Waddell & Reed sold for $1.7 billion

Macquarie to acquire Waddell & Reed for $25 per share

Waddell & Reed (WDR) announced it has entered into a merger agreement with Macquarie Asset Management, the asset management division of Macquarie Group (MQBKY), under which Macquarie would acquire all of the outstanding shares of Waddell & Reed for $25.00 per share in cash representing total consideration of $1.7B.

The transaction represents a premium of approximately 48% to the closing price of Waddell & Reed common stock on December 1, 2020, the last trading day prior to the transaction announcement, and a premium of approximately 57% to Waddell & Reed’s volume-weighted average price for the last 90 trading days.

On completion of the transaction, Macquarie has agreed to sell Waddell & Reed Financial, Inc.’s wealth management platform to LPL Financial Holdings Inc. (LPLA), a U.S. retail investment advisory firm, independent broker-dealer, and registered investment advisor custodian, and also enter into a long-term partnership with Macquarie becoming one of LPL’s top tier strategic asset management partners.

As a result of the transaction, Macquarie Asset Management’s assets under management are expected to increase to over $465B, with the combined business becoming a top 25 actively managed, long-term, open-ended U.S. mutual fund manager by assets under management, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners.

The transaction has been approved by the Boards of Directors of Waddell & Reed Financial, Inc., Macquarie Group and LPL and is expected to close in the middle of 2021, subject to regulatory approvals, Waddell & Reed Financial, Inc. stockholder approval and other customary closing conditions.

Waddell & Reed Financial, Inc. provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. 

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Slack Technologies sold for $27.7 billion

Salesforce acquires Slack in cash and stock deal worth $27.7B

Salesforce (CRM) and Slack Technologies (WORK) have entered into a definitive agreement under which Salesforce will acquire Slack.

Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30.

The boards of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement.

The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022.

Salesforce goes shopping

Salesforce has also entered into a voting agreement with certain stockholders of Slack common stock, under which each such stockholder has agreed to vote all of their Slack shares in favor of the transaction at the special meeting of Slack stockholders to be held in connection with the transaction, subject to certain terms and conditions.

The Slack shares subject to the agreement represent approximately 55% of the current outstanding voting power of the Slack common stock.

Salesforce expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on Salesforce’s balance sheet.

One year chart of Slack Tech. stock price

Salesforce has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10B senior unsecured 364-day bridge loan facility.

Salesforce said, “Slack will be deeply integrated into every Salesforce Cloud.

Five year chart of Salesforce stock price

As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.”

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Uncertainty in economy pushes lawmakers to come up with stimulus bill!

Powell says outlook for economy is ‘extraordinarily uncertain’

In prepared remarks for the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve Chair Jay Powell said:

Jerome Powell say economy is on shaky ground

“Economic activity has continued to recover from its depressed second-quarter level. The reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or GDP, rose at an annual rate of 33 percent in the third quarter.

In recent months, however, the pace of improvement has moderated.

Household spending on goods, especially durable goods, has been strong and has moved above its pre-pandemic level.

In contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality.

The overall rebound in household spending is due, in part, to federal stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals…

As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check…

Covid-19 has caused a global slowdown

The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months.

A full economic recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.

Recent news on the vaccine front is very positive for the medium term. For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups.”

Meanwhile lawmakers in Washington have come up with a new stimulus plan.  

A bipartisan group of U.S. lawmakers announced a $908B COVID-19 aid package aimed to breaking a monthslong deadlock between Democrats and Republicans over new emergency relief for small businesses, unemployed people, airlines, and other industries during the coronavirus crisis, Reuters’ Richard Cowan and Doina Chiacu report.

The bill has not yet been written into legislation, nor has it been embraced by the Republican White House, Democratic President-elect Joe Biden, or leaders in the Senate or House of Representatives, the authors note.

The package, however, does come with the support of a group of conservatives and moderates who believe it will appeal to a broad swath of Congress, the authors note.

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Walden University sold for $1.48B

Adtalem to acquire Walden University from Laureate Education for $1.48B in cash

Adtalem (ATGE) announced it has entered into a definitive agreement to acquire Walden University, an online healthcare education provider, from Laureate Education (LAUR), Inc. for $1.48B in cash.

With the addition of Walden, Adtalem will become a national healthcare educator, providing workforce solutions to employers through learning modalities with academic outcomes.

By adding Walden to its existing healthcare portfolio, Adtalem said it is better positioned to increase the talent supply to address the rapidly growing and unmet demand for healthcare professionals in the U.S. and globally.

