New York sues to dissolve NRA

New York Attorney General James files lawsuit to dissolve NRA

New York Attorney General Letitia James has filed a lawsuit seeking to dissolve the National Rifle Association.

According to a statement, “Attorney General James charges the organization with illegal conduct because of their diversion of millions of dollars away from the charitable mission of the organization for personal use by senior leadership, awarding contracts to the financial gain of close associates and family, and appearing to dole out lucrative no-show contracts to former employees in order to buy their silence and continued loyalty.

The suit specifically charges the NRA as a whole, as well as Executive Vice-President Wayne LaPierre, former Treasurer and Chief Financial Officer Wilson “Woody” Phillips, former Chief of Staff and the Executive Director of General Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer with failing to manage the NRA’s funds and failing to follow numerous state and federal laws, contributing to the loss of more than $64M in just three years for the NRA.

NY Attorney General Letitia James

In the complaint, Attorney General James lays out dozens of examples where the four individual defendants failed to fulfill their fiduciary duty to the NRA and used millions upon millions from NRA reserves for personal use, including trips for them and their families to the Bahamas, private jets, expensive meals, and other private travel.

In addition to shuttering the NRA’s doors, Attorney General James seeks to recoup millions in lost assets and to stop the four individual defendants from serving on the board of any not-for-profit charitable organization in the state of New York again.”

It further states that, “the NRA is alleged to have fostered a culture of noncompliance and disregard for internal controls that led to the waste and loss of millions in assets and contributed to the NRA reaching its current deteriorated financial state.

Vista Outdoor (VSTO), Stockwinners

The NRA’s internal policies were repeatedly not followed and were even blatantly ignored by senior leaders. Furthermore, the NRA board’s audit committee was negligent in its duty to ensure appropriate, competent, and judicious stewardship of assets by NRA leadership.

Specifically, the committee failed to assure standard fiscal controls, failed to respond adequately to whistleblowers, affirmatively took steps to conceal the nature and scope of whistleblower concerns from external auditors, and failed to review potential conflicts of interest for employees.

Smith & Wesson Brands (SWBI), Stockwinners

The lawsuit alleges that the four men instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA that was illegal, oppressive, and fraudulent.

They overrode and evaded internal controls to allow themselves, their families, favored board members, employees, and vendors to benefit through reimbursed expenses, related party transactions, excess compensation, side deals, and waste of charitable assets without regard to the NRA’s best interests.

Sturm, Ruger (RGR), Stockwinners

The complaint lays out numerous other instances in which LaPierre, Phillips, Powell, Frazer, and other executives and board members at the NRA abused their power and illegally diverted or facilitated the diversion of tens of millions of dollars from the NRA.

These funds were in addition to millions of dollars the four individual defendants were already receiving in grossly excessive salaries and bonuses that were not in line with the best practices and prudent standards for evaluating and determining compensation.”

Stocks to Watch

Companies in the firearm space include Sturm, Ruger (RGR), Smith & Wesson Brands (SWBI), and Vista Outdoor (VSTO).

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Boeing 737-Max Recertification Flight is set for later this month

Boeing 737-Max Recertification Flight is scheduled for later this month

Boeing (BA) is targeting late June for a recertification flight on the grounded 737 Max, Bloomberg’s Alan Levin and Julie Johnsson report.

Boeing 737-Max recertification flight set for late June

The company separately is notifying airlines of an important fix to the grounded jetliner’s wiring, said two people familiar with the planning who asked not to be named discussing sensitive matters.

A draft of revised pilot training for the plane, which has been parked around the world since March 2019 as a result of two fatal crashes that killed 346 people, is also being shared with airlines, the people said.

Grounded 737-Max planes

The moves were strong indications that Boeing is finally nearing the end of the jet’s 15-month grounding and controversy that has engulfed the company after the two fatal crashes.

The flight by Federal Aviation Administration pilots to certify that the plane meets safety regulations is one of the critical remaining milestones. However, the people cautioned that the date hasn’t been finalized and has shifted repeatedly as Boeing completed its final work for regulators.

Boeing’s goal has been to return the 737 Max, a critical source of revenue, to commercial service in the third quarter. The company restarted manufacturing the single-aisle jet late last month, ending a five-month halt to work in its 737 factory in the Seattle suburb of Renton, Washington.

