Unisys Federal sold for $1.2 billion

SAIC to acquire Unisys Federal for $1.2B in cash

Science Applications International Corp. (SAIC) announced that it has entered into a definitive agreement to acquire Unisys Federal (UIS), in an all-cash transaction valued at $1.2B, in a highly strategic and value creating transaction, the company said.

This represents a transaction multiple of approximately 10.5x CY2020 adjusted EBITDA, adjusted for the net present value of tax assets.

SAIC buys Uinsys Federal, Stockwinners

Unisys Federal, an operating unit of Unisys (UIS), is a provider of infrastructure modernization, cloud migration, managed services, and enterprise IT-as-a-service through scalable and repeatable solutions to U.S. federal civilian agencies and the Department of Defense.

SAIC expects to fund the $1.2B cash transaction through a combination of cash on hand and incremental debt.

The transaction is expected to close by the end of SAIC’s first quarter of fiscal year 2021, ending May 1, 2020, following customary closing conditions, including HSR regulatory clearance.

Unisys Federal sold to SAIC, Stockwinners

The transaction has been unanimously approved by SAIC’s Board of Directors. The businesses will continue to operate independently until the transaction closes.

“With the addition of Unisys Federal, SAIC will be a leading provider of digital transformation services and solutions to the federal government.

This exciting opportunity advances our strategy by building on our modernization capabilities, increasing customer access, accelerating growth and enhancing shareholder value,” said SAIC CEO Nazzic Keene.

“The financial benefits of acquiring Unisys Federal are compelling, including accretion of adjusted EBITDA margins, non-GAAP earnings per share, and cash generation.”

The transaction multiple of approximately 13x LTM 9/30/19 Adjusted EBITDA represents a significant premium to Unisys’ trading multiple.

Net proceeds are largely expected to be used to pay down debt and reduce pension obligations, thereby significantly improving Unisys’ balance sheet, its U.S. pension funded status and overall financial flexibility.

The transaction was unanimously approved by the Unisys board and is expected to close in the first half of 2020, subject to customary closing conditions. Unisys’ U.S. Federal business represents more than 1,900 associates, with approximately $689 million in revenue for the LTM period ended September 30, 2019. 

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Changyou.com sold for $579M

Changyou.com enters into definitive agreement for going private transaction

Changyou.com (CYOU) announced that it has entered into a definitive Agreement and Plan of Merger with Sohu Game, an indirectly wholly-owned subsidiary of Sohu.com (SOHU), and Changyou Merger, a wholly-owned subsidiary of Sohu Game, pursuant to which the company will be acquired by the Sohu Group in an all-cash transaction implying an equity value of the company of approximately $579M.

Changeyou.com sold to Sohu, Stockwinners.com

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each Class A ordinary share of the company issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares, will be cancelled and cease to exist, in exchange for the right to receive $5.40 in cash without interest, and each outstanding American depositary share of the company, other than the ADSs representing the Excluded Shares, will be cancelled in exchange for the right to receive $10.80 in cash without interest.

Sohu buys Changeyou.com, Stockwinners

The Merger Consideration represents a premium of 82.4% to the closing price of the company’s ADSs on September 6, 2019, the last trading day prior to the company’s announcement of its receipt of the “going-private” proposal, and a premium of 70.1% to the average closing price of the company’s ADSs during the 30 trading days prior to its receipt of the “going-private” proposal.

The Sohu Group intends to fund the Merger primarily with debt financing.

The Sohu Group has delivered a copy of an executed debt commitment letter to the company pursuant to which Industrial and Commercial Bank of China Limited, Tokyo Branch will provide, subject to the terms and conditions set forth therein, an amount sufficient to fund in full the consummation of Merger and the other transactions related thereto.

The company’s board, acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the board, approved the Merger Agreement and the Merger.

The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

Because the Sohu Group owns over 90% of the voting power represented by all issued and outstanding shares of the company, the Merger will be in the form of a short-form merger of Merger Co. with and into Changyou in accordance with section 233(7) of the Companies Law of the Cayman Islands, with Changyou being the company surviving the Merger.

Shareholder approval of the Merger Agreement and the Merger is not required.

The Merger is currently expected to close in Q2 of 2020. If completed, the Merger will result in the company becoming a privately-owned company wholly owned directly and indirectly by Sohu, its ADSs will no longer be listed on the Nasdaq Global Select Market, and the ADS program will be terminated.