The combined companies will have 90,000 students

The combined organization will have 26 campuses across 15 states and four countries, 6,100 faculty members, and more than 90,000 students with 34% African American enrollees.

The company said, “The acquisition is expected to provide significant potential for growth and margin expansion through new and expanded offerings as well as revenue and cost synergies.

These financial benefits are expected to lead to substantial gross margin and EBITDA margin expansion, and robust cash flow generation to invest in its offerings while paying down debt.”

Adtalem expects to generate upside to revenue by providing new and complementary educational offerings, increased student acquisition and retention capabilities as well as enhanced scale and coverage that will allow for new partnerships with large-sized employer partners in the healthcare sector.

The company noted, “The purchase price represents a compelling, pre-synergy adjusted EBITDA multiple of 8.4x, and the transaction is expected to contribute significantly to Adtalem’s free cash flow and earnings per share, generating $60 million in incremental free cash flow excluding special items in year one and adding $0.75 in earnings per share from continuing operations excluding special items in year two as synergies begin to offset the dilutive effect of purchase price accounting.”

Walden Univ. Campus

Adtalem expects to generate annual cost savings of approximately $60M driven by increased efficiencies in marketing spend and back office operations. Approximately $30M of these cost savings are anticipated within 12 months of closing and the remainder within 24 months of closing.

Additionally, Adtalem expects that this acquisition will generate between 10% and 12% ROIC beginning in year one, significantly exceeding the company’s current WACC of approximately 8%.

Adtalem expects to fund the cash consideration through a combination of cash from its balance sheet and committed debt financing.

Adtalem expects to realize the full potential of the transaction while maintaining a strong balance sheet.

The transaction is expected to close in Q1 of FY22, subject to regulatory approvals and other customary closing conditions.

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Virtusa sold for $2 billion

Virtusa to be acquired by BPEA for $51.35 per share in cash deal valued at $2B

Baring Private Equity Asia, or BPEA, and Virtusa (VRTU) announced the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for $51.35 per share in an all-cash transaction valued at approximately $2B.

Virtusa Corporation provides digital engineering and information technology (IT) outsourcing services primarily in North America, Europe, and Asia.

Virtusa sold for $2B

The companies said in a release, “The price per share to be paid in the transaction, which was unanimously approved by the Virtusa Board of Directors, represents a premium of approximately 27 percent to the closing price of Virtusa common stock on September 9, 2020, the last trading day prior to the transaction announcement, and premiums of approximately 29 percent and 46 percent to Virtusa’s volume-weighted average prices, or VWAP, for the last 30 and 60 trading days, respectively.

In addition, the price paid implies a valuation of 16.2x Firm Value / Last Twelve Months EBITDA as of June 30, 2020. On July 20, 2020, the Virtusa Board of Directors received an unsolicited proposal from an interested party to acquire Virtusa.

BPEA buys Virtusa for $2 billion

Following receipt of the offer, consistent with the Board’s fiduciary duties to maximize shareholder value, the Board authorized the Company and its financial advisors to engage with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.

As part of this process, the Company signed non-disclosure agreements with five parties and engaged with two others.

After an independent review of the alternatives available, including the value creation opportunity through continued execution of the Company’s strategic plan, the Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $51.35 per share in cash maximizes value for Virtusa’s shareholders.

The transaction, which is expected to close in the first half of 2021, is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States, or CFIUS, and customary closing conditions.

The transaction is not subject to a financing condition.

The Orogen Group, which holds 108,000 shares of Virtusa Convertible Preferred Stock and whose CEO is Vikram Pandit, an independent member of the Board, has entered into a voting agreement under which it has agreed to vote all of Orogen’s Convertible Preferred Stock in favor of the transaction.

Orogen Group is a major shareholder of Virtusa

Orogen’s shares of preferred stock are convertible into 3,000,000 shares of Virtusa common stock and represent approximately 10 percent of the voting power in the Company.

The directors and executive officers of Virtusa have also entered into this voting agreement, and hold an additional approximate 5.7% of the voting power of the Company.”

VRTU closed at $40.50, last traded at $50.45.

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Stein Mart files for Chapter 11 bankruptcy

Stein Mart voluntarily files Chapter 11 bankruptcy protection

Stein Mart (SMRT) announced that it and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida – Jacksonville Division.

Stein Mart files for bankruptcy protection

Stein Mart offers designer and name-brand fashion apparels, home decor merchandise, accessories, and shoes at everyday discount prices in the United States. As of June 3, 2020, it operated 281 stores in 30 states. The company was founded in 1908 and is headquartered in Jacksonville, Florida.