The company is revising a software system implicated in the two crashes that repeatedly drove down the noses of the jets due to a malfunction. Reviews of the plane’s safety following its March 13, 2019, grounding also discovered additional flaws that needed upgrading, including its flight-control computer, how electrical wires were bundled and software issues.

The FAA on Wednesday said it won’t approve the plane for passenger service until it is satisfied that all safety-related issues have been addressed.

BA is down 5% to $206.00

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Boeing fires 6,770 U.S. workers

Boeing starts involuntary layoffs with 6,770 U.S. workers losing jobs

Boeing (BA) President and CEO Dave Calhoun issued a letter to employees today providing an update on workforce actions, which stated in part, “Following the reduction-in-force announcement we made last month, we have concluded our voluntary layoff program.

And now we have come to the unfortunate moment of having to start involuntary layoffs. We’re notifying the first 6,770 of our U.S. team members this week that they will be affected.

Boeing beings involuntary layoffs

We will provide all the support we can to those of you impacted by the ILOs – including severance pay, COBRA health care coverage for U.S. employees and career transition services.

Covid19 related layoffs are adding up

Our international locations also are working through workforce reductions that will be communicated locally on their own timelines in accordance with local laws and benefit terms.

Boeing plans to cut 10% of it’s workforce

The COVID-19 pandemic’s devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices.

We have done our very best to project the needs of our commercial airline customers over the next several years as they begin their path to recovery. I wish there were some other way.”

Green Shoots

In another announcement, Dave Calhoun stated “We are seeing some green shoots. Some of our customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started. Some countries and U.S. states are starting cautiously to open their economies again.

And some parts of our business, most notably on the defense side, will continue hiring to meet customer commitments and fill critical skill positions.

Boeing CEO Dave Calhoun

The Defense, Space & Security and defense services teams have achieved a number of milestones recently, including the successful return to orbit of the reusable and autonomous X-37B Orbital Test Vehicle.

We’re moving forward with our plan to restart 737 MAX production in Renton, Washington, as our return-to-service efforts continue.

And our Global Services team is changing its organization to ensure it is lean and focused on the post-COVID needs of its customers. But these signs of eventual recovery do not mean the global health and economic crisis is over. Our industry will come back, but it will take some years to return to what it was just two months ago.”

Company executives said last month that Boeing planned to cut about 10% of its global workforce this year as it reduces jetliner production, and union officials say the initial wave of layoffs was focused on Boeing’s Seattle-area commercial airplanes operation.

BA last traded at $146.47, up 1.2%.

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Department of Defense back’s Microsoft cloud contract

DOD issues report on JEDI contract, sees award to Microsoft as proper

The Department of Defense Office of Inspector General has issued a report on the Joint Enterprise Defense Infrastructure Cloud Procurement.

“On June 11, 2019, the Department of Defense Office of Inspector General initiated a review of the DoD Joint Enterprise Defense Infrastructure Cloud procurement, and an investigation into allegations that former DoD officials engaged in ethical misconduct related to the JEDI Cloud procurement,” the Department of Defense Office of Inspector General said in a statement.

DOD OIG says JEDI contract was handled correctly

According to the report, the DoD OIG concluded that “the DoD’s decision to award the JEDI Cloud contract to a single contractor was consistent with applicable law and acquisition standards. […] We concluded that the procuring contracting officer’s determination to use a single-award contract was in accordance with the Federal Acquisition Regulation and was reasonable.

Amazon sued to overturn the contract , Stockwinners

We also concluded that the Undersecretary of Defense for Acquisition and Sustainment’s authorization for a single-award contract was consistent with applicable law.

DOD awarded the contract to Microsoft, Stockwinners

In addition, we concluded that the JEDI Cloud requirements in the Request for Proposal were reasonable and based on approved requirements, essential cloud capabilities, DoD cloud security policy, and the Federal Risk and Authorization Management Program guidance.

In addition, we concluded that the DoD’s inclusion of gate requirements was reasonable and did not overly restrict competition. We also concluded that the DoD conducted the JEDI Cloud source selection in compliance with the FAR, the DoD Source Selection Procedures, the JEDI Cloud Source Selection Plan, and the Request for Proposals, Sections M1 – Basis for Award and M2 – Evaluation Process.

We concluded that the source selection team’s evaluation of the contractors’ proposals was consistent with established DoD and Federal source selection standards. We also note that on February 13, 2020, the U.S. Court of Federal Claims issued an opinion and order which granted Amazon’s request for a preliminary injunction and stopped the DoD from proceeding with JEDI Cloud contract activities until further order of the court.