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RBC Capital’s predictions for 2020

Accelerating Netflix subs, Uber profitability among RBC’s top 10 surprise list

RBC Capital analyst Mark Mahaney compiled a broader research note titled “Top Ten Internet Surprises for 2020” list, in which he assigns a “reasonable chance” of 30% or more for the following to occur against the “average internet investor” expectations of the event being improbable.

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more
RBC expects subs accelerating in 2020, Stockwinners
  • 1) Netflix (NFLX) subscriber additions may accelerate because the company will be comping 2019’s “material price increase and a dramatic slowdown in marketing spending.
  • 2) Google’s (GOOGL) operating margins may be flat to up as its Google Cloud becomes a smaller margin drag and the company’s Other Bets division gets greater investment after the resignation of its founders.
  • 3) Uber (UBER) and Lyft (LYFT) achieve EBITDA profitability thanks “insurance expense leverage, driver and rider subsidies rationalization, pricing actions, and growth leverage”.
  • 4) Amazon’s (AMZN) profitability plummets as the company continues its “aggressive investment” in shipping and fulfillment, particularly internationally, while continuing the build-out of AWS salesforce.
  • 5) Maturing growth rates and large cash piles may see Google, Facebook (FB), and Booking.com (BKNG) become dividend payers in the internet sector.
  • 6) Spotify (SPOT) gross margins may expand as the company concludes its music label negotiations.
 EU ruling against Google seen as win for Amazon, Apple, Stockwinners
Google may pay a dividend, Stockwinners

RBC Capital Markets is a global investment bank providing services in banking, finance and capital markets to corporations, institutional investors, asset managers and governments globally. Locations span 70 offices in 15 countries across North America, the UK, Europe and the Asia-Pacific region. 

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Shape Security sold for $1B

F5 Networks to acquire Shape Security for approximately $1B in cash

F5 Networks (FFIV) and Shape Security announced a definitive agreement under which F5 will acquire all issued and outstanding shares of the privately held Shape for a total enterprise value of approximately $1B in cash, subject to certain adjustments.

F5 Networks purchases Shape Security, Stockwinners

Shape protects the largest banks, airlines, retailers, and government agencies with sophisticated bot, fraud, and abuse defense.

In particular, Shape defends against credential stuffing attacks, where cybercriminals use stolen passwords from third-party data breaches to take over other online accounts.

Shape has built an advanced platform, utilizing artificial intelligence and machine learning, supported by powerful cloud-based analytics to protect against attacks that bypass other security and fraud controls.

Shape Security sold for $1B, Stockwinners

Upon closing of the acquisition, Derek Smith, and the leadership team will join F5 in key management roles.

Shape will remain located in their current Santa Clara headquarters.

The acquisition of Shape is consistent with F5’s vision to build the best end-to-end multi-cloud application services company. It accelerates F5’s product and total revenue growth; speeds F5’s transition to a software- and SaaS-driven business model; and is expected to meaningfully increase F5’s software subscription mix in fiscal year 2020.

F5 expects to achieve breakeven non-GAAP EPS within 24 months of closing the acquisition and anticipates that the combination will be accretive to free cash flow per share within 12 months of closing.

F5 expects to fund the transaction through cash on its balance sheet and $400M in a Senior Unsecured Term Loan A. The acquisition has been approved by the boards of directors of both F5 and Shape.

The acquisition is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first calendar quarter of 2020.

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Cision sold for $10 per share

Cision to be acquired by Platinum Equity affiliate in deal valued at $2.74B

Cision (CISN) announced that it has entered into a definitive agreement to be acquired by an affiliate of Platinum Equity in an all cash transaction valued at approximately $2.74B.

Cision sold for $2.74B, Stockwinners

Under the terms of the agreement, which has been unanimously approved by the members of Cision Ltd.’s board of directors, an affiliate of Platinum Equity will acquire all of the outstanding ordinary shares of Cision Ltd. for $10.00 per share in cash.

The purchase price represents a 34% premium over Cision Ltd.’s 60-day volume-weighted average price ended on October 21, 2019.

A special meeting of Cision Ltd.’s shareholders will be held as soon as practicable following the filing of a definitive proxy statement with the U.S. Securities and Exchange Commission (“SEC”) and subsequent mailing to its shareholders.