The Company has filed customary motions with the Bankruptcy Court that will authorize, upon Bankruptcy Court approval, the Company’s ability to maintain operations in the ordinary course of business, including, among other things, the payment of employee wages and benefits without interruption, payment of suppliers and vendors in the normal course of business, and the use of cash collateral.

Too much savings caused Stein Mart’s demise

These motions are typical in the Chapter 11 process and the Company anticipates that they will be approved shortly after the commencement of its Chapter 11 case.

Details on the Company’s Chapter 11 process and go-forward strategy are as follows:

The Company expects to close a significant portion, if not all, of its brick-and-mortar stores and, in connection therewith, the Company has launched a store closing and liquidation process.

The Company, however, will continue to operate its business in the ordinary course in the near term; and the Company is evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property. 

SMRT last traded at $0.18.

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Uber buys Postmates for $2.65B

 Uber to acquire Postmates for $2.65B in all-stock transaction

Uber and Postmates announced that they have reached a definitive agreement under which Uber will acquire Postmates for approximately $2.65B in an all-stock transaction.

Uber buys Postmates

This transaction brings together Uber’s global Rides and Eats platform with Postmates’ delivery business in the U.S.

Additionally, Postmates has been an early pioneer of “delivery-as-a-service,” which complements Uber’s efforts in the delivery of groceries, essentials and other goods.

For restaurants and merchants, Postmates and Uber Eats will together offer more tools and technology to connect with a bigger consumer base.

Following the closing of the transaction, Uber intends to keep the consumer-facing Postmates app running separately.

Uber currently estimates that it will issue approximately 84M shares of common stock for 100% of the fully diluted equity of Postmates.

The boards of directors of both companies have approved the transaction, and stockholders representing a majority of Postmates’ outstanding shares have committed to support the transaction.

The transaction is subject to the approval of Postmates stockholders, regulatory approval and other customary closing conditions and is expected to close in Q1 2021.

Uber consolidates its market position by buying Postmates

Like other travel- and transportation-related businesses, Uber’s ride-hailing segment has been negatively impacted by the COVID-19 pandemic, due to shelter-in-place orders throughout the United States.

On-demand delivery, however, has grown, with people relying on services like Uber Eats to get food without leaving their homes. According to its last earnings report, Uber’s ride-hailing gross bookings dropped, but its food delivery service saw gross sales growth of 54% during its first fiscal quarter.

UBER closed at $30.68.

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DOJ issues guideline for online content

DOJ issues recommendations for Section 230 reform

The Department of Justice has released a set of reform proposals to update the outdated immunity for online platforms under Section 230 of the Communications Decency Act of 1996.

Responding to bipartisan concerns about the scope of 230 immunity, the department identified a set of concrete reform proposals to provide stronger incentives for online platforms to address illicit material on their services while continuing to foster innovation and free speech.

The department’s review of Section 230 over the last ten months arose in the context of its broader review of market-leading online platforms and their practices, which were announced in July 2019.

The department held a large public workshop and expert roundtable in February 2020, as well as dozens of listening sessions with industry, thought leaders, and policy makers, to gain a better understanding of the uses and problems surrounding Section 230.

The first category of recommendations is aimed at incentivizing platforms to address the growing amount of illicit content online, while preserving the core of Section 230’s immunity for defamation claims.

These reforms include a carve-out for bad actors who purposefully facilitate or solicit content that violates federal criminal law or are willfully blind to criminal content on their own services.

Additionally, the department recommends a case-specific carve out where a platform has actual knowledge that content violated federal criminal law and does not act on it within a reasonable time, or where a platform was provided with a court judgment that the content is unlawful, and does not take appropriate action.

A second category of proposed reforms is intended to clarify the text and revive the original purpose of the statute in order to promote free and open discourse online and encourage greater transparency between platforms and users.

One of these recommended reforms is to provide a statutory definition of “good faith” to clarify its original purpose.

The new statutory definition would limit immunity for content moderation decisions to those done in accordance with plain and particular terms of service and consistent with public representations. These measures would encourage platforms to be more transparent and accountable to their users.

The third category of recommendations would increase the ability of the government to protect citizens from unlawful conduct, by making it clear that Section 230 does not apply to civil enforcement actions brought by the federal government.

A fourth category of reform is to make clear that federal antitrust claims are not, and were never intended to be, covered by Section 230 immunity.