The court concluded that Amazon is likely to demonstrate in the course of their bid protest that the DoD erred in its evaluation of a discrete portion of Microsoft’s proposal for the JEDI Cloud contract. The court’s decision was not inconsistent with our conclusion that the source selection process used by the DoD was in compliance with the FAR, the DoD Source Selection Procedures, the JEDI Cloud Source Selection Plan, and the Request for Proposals, Sections M1 – Basis for Award and M2 – Evaluation Process.

In this report, we do not draw a conclusion regarding whether the DoD appropriately awarded the JEDI Cloud contract to Microsoft rather than Amazon Web Services.

We did not assess the merits of the contractors’ proposals or DoD’s technical or price evaluations; rather we reviewed the source selection process and determined that it was in compliance with applicable statutes, policies, and the evaluation process described in the Request for Proposals. In addition, however, we concluded that after the JEDI Cloud Contract award, the DoD improperly disclosed source selection and proprietary Microsoft information to Amazon.

In addition, the DoD failed to properly redact names of DoD source selection team members in the source selection reports that were disclosed to Amazon and Microsoft. […] we believe the evidence we received showed that the DoD personnel who evaluated the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House.”

AMZN last traded at $2308. MSFT last changed hands at $172.44.

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L3Harris Security Detection sold for $1 B

Leidos to acquire L3Harris security detection, automation businesses

Leidos (LDOS) announced that it has entered into a definitive agreement to acquire L3Harris Technologies’ (LHX) security detection and automation businesses, for $1B in cash.

The boards of both companies unanimously approved the transaction. L3Harris’ security detection and automation businesses provide airport and critical infrastructure screening products, automated tray return systems and other industrial automation products.

L3Harris sells its security division for $1B, Stockwinners

With headquarters in Tewksbury, Massachusetts and Luton, England, the combined businesses have 1,200 employees and a global sales and services operations footprint with more than 20,000 systems deployed world-wide across more than 100 countries.

The businesses serve customers in the aviation, transportation, government and critical infrastructure markets.

Leidos goes on $1B shopping spree, Stockwinners

This acquisition adds products that expand Leidos’ offerings to create a security and detection platform.

These products include checkpoint security products like checkpoint CT scanners, people scanners, comprehensive explosives trace detectors, checked baggage screeners and automated tray return systems, or ATRS.

This business expands customer penetration internationally, helping deliver on a stated objective to diversify revenue globally.

The deal will increase Leidos’ international security products revenue more than six-fold. The acquisition also enables the company to leverage technology investments across the combined portfolio to accelerate innovation and improve service efficiency for customers.

The transaction is expected to be immediately accretive to Leidos’ revenue growth, EBITDA margins, and non-GAAP diluted earnings per share upon closing.

Leidos expects to fund the $1B cash transaction through a combination of cash on hand and incremental debt.

The transaction is expected to close by the end of Q2, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

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Hexcel and Woodward merge to form Woodward Hexcel

Hexcel, Woodward announce merger of equals

Woodward (WWD) and Hexcel (HXL) announced a definitive agreement to combine in an all-stock merger of equals “to create a premier integrated systems provider serving the aerospace and industrial sectors,” the companies said.

Woodward and Hexcel agree to merge, Stockwinners

Under the terms of the agreement approved by the Boards of Directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.

Hexcel and Woodward to merge, Stockwinners

The exchange ratio is consistent with the 30-day average share prices of both companies.

Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.

In connection with the transaction, Woodward is increasing its quarterly cash dividend to 28c a share.

The merger is expected to be tax free for U.S. federal income tax purposes.

The combined company will be named Woodward Hexcel.

For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3B and EBITDA of $1.1B, or a 21% EBITDA margin.

The transaction is subject to the approval of the shareholders of both Woodward and Hexcel, as well as other customary closing conditions, including required regulatory approvals.

The parties expect the merger to close in the third calendar quarter of 2020, subject to satisfaction of these conditions.

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Exotic Metals sold for $1.725B

Parker-Hannifin to acquire Exotic Metals for $1.725B in cash

Exotic Metals sold to Parker Hannifin, Stockwinners

Parker Hannifin Corporation (PH) announced that it has entered into a definitive agreement to acquire Exotic Metals Forming Company LLC for $1.725B in cash. When adjusted for approximately $170M of expected tax benefits, the net transaction value is approximately $1.56B.