Certain affiliates of GTCR, collectively holding approximately 34% of the outstanding shares of Cision Ltd., have entered into a voting agreement committing them to, among other things, vote in favor of adopting the acquisition agreement.

The proposed transaction is expected to close in the first quarter of 2020 and is subject to approval by Cision Ltd.’s shareholders, along with the satisfaction of customary closing conditions and antitrust regulatory approvals, as necessary.

Cision Ltd. provides public relations (PR) software, media distribution, media intelligence, and related professional services to businesses worldwide. The company enables public relations and communications professionals to manage, execute, and measure their strategic PR and communications programs.

Upon completion of the acquisition, Cision Ltd. will become wholly owned by an affiliate of Platinum Equity.

Cision Ltd. may solicit alternative acquisition proposals from third parties during a “go-shop” period from the date of the agreement until November 12, 2019.

There is no guarantee that this process will result in a superior proposal, and the agreement provides Platinum Equity with a customary right to match a superior proposal and termination fee if a superior proposal is accepted.

Cision Ltd. does not intend to disclose developments with respect to the solicitation process unless and until the company determines such disclosure is appropriate.

“This transaction will provide shareholders with immediate and substantial cash value, while also providing us with a partner that shares in our commitment to customers and employees and can add strategic and operational value,” said Kevin Akeroyd, Cision’s CEO.

“Based on our extensive engagement with Platinum over the past several months, we are confident that Platinum’s support will enable Cision to execute on its strategy and next phase of growth.”

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Netflix, a battle of bulls and bears!

Netflix lost more than $18 billion in market capitalization in 2 days

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more
Netflix subscribers grew less than expected. Stockwinners

On Wednesday, Netflix (NFLX) reported 2nd Quarter June 2019 earnings of $0.60 per share on revenue of $4.9 billion. The consensus earnings estimate was $0.56 per share on revenue of $4.9 billion. Revenue grew 26.0% on a year-over-year basis.

The company said in its shareholders letter it expects third quarter earnings of approximately $1.04 per share on revenue of approximately $5.25 billion. The current consensus earnings estimate is $1.04 per share on revenue of $5.25 billion for the quarter ending September 30, 2019.

Bears vs Bulls, Stockwinners

The company saw its first loss in US subscribers last quarter, and a 2.7 million paid customers added globally, nearly half of what was forecast.

Competition

At the same time, the company is facing a steeper path than ever in the United States. Netflix lost subscribers this quarter for the first time in years, a combination of the price hike and a content loss. As the US market becomes oversaturated with streaming services — with WarnerMedia, Disney, and Apple all launching streaming services — the only way to ensure growth is going outside the United States. Netflix currently has 60 million paying domestic subscribers, and company believes they can get to 90 million, but the risk of market saturation is real, and raises difficult questions for the company’s content strategy.

BMO Capital

BMO Capital analyst Daniel Salmon lowered his price target on Netflix (NFLX) to $440 after its reported shortfall on subscriber addition in Q2, which he expects to “fuel the debate” about the company’s pricing power and the role of new content. Given the sequential decline in its U.S. markets and the approaching launch of Disney+ (DIS), the analyst contends that this may be a “more than just the usual” earnings-miss driven debate. Longer term however, Salmon believes that the company’s revenue trend remains on track, keeping his Outperform rating on the stock and recommending Netflix, Amazon (AMZN), and Disney as a “collective investment” in the global streaming race.

Credit Suisse

Credit Suisse analyst Douglas Mitchelson lowered his price target for Netflix to $440 from $450 after the company posted its worst subscriber miss ever, short by 2.3M net adds, while revenue was in line and EBIT well ahead. The analyst reiterates an Outperform rating on the shares.

Disney to end Netflix distribution agreement in 2019. See Stockwinners.com Market Radar for details
Disney ended Netflix distribution agreement this year. See Stockwinners.com

Deutsche Bank

Deutsche Bank analyst Bryan Kraft views post-earnings selloff in shares of Netflix as a buying opportunity. The analyst keeps a Buy rating on the streaming service.

KeyBanc

KeyBanc analyst Andy Hargreaves says that despite soft Q2 results, he believes Netflix retains competitive advantages that should support excellent revenue and profit growth well into the future. The likely decline in the stock price improves the risk/reward, but increased confidence in the potential for upside to his estimates is likely needed for a more positive view of the shares, he contends. Hargreaves reiterates a Sector Weight rating on the shares.