Over time, the avenues for engaging in both online commerce and speech have concentrated in the hands of a few key players.

It makes little sense to enable large online platforms (particularly dominant ones) to invoke Section 230 immunity in antitrust cases, where liability is based on harm to competition, not on third-party speech.

The action follows President Trump’s executive order seeking to weaken broad immunity enjoyed by Facebook (FB), Twitter (TWTR) and Google (GOOGL).

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Several retailers grab their shopping bags and file for bankruptcy

As JC Penney’s files for bankruptcy, others line up to do the same

Retailers have long been suffering from a tough retail environment due to competition from online retailers such as Amazon, Etsy and eBay; it seems like COVID-19 fired the kill shot.

J.C. Penney

J.C. Penney announced that it has received approvals from the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX for the “First Day” motions related to the company’s voluntary Chapter 11 petitions filed on May 15, 2020, including approval for the company to access and use its approximately $500M in cash collateral.

The 118 year old retailer files for Chapter 11 bankruptcy, Stockwinners

J.C. Penney entered into a restructuring support agreement with lenders holding approximately 70% of J.C. Penney’s first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position. J.C. Penney has approximately $500M in cash on hand as of the Chapter 11 filing date.

James Cash Penney started the company in 1902

JCP Gets Delisted

The New York Stock Exchange announced that the staff of NYSE Regulation has determined to commence proceedings to delist the common stock of J.C. Penney Company – ticker symbol JCP – from the NYSE. NYSE Regulation reached its decision that the company is no longer suitable for listing after the company’s May 15, 2020 disclosure that the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Recent Retail Bankruptcies

On May 4th, J.Crew Group announced it has reached an agreement with its lenders holding approximately 71% of its Term Loan and approximately 78% of its IPCo Notes, as well as with its financial sponsors, under which the company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.

Houston-based Stage Stores Inc. filed for chapter 11 bankruptcy in Texas last week.

GNC Holdings (GNC), the nutritional supplement retailer, avoided bankruptcy by reaching a last-minute deal with creditors that allows it to avoid bankruptcy for at least 30 days but no more than 90 days under a deal announced Friday.

GNC avoids bankruptcy for 90 days

True Religion

Even before COVID-19 forced True Religion to close its 87 stores, the denim specialist’s sales were in decline and its profits were negative. After shuttering its footprint in response to the pandemic, 80% of its sales disappeared, according to the company. 

Others on the list

According to Law.com, both Macy’s (M) and Neiman Marcus have hired bankruptcy law firm Kirkland, and Wachtell. Neiman filed for Chapter 11 last week. Macy’s should be forthcoming.

Pier 1 Imports (PIR) filed for bankruptcy protection this month. It would only make sense if it’s competitors follow the same path.

Nashville-based retailer, Kirkland’s, Inc. operates as a specialty retailer of home décor in the United States. The company’s stores provide various merchandise, including holiday décor, furniture, ornamental wall décor, decorative accessories, art, textiles, mirrors, fragrance and accessories, lamps, artificial floral products, housewares, outdoor living items,

Kirkland’s has avoided Chapter 11, Stockwinners

In 2019, seventeen major retailers filed for bankruptcy. For some of them it was their second trip to the alter including Payless, Gymboree, and Charming Charlie.

Some of the retailers that filed for bankruptcy in the past 18 months. Stockwinners

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Uber in talks to acquire GrubHub

Uber made all-stock offer to acquire GrubHub, WSJ reports

Shares of food delivery company GrubHub are sharply higher after the Wall Street Journal reported that Uber Technologies (UBER) approached GrubHub (GRUB) earlier this year with a takeover offer and the parent company of Uber Eats and its rival service operator continue to discuss a possible combination.

Uber may buy GrubHub, Stockwinners

Uber is seeking to acquire GrubHub in an all-stock deal that would reshape the meal-delivery business, but “it’s far from guaranteed the talks will produce a deal,” according to the report.

UberEats has 25% of the food delivery market, Stockwinners

Bloomberg’s Ed Hammond has separately reported this morning that Uber has made an offer to acquire GrubHub.

The companies are in talks about a deal and could reach an agreement as soon as this month, sources told Bloomberg. 

“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” said Uber CEO Dara Khosrowshahi.

Uber has a market cap of $57B

Uber Eats is a direct competitor to Grubhub, with Grubhub controlling  26.7% of the market while Uber holds a 25.2% market share. 

Grubhub has a market cap of more than $5.3 billion. Uber has a market cap of $57 billion.