Parker enters exotic metals business, Stockwinners

The transaction has been approved by the Board of Directors of each company and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

Exotic Metals, headquartered in Kent, Washington, is a privately held company founded in 1966 that designs and manufactures innovative and technically demanding, high temperature, high pressure air and exhaust management solutions for aircraft and engines.

Exotic Metals has expected annual sales of approximately $450M and employs 1,600 team members across three locations in the United States.

Exotic Metals has long-term agreements in place across high growth aerospace programs.

Exotic Metals makes the exhaust cone for GE engines, Stockwinners

Parker also expects growth synergies through cross-selling opportunities and leveraging Parker’s strong aftermarket position.

Parker expects to realize approximately $13M in pre-tax run-rate synergies by fiscal year 2023 by combining supplier networks and implementing Win Strategy initiatives. The cumulative cost to achieve these synergies is expected to be approximately $5M.

The transaction is expected to be accretive to Parker’s organic growth, EBITDA margins, EPS and cash flow, after adjusting for one-time costs, and to achieve high single-digit ROIC in year five with continued expansion.

Upon the closing of this transaction, Parker plans to have Exotic Metals operate as a standalone division within Parker’s Aerospace Group, which is led by Roger Sherrard, Vice President and President Aerospace Group.

Exotic Metals manufactures the intake blades for GE engines, Stockwinners

Parker plans to finance the transaction using new debt.

Following the completion of the transaction, Parker expects to maintain a high investment grade credit profile.

The transaction is not expected to impact Parker’s dividend payout target of approximately 30-35% average percent of net income over a five-year period, while maintaining its record of annual dividend increases.

The transaction is expected to be completed within the next two to three months and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

PH last traded at $172.46, down $2.45.

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Circor receives $1.7B takeover offer

Crane proposes to acquire Circor for $45.00 per share in cash

Crane proposes to acquire Circor for $45.00 per share in cash, Stockwinners

Crane Co. (CR) announced that it has submitted a proposal to the Board of Directors of CIRCOR International (CIR) to acquire CIRCOR for $45 per share in cash.

CIRCOR International, Inc. designs, manufactures, and markets engineered products and sub-systems worldwide. It operates through three segments: Energy, Aerospace and Defense, and Industrial. 

The proposal represents a 47% premium over yesterday’s closing price and a 37% and 51% premium over a three- and six-month volume weighted average share price, respectively.

This reflects an enterprise value of approximately $1.7B at a multiple of approximately 13.5x the last 12-month adjusted EBITDA. Crane Co. proposed the all-cash transaction to CIRCOR’s President and CEO Scott Buckhout on April 30, the terms of which were confirmed by a letter to the CIRCOR Board of Directors.

On May 13, the CIRCOR Board summarily rejected Crane Co.’s proposal with no offer of discussions or due diligence.

“While we had hoped to complete a transaction privately, the Board’s rejection of our proposal without comment or discussion led to our decision to make our proposal known to CIRCOR shareholders so they can express their views directly to the CIRCOR Board,” said Max Mitchell, Crane Co. President and CEO.

“Our proposal provides CIRCOR shareholders with attractive value and certainty compared to the continued uncertainty surrounding CIRCOR’s plans to improve operating performance.

Based on CIRCOR’s history of underperformance and inability to meet its own financial targets, we believe CIRCOR’s standalone plan is unlikely to generate value comparable to what we are proposing.”

Mitchell continued, “We believe that this business, which has great brands and products, has been meaningfully undermanaged for years.

This has resulted in a persistent decline in CIRCOR’s share price, making it the worst performer of the peers in the S&P Midcap Capital Goods Index since the end of 2013.

Based upon the strength of our disciplined operating approach, Crane Co. is well positioned to integrate CIRCOR’s businesses into our focused portfolio, realize operational synergies, and deliver long-term value to Crane shareholders.

Combining CIRCOR’s Fluid Handling, Aerospace and Defense assets with Crane’s portfolio of leading brands would create a stronger competitor with additional scale and growth potential.”

CIR +13.49 to $44.15.

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Kforce Government Solutions sold for $115 million

ManTech to acquire Kforce Government Solutions for $115M

KForce sold for $115 million, Stockwinners

ManTech (MANT) announced that it has signed a definitive agreement to acquire Kforce Government Solutions, or KGS, formerly a wholly-owned subsidiary of Kforce (KFRC) for $115M in cash.

