count for November 2017 was 204, unchanged from the 204 counted in October 2017, and up 31 from the 173 counted in November 2016.

The worldwide rig count for November 2017 was 2,057, down 20 from the 2,077 counted in October 2017, and up 379 from the 1,678 counted in November 2016.

WTI Crude is up 6 cents to $56.02 per barrel. Brent crude is up 27 cents to $61.49 per barrel. USO closed at $11.20.


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Rig counts continue to rise

Baker Hughes reports U.S. rig count up 6 to 929 rigs 

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Baker Hughes reports that the U.S. rig count is up 6 rigs from last week to 929, with oil rigs up 2 to 749, gas rigs up 4 to 180, and miscellaneous rigs unchanged.

The U.S. Rig Count is up 332 rigs from last year’s count of 597, with oil rigs up 272, gas rigs up 61, and miscellaneous rigs down 1 to 0.

The U.S. Offshore Rig Count is down 2 rigs from last week to 20 and down 2 rigs year-over-year.

The Canada Rig Count is up 7 rigs from last week to 222, with oil rigs up 4 to 111 and gas rigs up 3 to 111, and miscellaneous rigs unchanged.

The Canada Rig Count is up 22 rigs from last year’s count of 200, with oil rigs up 11, gas rigs up 13, and miscellaneous rigs down 2 to 0.

Crude oil is up 85 cents to $58.25 per barrel.  Brent crude is up $1.01 to $63.64 per barrel.


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Bitcoin hits an all time high, thanks to Square

Bitcoin hits record high amid Square inclusion on Cash app

Bitcoin hits $8000. See Stockwinners.com for details

Bitcoin hit a new record high on Sunday, breaking the $8,000 threshold for the first time.

WHAT’S NEW:

Bitcoin reached $8,121.56 on Monday at 12:25 p.m. London Time after breaking the $8,000 value on Sunday, CNBC reported, citing the Coindesk website. The high comes after a sell-off on November 12, in which the cryptocurrency’s price dropped to roughly $5,500, resulting from the cancellation of a potential November 16 upgrade called SegWit2X, which was designed to increase transaction speeds to the bitcoin network.

Positive news including favorable regulation in Japan, increasing interest from institutional investors and planned new market products including CME Group’s (CME) bitcoin future contracts have supported the bitcoin price.

SQUARE TESTS BITCOIN

On Wednesday, Forbes reported Square (SQ) is now offering users the option to buy, sell or hold Bitcoin on its Cash app.

“We’re always listening to our customers and we’ve found that they are interested in using the Cash App to buy Bitcoin,” the spokesperson said.

“We’re exploring how Square can make this experience faster and easier, and have rolled out this feature to a small number of Cash App customers. We believe cryptocurrency can greatly impact the ability of individuals to participate in the global financial system and we’re excited to learn more here.”

CREDIT SUISSE RAISES SQUARE PRICE TARGET

Credit Suisse analyst Paul Condra raised his price target for Square to $37 from $31 following its announcement that it is piloting bitcoin sales via its Square Cash app.

While the analyst is positive on Square’s strategy, to the extent it confers legitimacy on Bitcoin and prompts adoption by other providers, the biggest beneficiary may be the crypto-asset industry. He added that he believes there is low risk that bitcoin will disrupt mainstream payments as the cryptocurrency requires traditional bank accounts, it has fees for consumers to send it, merchant knowledge of bitcoin is very low and buyers are more interested it on holding it than spending it.

The analyst estimates that if Square can attract 10M bitcoin buyers over 10 years, it could drive an incremental $30M in revenue. Condra reiterated a Neutral rating on the shares.

SUNTRUST SAYS BITCOIN “GAME-CHANGING” FOR SQUARE

Suntrust Robinson analyst Andrew Jeffrey said the news of Square offering Bitcoin on its Cash app is bullish, if not game changing, for Square as it creates Cash app differentiation and supports potential monetization.

He added the move is also bullish for Bitcoin adoption as it eliminates friction in buying/selling the cryptocurrency via a P2P app.

Jeffrey also said a broader launch of the feature may boost new user growth for the app, drive increased engagement among existing users and allow Square to monetize Square Cash through transaction fees.

While the analyst believes the news is a slight negative to legacy ecosystem participants, he does not see mainstream Bitcoin adoption in the “investable horizon.” Jeffery has a Hold rating on Square.

Standpoint Research

Standpoint Research analyst Ronnie Moas raised his 2018 price target for bitcoin to $14,000 from $11,000. The price just crossed $8,180 and is now split-adjusted at $9,518 when you factor in the August fork spinoff bitcoin cash and the October fork spinoff bitcoin gold at $158, Moas writes in an email. The analyst sees the price of bitcoin hitting $60,000 five years. He says this is reached by 0.5% of the global total money invested currently in cash, stocks, bonds and gold going into the cryptocurrency.

PRICE ACTION

Bitcoin rose 2.1% to 8,198.99 in morning trading, while Square (SQ) was up 3.1% to $45.56.


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Intra-Cellular receives FDA Fast Track designation

 Intra-Cellular receives FDA Fast Track designation for lumateperone

Intra Cellular Therapies receives FDA's fast track designation. See Stockwinners.com for details

Intra-Cellular (ITCI) announced that the FDA has granted Fast Track designation for lumateperone for the treatment of schizophrenia.