GrubHub (GRUB) is seeking 2.15 Uber (UBER) share in exchange for each of its own shares in a potential takeover and Uber’s board is expected to review the latest GrubHub counter proposal, according to The Wall Street Journal, citing sources.

NEEDHAM

After Bloomberg reported that Uber (UBER) has approached GrubHub (GRUB) with a takeover offer, Needham analyst Brad Erickson said such a deal would be consistent with his bullish thesis that Uber Eats could eliminate as much as $500M of its roughly $1.2B in losses last year through such a GrubHub acquisition.

With Uber having exited India and seven other unprofitable markets, Erickson thinks investors would “further recognize a dramatically clearer picture towards food delivery profitability” if a GrubHub deal were to occur, he added. Erickson reiterates a Buy rating and $42 target on Uber shares.

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Paypal is expected to report strong results

What to watch in PayPal earnings report

PayPal (PYPL) is scheduled to report results of its first fiscal quarter after market close on May 6, with a conference call scheduled for 5:00 pm EDT.

PayPal international business hurt by Covid -19

What to watch for:

1. OUTLOOK: On February 27, PayPal said that it had been “carefully assessing the effect of COVID-19 as conditions continue to evolve… PayPal’s business trends remain strong; however, international cross-border e-commerce activity has been negatively impacted by COVID-19.

We currently estimate the negative impact from COVID-19 to be an approximate one percentage point reduction, on both a spot and foreign currency-neutral basis, to PayPal’s year-over-year revenue growth for the first quarter, as compared to the revenue guidance provided on January 29, 2020.

PayPal domestic business remains strong, Stockwinners

Stronger performance quarter-to-date across our diversified business is partially offsetting this one percentage point negative impact. We now expect to report first quarter 2020 revenue toward the lower end of our previously guided range of $4.78B-$4.84B.”

The company also reaffirmed its Q1 GAAP and non-GAAP EPS guidance.

During the company’s last earnings call in late January, PayPal said it expected Q1 adjusted EPS between 76c-78c, and FY20 adjusted EPS of $3.39-$3.46.

2. ‘RAPID ADOPTION INCREASE’: In a research note to investors last month, Deutsche Bank analyst Bryan #Keane raised the firm’s price target on #PayPal to $147 from $127, while keeping a Buy rating on the shares.

The analyst believes the Street is underappreciating the “rapid adoption increase” toward e-commerce in the new COVID-19 world, with PayPal as one of the main beneficiaries of this trend. The surge in new online shoppers should drive “strong” net new active customers for the company, he contended.

3. TO WAIVE CERTAIN FEES, DEFER PAYMENTS: PayPal announced on March 31 a set of relief measures to help its more than 24M merchants around the world impacted by the coronavirus.

e-Commerce continues to fuel Paypal’s growth, Stockwinners

The company said it was waiving certain fees and deferring repayments on business loans for some of its most affected small business customers.

4. LENDING TO SMALL BUSINESSES: PayPal, Square (SQ), and Intuit (INTU) started lending to small businesses that couldn’t get access to COVID-19 relief funds through large U.S. banks, Bloomberg’s Olivia Rockeman and Edward Ludlow reported last month.

Fintech companies have been pushing to provide emergency loans since mid-March, over a week before the passage of a federal bill that crated the Paycheck Protection Program, the authors noted.

“The PPP program has manual checks and processes that require time, and we’re doing the best we can despite having tech that can operate at scale and efficiency,” said Brian Peters, executive director of Financial Innovation Now, an industry group whose membership includes PayPal and Square.

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L Brands shares tumble after buyer backs out of the deal

Sycamore Partners had agreed in February to acquire 55% of the company

Shares of L Brands fell sharply after Bloomberg reported that Sycamore Partners is seeking to terminate its agreement with the company regarding the Victoria’s Secret brand.

Bloomberg cites a court complaint filed by Sycamore in a Delaware court.

On February 20, L Brands and Sycamore Partners, a private equity firm specializing in consumer and retail investments, announced a strategic transaction that would position Bath & Body Works as a standalone public company and separate Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK into a privately-held entity.

Sycamore Partners is seeking to terminate its agreement to acquire a controlling stake in Victoria’s Secret from L Brands, Bloomberg’s Ed Hammond and Elizabeth Fournier report, citing a court filing. Sycamore in February had agreed to purchase 55% of the lingerie chain and take it private, leaving L Brands with a minority interest, the authors note.