Headquartered in Fairfax, Virginia, KGS provides technology solutions, transformation management, data management and analytics in support of federal health and defense missions.

KGS has built a legacy of success with its customers particularly within the Department of Veterans Affairs, or VA.

The acquisition adds over 500 employees to the ManTech team. In 2018, KGS generated approximately $98M of revenue and has profitability comparable to ManTech.

The combination will substantially increase ManTech’s footprint at the VA and enable ManTech to deliver services through the VA’s Transformation Twenty-One Total Technology Next Generation, or T4NG, program.

The T4NG program is a 10-year indefinite delivery, indefinite quantity contract awarded by the VA Technology Acquisition Center to help the VA transform its information technology programs.

ManTech will fund the acquisition from cash on hand with additional funding from its existing line of credit. ManTech expects the acquisition to be slightly accretive to earnings per share in 2019.

The acquisition is subject to various closing conditions and approvals, including approval under the Hart-Scott-Rodino Act, and is expected to be completed in March.

David L. Dunkel, Chairman and Chief Executive Officer commented, “Our federal government solutions business has been a meaningful part of our business since our initial government acquisition in 2006. I am immensely proud of the success that our KGS management team has had in growing and positioning this business for continued future success despite the competitive challenges it has faced, given its scale.

We are excited for our KGS management team and associates to join forces with ManTech, which we expect will enhance KGS’s competitive positioning and leverage its deep and long-standing customer relationships to drive further growth. We firmly believe in the strong secular drivers within the commercial technology space and, with this divestiture, virtually all of our revenues are derived from domestic professional and technical staffing services and solutions.”


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L3 Technologies and Harris to merge

Harris, L3 Technologies to combine in merger of equals

L3 Technologies and Harris to merge, Stockwinners
L3 Technologies and Harris to merge, Stockwinners

L3 Technologies and Harris to merge, Stockwinners
L3 Technologies and Harris to merge, Stockwinners

Harris Corporation (HRS) and L3 Technologies (LLL) have agreed to combine in an all stock merger of equals.

Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, L3 shareholders will receive a fixed exchange ratio of 1.30 shares of Harris common stock for each share of L3 common stock, consistent with the 60-trading day average exchange ratio of the two companies.

Upon completion of the merger, Harris shareholders will own approximately 54% and L3 shareholders will own approximately 46% of the combined company on a fully diluted basis.

The combined company, L3 Harris Technologies, will be the 6th largest defense company in the U.S. and a top 10 defense company globally, with approximately 48,000 employees and customers in over 100 countries.

For calendar year 2018, the combined company is expected to generate net revenue of approximately $16B, EBIT of $2.4B and free cash flow of $1.9B.

The combination is expected to generate approximately $500M of annual gross pre-tax cost synergies, or $300M net of savings returned to customers, in year 3.

The savings will come from reducing direct and indirect spend, rationalizing footprint, consolidating corporate and segment headquarters, establishing a common shared services platform for IT and finance and reducing other overhead costs.

The company is expected to invest approximately $450M cash to achieve the synergies over the next 3 years.

The combined company will target $3B in free cash flow by year 3, driven by organic growth, cost synergies, working capital improvements and capital expenditure efficiencies. L3 Harris Technologies will be well capitalized with a strong balance sheet and a leverage ratio of 2.2 times net debt to trailing twelve months EBITDA.

The combined company will remain committed to maintaining an investment grade credit rating and a dividend payout consistent with each company’s current practice and deploying excess cash toward share repurchases, including up to $2B in share repurchases in the 12 months post-closing.

L3 Harris Technologies will be headquartered in Melbourne, Florida.

The combined company’s Board of Directors will have 12 members, consisting of six directors from each company. William Brown will serve as chairman and CEO, and Christopher Kubasik will serve as vice chairman, president and COO for the first two years following the closing of the transaction. For the third year, Brown will transition to executive chairman and Kubasik to CEO, after which Kubasik will become chairman and CEO.

The merger is expected to close in mid-calendar year 2019, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by the shareholders of each company.


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GE fires CEO, Shares rise

GE shares jump after CEO Flannery ousted amid Power unit challenges

GE introduces new company AiRXOS, Stockwinners
GE fires CEO, Shares rise

Shares of GE (GE) are rising in pre-market trading after the shrinking conglomerate announced that H. Lawrence Culp, Jr. has been named Chairman and CEO, replacing John Flannery, effective immediately.