WarnerMedia streaming service hurts Netflix, Stockwinners

JPMorgan

JPMorgan analyst Doug Anmuth to $425 from $450 while keeping an Overweight rating on the shares. The Q2 net adds miss was meaningful, but the company’s Q2 results are often volatile and this quarter contained a number of moving pieces, Anmuth tells investors in a research note. Netflix’s back half of the year content slate is strong and the company is seeing significantly better trends quarter-to-date, adds the analyst. History suggests that Q2 is a “difficult quarter from which to extrapolate NFLX’s trajectory,” says Anmuth.

Stifel

Stifel analyst Scott Devitt said Netflix shares may be range bound until the company reports Q3 earnings following its miss in Q2 on its domestic and international paid net sub add guidance. He believes management’s explanations for the current quarter miss “appear reasonable,” though Netflix “will have to prove, as it has done many times, that its value proposition remains one of the best,” Devitt tells investors in a post-earnings research note. Following last night’s report, Devitt lowered his price target on Netflix shares to $400 from $425 and keeps a Buy rating on the stock.

Wedbush

Wedbush analyst Michael Pachter raised his price target for Netflix to $188 from $183, while reiterating an Underperform rating on the shares after the company reported quarterly results. The analyst expects content spending to trigger substantial cash burn for many years, and notwithstanding four Netflix price increases in the last five years, he notes that cash burn continues to grow. Content migration and price hikes could cause a deceleration in subscriber growth, and consistently negative free cash flow makes DCF valuation impossible, he adds.

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Liberty Tax revamps its operations

Liberty Tax to pursue new business model, offering $12 per share for all shares

Liberty Tax to revamp its operations, Stockwinners

Liberty Tax (TAXA), the parent company of Liberty Tax Service, last night announced that it has entered into definitive documentation with affiliates of Vintage Capital Management providing for a series of strategic transactions, including the acquisition by Liberty Tax of all of the outstanding equity interests in Buddy’s Newco, which operates substantially all of the Buddy’s Home Furnishings business.

Liberty Tax’s acquisition of Buddy’s was consummated concurrently with the execution of the definitive documentation.

“These transactions are intended as the first step in a strategic transformation of Liberty Tax.

Under the direction of its board of directors, Liberty Tax intends to evaluate the acquisition of or investment in other franchise-oriented or complementary businesses, including businesses that are not presently subject to franchising arrangements but that have the potential to be franchised in the future.

In recognition of the anticipated shift in its strategic direction, Liberty Tax intends to change its name to Franchise Group.

Liberty Tax will remain a publicly-traded company and intends to pursue a re-listing of its common stock on a national securities exchange,” the company said.

In addition, Liberty Tax intends to promptly commence a tender offer for any and all outstanding shares of common stock at a price of $12.00 per share in cash, representing an approximately 31.5% premium to the closing price of Liberty Tax on May 3, the day before the public announcement regarding a potential transaction between Liberty Tax and Vintage.

The tender offer will be financed through a combination of debt and equity financing. Concurrent with the closing of the acquisition of Buddy’s, Liberty Tax issued to an affiliate of Vintage approximately 2.083M shares of common stock in exchange for $25M in cash, representing a purchase price of $12.00 per share, and Buddy’s borrowed approximately $82M in cash.

Any excess financing proceeds that are not required to finance the tender offer will remain on the balance sheet of Liberty Tax or its subsidiaries.

An affiliate of Vintage has also entered into a binding commitment with Liberty Tax to purchase additional shares of common stock at a purchase price of $12.00 per share in the event that the net proceeds from the equity and debt financings referred to above are not sufficient to enable Liberty Tax to purchase all shares that are validly tendered and not withdrawn in the tender.

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Acacia Communications sold for $2.6B

Cisco to acquire Acacia Communications for $70.00 per share in cash

Acacia Comms tumbles, Stockwinners.com
Acacia Comms. sold to Cisco, Stockwinners.com

Cisco (CSCO) and Acacia Communications (ACIA) announced they have entered into a definitive agreement under which Cisco has agreed to acquire Acacia.

An existing Cisco supplier, Acacia designs and manufactures high-speed, optical interconnect technologies that allow web scale companies, service providers, and data center operators to meet the fast-growing consumer demands for data.

Cisco buys Acacia Comms. at a 47% premium, Stockwinners

Under the terms of the agreement, Cisco has agreed to acquire Acacia for $70.00 per share in cash, or for approximately $2.6B on a fully diluted basis, net of cash and marketable securities.