Sales at Victoria’s Secret have been declining recently, Stockwinners

Before the pandemic disrupted the U.S. retail sector, Victoria’s Secret was struggling with plunging sales, and all of its U.S. retail locations are currently closed, the authors say.

Victoria’s Secret’s sales had been slowing for years , as the company wrestled with changing consumers tastes and how its customers shopper. 

Sycamore sues to cancel the deal, Stockwinners

L Brands, Inc. (LB) today announced that Sycamore Partners delivered a notice on April 22, 2020 purporting to terminate the Feb. 20, 2020 transaction agreement  (“Transaction Agreement”) relating to the sale of a 55% interest in Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK (collectively, Victoria’s Secret) announced on Feb. 20, 2020. 

Sycamore Partners also filed a lawsuit in the Court of Chancery of the State of Delaware on April 22, 2020 seeking a declaratory judgment that its termination of the Transaction Agreement is valid. 

L-Brands has been under pressure to create value for share holders, Stockwinners

L Brands believes that Sycamore Partners’ purported termination of the Transaction Agreement is invalid.  L Brands will vigorously defend the lawsuit and pursue all legal remedies to enforce its contractual rights, including the right of specific performance. 

L Brands intends to continue working towards closing the transactions contemplated by the Transaction Agreement.

LB is down 21% to $9.57.

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Microsoft acknowledges security flaw in its new Windows operating system

Microsoft says aware of new security flaw found in Microsoft Windows

Microsoft (MSFT) said it is aware of limited targeted attacks that could leverage un-patched vulnerabilities in the Adobe Type Manager Library, and is providing the following guidance to help reduce customer risk until the security update is released.

A security flaw is discovered in Windows, Stockwinners

Two remote code execution vulnerabilities exist in Microsoft Windows when the Windows Adobe Type Manager Library improperly handles a specially-crafted multi-master font – Adobe Type 1 PostScript format.

There are multiple ways an attacker could exploit the vulnerability, such as convincing a user to open a specially crafted document or viewing it in the Windows Preview pane.

Vulnerability exists on Adobe Type Manager, Stockwinners

Microsoft is aware of this vulnerability and working on a fix.

Updates that address security vulnerabilities in Microsoft software are typically released on Update Tuesday, the second Tuesday of each month.

This predictable schedule allows for partner quality assurance and IT planning, which helps maintain the Windows ecosystem as a reliable, secure choice for our customers.

The operating system versions that are affected by this vulnerability are listed below. Please see the mitigation and workarounds for guidance on how to reduce the risk.

Software patch is coming, Stockwinners

The security flaw, which Microsoft deems “critical” — its highest severity rating — is found in how Windows handles and renders fonts, according to the advisory posted.

Although Windows 7 is also affected, only enterprise users with extended security support will receive patches. In the meantime, the advisory offered a temporary workaround for affected Windows users to mitigate the flaw until a fix is available.

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LVMH offers to buy Tiffany for $120 per share or $14.5B

Tiffany is expected to reject the offer

According to several sources including Bloomberg, Financial Times and Reuters, Louis Vuitton owner LVMH has approached Tiffany & Co (TIF) with a $14.5 billion acquisition offer, people familiar with the matter said, at a time when the U.S. luxury jeweler grapples with the impact of tariffs on its exports to China.

LVMH, which has for years been looking for ways to expand in the U.S. market, submitted a preliminary, non-binding offer to Tiffany earlier this month, one of the sources said.

LVMH is looking to boost U.S. sales, Stockwinners

LVMH’s offer valued Tiffany at about $120 per share, another of the sources added. Tiffany shares ended trading on Friday at $98.55.

Tiffany is expected to reject the $14.5B offer, Stockwinners

Financial Times reports that Tiffany is expected to rebuff the takeover approach from French luxury group LVMH, with the US jeweller believing the offer undervalues the company, according to people familiar with the matter. Tiffany’s advisers were on Sunday still assessing the surprise indicative offer from LVMH, the world’s largest luxury group by sales, with the board set to consider the next move. 

LVMH, which is behind brands such as Fendi, Christian Dior and Givenchy, as well as Veuve Cliquot champagne, has stood out for several years as one of the top performers in the upscale retail sector in China.

Tiffany, on the other hand, has not been as resilient. Beyond the tariffs that have been triggered by the trade war between the United States and China, a lower Chinese domestic sales tax has also contributed to double-digit decreases in its sales to Chinese tourists in the United States and in other destinations.

High-end brands have also long relied on Hong Kong as a major shopping hub drawing visitors from mainland China in particular, and four months of pro-democracy demonstrations are starting to take their toll.

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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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