POWER WRITE-OFF

The company stated that while its businesses other than Power are “generally performing consistently with previous guidance,” the company will fall short of previously indicated guidance for free cash flow and EPS for 2018 due to weaker performance in the GE Power business.

GE expects to take a non-cash goodwill impairment charge related to the GE Power business that will likely be as much as the approximately $23B current goodwill balance for the business, GE added.

GE previously forecast FY18 EPS at the low end of its $1.00-$1.07 range. The current EPS consensus is 95c.

RECENT ANALYST CONCERNS

In a recent note to investors, RBC Capital analyst Deane Dray lowered his price target on GE shares to $13 from $15, stating that the company had yet to reach a point where bad news does not make the stock decline and arguing that the bottom had not yet been reached.

Last month, JPMorgan analyst Stephen Tusa lowered his price target for General Electric to $10 from $11 and kept an Underweight rating on the shares.

The analyst’s channel checks, which were confirmed by GE Power’s CEO, GE investor relations, suggested GE had experienced a failure in a first stage blade on an H-frame in one of its two initial marquee installations in the U.S., Colorado Bend. Further, Tusa said the problem was material enough for Exelon (EXC) to have shut the plant down, along with the “award winning” Wolf Hollow plant for precautionary measures.

There should no longer be any doubt that GE Power has company-specific issues, Tusa contended at the time, stating that his new price target assumed weaker results at GE Power and some franchise value impact.

PRICE ACTION

In Monday’s pre-market trading, GE shares are up $1.53, or 13.5%, to $12.82.


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Rockwell Automation to make $1B investment in PTC

Rockwell Automation to make $1B equity investment in PTC

Rockwell Automation to make $1B equity investment in PTC, Stockwinners
Rockwell Automation to make $1B equity investment in PTC

PTC (PTC) and Rockwell Automation (ROK) announced that they have entered into a definitive agreement for a strategic partnership that is expected to accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology.

As part of the partnership, Rockwell Automation will make a $1B equity investment in PTC, and Rockwell Automation’s Chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.

Under the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation.

The price per share represents an 8.6% premium to PTC’s closing stock price on June 8, 2018, the last trading day prior to today’s announcement.

Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings.

Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.

As separately announced today, Rockwell Automation is increasing its share repurchase target for fiscal year 2018 to $1.5 billion.

This represents a $300 million increase to its previous plans to repurchase $1.2 billion of its stock in fiscal year 2018.

The investment transaction is subject to customary closing conditions and regulatory approvals, and is expected to close within 60 days.

PTC Inc. develops and delivers software products and solutions worldwide.


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BAE Systems receives contract for submarines

BAE Systems receives contract for payload tubes for Virginia-class submarines 

BAE Systems receives contract for submarines, Stockwinners
BAE Systems receives contract for submarines

BAE Systems (BAESY) has received a contract to produce payload tubes for two of the U.S. Navy’s new Virginia-class submarines to support increased firepower on the Block V version of the attack subs.

Under the contract with General Dynamics Electric Boat, a builder of the Virginia class, BAE Systems will deliver two sets, each consisting of four tubes, for the Virginia Payload Modules on the SSN 804 and SSN 805.

The Virginia Payload Module extends the length of the Block V submarines over previous versions of the Virginia-class by adding an additional mid-body section to create more payload space for greater firepower.

Each large-diameter payload tube can store and launch up to seven Tomahawk cruise missiles.

The VPM offers exceptional flexibility as well for the integration of future payload types, such as unmanned systems or next-generation weapons.

BAE Systems, which is also providing payload tubes for the SSN 803 under a previously awarded VPM contract, has a long history of supporting the Navy’s submarine fleet as the leading provider of propulsors and other submarine systems.

The company was selected to provide propulsors, spare hardware, and tailcones for Block IV Virginia-class vessels and stands ready to provide the same support for the Block V subs.

Under this most recent contract, BAE Systems will also develop the processes and tooling necessary for the Block V payload tube production.

Work will be performed at the company’s facility in Louisville, Kentucky, with deliveries scheduled to begin in 2020.