The acquisition is expected to close during the second half of Cisco’s FY2020, subject to customary closing conditions and required regulatory approvals.

Cisco, whose equipment makes up the backbone of the internet and corporate networks, has recently rekindled growth by revamping existing products and adding new software and services under a corporate makeover by Chief Executive Officer Chuck Robbins. In May, the company gave a bullish sales and profit forecast for the current period, a sign that corporations continue to spend on computer networks despite the trade dispute between China and the U.S.

Bill Gartner, who heads Cisco’s Optical Systems and Optics, wrote that Acacia’s products “are designed to transform communications networks through improvements in performance, capacity and cost.” He added that Acacia’s coherent optics technology will build on Cisco’s strength in optical, silicon, and software technologies.

Upon completion of this transaction, Acacia employees will join Cisco’s Optical Systems and Optics business within the networking and security business under David Goeckeler.

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Barnes & Noble sold for $683M

Barnes & Noble to be acquired by Elliott for $6.50 per share in all cash deal

Barnes & Noble sold for $683M, Stockwinners

Barnes & Noble (BKS) announces that it has entered into a definitive agreement to be acquired by funds advised by Elliott Advisors for $6.50 per share in an all-cash transaction valued at approximately $683M, including the assumption of debt.

Barnes & Noble has faced continued pressure from Amazon and independent booksellers. Its shares had fallen roughly 25% year to date before the news leak. Within the past five years, Barnes & Noble has lost more than $1 billion in market value.

Elliott’s acquisition of Barnes & Noble, the largest retail bookseller in the United States, follows its June 2018 acquisition of Waterstones, the largest retail bookseller in the United Kingdom.

James Daunt, CEO of Waterstones, will assume also the role of CEO of Barnes & Noble following the completion of the transaction and will be based in New York.

The $6.50 per share purchase price represents a 43% premium to the 10-day volume weighted average closing share price of Barnes & Noble’s common stock ended June 5, the day before rumors of a potential transaction were reported in the media.

As a private company, Barnes & Noble will likely be more free to make the changes and investment that can be unwieldy under a public spotlight. Part of the bookseller’s turnaround plan has included closing some of its more than 600 stores across the U.S. and relocating to smaller spaces that receive a fresh and modern look. The company has said its prototype stores encourage shoppers to buy books online or from a tablet.

The retailer has shown small signs of upturn. In March, it reported that over the holidays, sales at locations open for at least a year during the quarter rose 1.1 percent — its best quarterly performance in three years. As of January, it had $15 million in cash and cash equivalents.

The announced transaction with Elliott is the culmination of an extensive Strategic Alternative Review conducted by the Special Committee of the Barnes & Noble board, which was announced on October 3, 2018.

The board of Barnes & Noble unanimously approved the transaction and recommend the transaction to Barnes & Noble shareholders.

Leonard #Riggio, the Founder and Chairman of Barnes & Noble, has also entered into a voting agreement in support of the transaction.

The transaction is subject to customary closing conditions, including the receipt of regulatory and stockholder approval, and is expected to close in Q3.

The merger agreement provides for the acquisition to be consummated through a merger structure. However, the parties expect to amend the agreement to utilize a tender offer structure, which is expected to reduce the time to closing by a number of weeks.

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Zayo Group sold for $35 per share

Zayo Group to be acquired by Digital Colony, EQT in deal valued at $14.3B

Zayo Group Holdings (ZAYO) announced that it has signed a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund.

Zayo sold for $14.3 billion, Stockwinners

The transaction would result in Zayo transitioning from a public company to a private company.

Zayo Group Holdings, Inc. provides bandwidth infrastructure solutions for the communications industry in the United States, Canada, and Europe.

Under the new ownership, the Zayo team would continue to execute the Company’s strategy and remain headquartered in Boulder, Colorado.

Under the terms of the agreement, which was unanimously approved by Zayo’s Board of Directors, shareholders will receive $35.00 in cash per share of Zayo’s common stock in a transaction valued at $14.3 billion, including the assumption of $5.9 billion of Zayo’s net debt obligations.

The offer price represents a 32% premium to the volume-weighted price average of the last six months of $26.44. Dan Caruso, Zayo’s Chairman and CEO, said, “Digital Colony and EQT share our vision that Zayo’s Fiber Fuels Global Innovation.