Lumateperone (INN; developmental code names ITI-007ITI-722) is an investigational atypical antipsychotic which is currently under development by Intra-Cellular Therapies, licensed from Bristol-Myers Squibb, for the treatment of schizophrenia.  It is also being developed by Intra-Cellular Therapies for the treatment of bipolar disorder, depression, and sleep and behavioral disturbance in dementia, autism, and other neuropsychiatric disorders.

The company requested Fast Track designation for lumateperone based on clinical evidence that lumateperone has the potential to address the unmet medical need for the treatment of schizophrenia with significant improvements on several clinically significant safety parameters, including with respect to metabolic, motor and cardiovascular issues associated with many currently available antipsychotic agents.

The FDA’s Fast Track designation is designed to facilitate the development and expedite the review of drug candidates to treat serious and life-threatening conditions.

Fast Track designation may allow for more frequent meetings and communications with the FDA to discuss a drug candidate’s development plans and review process.

Drug candidates with Fast Track designation may also qualify for priority review to expedite the FDA review process, if relevant criteria are met.

ITCI closed at $15.32.


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Merit Medical goes shopping

Merit Medical to purchase Becton Dickinson assets for $100M 

Merit Medical goes shopping. See Stockwinners.com for details

Merit Medical (MMSI) has signed an asset purchase agreement with Becton, Dickinson (BDX) to acquire certain assets which BD proposes to sell in connection with its proposed acquisition of C.R. Bard.

Merit’s proposed asset acquisition is subject to the closing of BD’s proposed acquisition of Bard as well as other usual and customary closing conditions.

The assets to be acquired are soft tissue core needle biopsy products currently sold by BD under the trade names of Achieve Programmable Automatic Biopsy System, Temno Biopsy System and Tru-Cut Biopsy Needles.

Additionally, Merit proposes to acquire the Aspira Pleural Effusion Drainage Kits and the Aspira Peritoneal Drainage System currently marketed by Bard.

The purchase price for the product lines and related assets to be acquired is $100M, subject to adjustment for fluctuations in the value of transferred inventory. Merit intends to finance the acquisition at closing through borrowings which are currently available under its revolving credit facility.

After giving effect to the proposed transaction, Merit anticipates its debt to adjusted EBITDA will increase from approximately 2.20 to approximately 2.70.

This transaction is expected to be accretive to both GAAP and non-GAAP earnings in 2018. Merit’s management expects the acquisition to provide incremental annual revenues in the range of $42M-$48M, adjusted gross margins for the subject product lines in the range of 60-70%, and, over a period of six to twelve months, to be accretive by 50-120 basis points to Merit’s adjusted gross margins.

The transaction is also expected to expand operating margins and increase cash flow. Merit’s management expects the acquisition to provide 10c-19c in adjusted non-GAAP EPS accretion in FY18.


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Rockwell Automation receives $29 billion takeover offer

Emerson raises bid for Rockwell Automation to $225 per share in cash and stock

Rockwell receives $29B takeover offer. See Stockwinners.com for details
Emerson (EMR) announced that its Chairman and CEO, David Farr, has sent a letter to Rockwell Automation (ROK) President and CEO, Blake Moret, proposing to acquire all outstanding shares of Rockwell for $225 per share, consisting of $135 per share in cash and $90 per share in Emerson shares.
The total enterprise value of the transaction is approximately $29B.
Farr’s letter states in part: “Over the past several months, we have attempted to engage with you privately regarding a business combination of Emerson Electric and Rockwell Automation. We remain convinced there is compelling strategic, operational, and financial merit to bringing together our two companies – and that such a combination would benefit our respective customers, employees and shareholders…Given our continued conviction in the significant value creation opportunity this combination represents, I am sending you an enhanced proposal for Emerson to acquire Rockwell in a transaction that would provide Rockwell shareholders with immediate and long-term value that we believe is well in excess of what Rockwell could achieve on a standalone basis…The portion of the consideration to be paid in Emerson stock would result in Rockwell shareholders owning approximately 22% of the combined company, allowing them to participate in the significant value creation from synergies generated by a combination.
Based on public information only, we estimate the total capitalized value of synergies to be in excess of $6 billion, which equates to over $1.3 billion or $10 per share of additional value to Rockwell shareholders through their continuing ownership.
Including the value of synergies, Rockwell shareholders would receive $235 per share in total value, representing aggregate value creation of 36% compared to Rockwell’s undisturbed 90-day volume weighted average share price as of October 30…We and our advisors have conducted extensive analysis of the regulatory approvals that would be required in connection with the proposed transaction, and we are confident that the transaction would receive all necessary approvals in a timely manner. We do not anticipate any material antitrust or other regulatory issues that would extend the normal timetable for closing a transaction of this nature.
We strongly believe the combined company would be able to do more for our customers than either of us could do separately…Our proposal is not subject to any financing contingency. We have had in-depth discussions with J.P. Morgan, which is highly confident Emerson can finance the cash portion of the transaction with a combination of cash on our balance sheet and newly issued debt. We sincerely hope you and your Board will objectively evaluate the strategic, financial and operational benefits of this transaction and agree to meet with Emerson to negotiate a mutually beneficial transaction.”


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