BAESY last traded at $35.39


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Xcerra sold for $796 million

Cohu to acquire Xcerra in cash, stock deal valued around $796M

Xcerra sold for $796 million, Stockwinners
Xcerra sold for $796 million, Stockwinners

Cohu (COHU) and Xcerra (XCRA) announced they have entered into a definitive merger agreement pursuant to which Cohu will acquire Xcerra for a combination of cash and stock.

The acquisition is expected to make Cohu a global leader in semiconductor test, with combined sales for Cohu and Xcerra in excess of $800M for the last twelve months.

Upon the closing of the transaction, Xcerra shareholders will be entitled to receive $9.00 in cash and 0.2109 of a share of Cohu common stock, subject to the terms of the definitive agreement.

Based on the closing price of Cohu common stock as of May 7, 2018, the transaction values Xcerra at $13.92 per share, or approximately $796M in equity value, with a total enterprise value of approximately $627M, after excluding Xcerra’s cash and marketable securities net of the debt on its balance sheet as of January 31, 2018.

The transaction value represents a premium of 8.4% to Xcerra’s closing price on May 7, 2018, and a premium of 15.4% to Xcerra’s 30-day average closing price.

The transaction is expected to be immediately accretive to non-GAAP earnings per share and generate over $20M of annual run-rate cost synergies within 2 years of closing, excluding stock-based compensation and other charges.

Xcerra shareholders are expected to own approximately 30% of the combined company upon the closing of the transaction. The transaction has been unanimously approved by the boards of both companies.

The transaction is expected to close in the second half of calendar year 2018, subject to approval by both companies’ respective shareholders, antitrust regulatory approvals and other customary closing conditions.


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Barron’s is bullish on Apple and Exxon

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS

Apple reaffirms position as tech’s ‘undisputed’ leader – In a follow-up story, Barron’s says that with its earnings report last week, Apple (AAPL) flexed its financial muscle and reaffirmed its position as “tech’s undisputed leader.” Fiscal second-quarter iPhone sales came in roughly as expected, while the company’s total profit was slightly ahead of estimates, the report notes, adding that Apple’s real surprise came from its updated buyback plans. Investors rewarded the company with its best five-day stretch in the stock market since October 2011, Barron’s says.

Apple raking in profits amid technology impasse – Warren Buffet’s Berkshire Hathaway (BRKA) has bought another 75M shares of Apple (AAPL), Tiernan Ray writes in this week’s edition of Barron’s. While the current impasse for technology is going to continue to reduce new opportunities for Apple, for competitors such as Samsung (SSNLF) and suppliers like Qorvo (QRVO), there is enough wealth in the steady supply of what exists to keep investors like Buffett delighted with the cash flow, he contends. Milking it, at the moment, triumphs over innovation, Barron’s says.

Boeing eyeing ‘air supremacy’  – Boeing  (BA) announced last week that it would acquire KLX, whose products include airplane parts, as part of the aircraft manufacturer’s long-term plan to bolster its presence in parts, components, and services, Lawrence Strauss writes in this week’s edition of Barron’s. This is a trend investors should keep an eye on, he contends.

Sarepta winning over investors – Sarepta Therapeutics (SRPT) has been winning over investors with rising sales of its drug to treat Duchenne muscular dystrophy and a promising pipeline of drugs targeted at the fatal muscle-wasting disease, Andrew Bary writes in this week’s edition of Barron’s. Part of the optimism surrounding Sarepta is that it can bring to market two drugs similar to Exondys 51, which treats about 13% of DMD patients, he notes, adding that these drugs – casimersen and golodirsen – target mutations at other points on the dystrophin gene and could treat another 16% of DMD patients.

Exxon Mobil looks appealing – Demand for oil and natural gas is expected to be strong for decades and to capitalize on this growth, Exxon (XOM) has an ambitious plan to increase the company’s energy output by 25% and more than double earnings by 2025, Andrew Bary writes in this week’s edition of Barron’s. At a share price of $77, Exxon looks “appealing,” he adds.

BEARISH  MENTIONS

Wolverine may face mounting cleanup costs – The Scotchgard chemicals that gave stain resistance to Wolverine’s Hush Puppies shoes have leached into wells and aquifers from rusting barrels of sludge and other factory waste scattered around Michigan’s Kent County, where Wolverine (WWW)  used the chemicals for about 50 years, Bill Alpert writes in this week’s edition of Barron’s. The footwear firm has provided water filters to area homes and last year it set aside $35M to cover expected legal and remediation costs, but the question is whether $35M is enough, Barron’s notes.


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