Both are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fiber infrastructure assets, our highly talented team and our strong customer base. I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership.”

“Following a comprehensive review of strategic alternatives, the Zayo Board of Directors concluded that the sale of Zayo to Digital Colony and EQT Infrastructure is in the best interest of Zayo and all its stakeholders,” said Yancey Spruill, Zayo’s Lead Independent Director. “

The transaction delivers immediate and substantial value to shareholders and will strengthen Zayo’s financial flexibility, enabling the company to increase investments and better position itself for long-term growth and profitability.”

The closing of the deal is subject to customary conditions, including regulatory clearance and Zayo shareholder approvals.

The transaction is expected to close in the first half of calendar 2020.

Goldman Sachs and J.P. Morgan are serving as financial advisors to Zayo Group in connection with the transaction and Skadden Arps is serving as legal counsel.

Morgan Stanley and Deutsche Bank are acting as financial advisors to Digital Colony and EQT Infrastructure, and Simpson Thacher is serving as legal advisor.

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Sinclair scores a homerun!

Sinclair Broadcast to acquire 21 Regional Sports Networks from Disney at valuation of $10.6B


Sinclair Broadcast buys Fox College Sports from Disney, Stockwinners

Sinclair Broadcast (SBGI) and The Walt Disney Company (DIS) announced that they have entered into a definitive agreement under which Sinclair will acquire the equity interests in 21 Regional Sports Networks and Fox College Sports, which were acquired by Disney in its acquisition of Twenty-First Century Fox.

Sinclair scores a home run by this purchase, Stockwinners

The transaction ascribes a total enterprise value to the RSNs equal to $10.6B, reflecting a purchase price of $9.6B, after adjusting for minority equity interests.

That’s far cheaper than the $15 billion to $25 billion range most analysts had predicted Disney could get.

Disney assets do not fetch the price that was expected for the assets, Stockwinners

Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice.

The RSN portfolio, which excludes the YES Network, is the largest collection of RSNs in the marketplace today, with an extensive footprint that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams.

In calendar year 2018, the RSN portfolio delivered a combined $3.8B in revenue across 74M subscribers.

The RSNs will be acquired via a newly formed indirect wholly-owned subsidiary of Sinclair, Diamond Sports Group.

Byron Allen has agreed to become an equity and content partner in a newly formed indirect wholly-owned subsidiary of Sinclair and an indirect parent of Diamond.

Allen, who bought The Weather Channel in 2018, is the Founder, Chairman, and CEO of Entertainment Studios, a global media, content and technology company.

Byron Allen who bought the Weather Channel in 2018 invests in the transaction, Stockwinners

Sinclair expects to capitalize Diamond with $1.4B in cash equity, comprised of a combination of approximately $0.7B of cash on hand and a contribution of $0.7B in the form of new fully committed debt at Sinclair Television Group.

In addition, the purchase price will be funded with $1B of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of Sinclair and direct parent of RSN Holding Company.

The remainder of the purchase price is being funded by $8.2B of fully committed secured and unsecured debt incurred by Diamond.

The transaction will be treated as an asset sale for tax purposes, with Sinclair receiving a full step-up in basis.

The transaction has been unanimously approved by the Board of Directors of both Sinclair and Disney.

In March, Sinclair, Blackstone and Amazon backed the New York Yankees’ $3 billion re-purchase of the 80% of YES Network the team had sold to Fox in 2014. YES Network was the 22nd channel in the former Fox portfolio, and was seen as the crown jewel.

And back in February, Sinclair partnered with the Chicago Cubs to create a new RSN in Chicago, to be called Marquee Sports Network, that will air all local Cubs games beginning in 2020.

Sinclair also own the Tennis Channel, Stockwinners

Sinclair is the largest owner of local television stations (it owns 200) in the country. SBG also owns the Tennis Channel. (It is also a partner in the joint venture sports streaming platform Stadium.) By 2020, it will operate 22 regional sports networks, plus a minority ownership stake in YES.

SBGI closed at $44.95. DIS closed at $134.33.

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Electronics for Imaging sold for $1.7 billion

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

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

EFI sold for $1.7 billion, Stockwinners

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

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

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

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

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

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

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

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

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

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

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Alliance Data sells Epsilon for $4.4 billion

Publicis to acquire Epsilon for $4.40B in cash

Publicis (PUBGY) announced it has entered into an agreement with Alliance Data Systems (ADS) under which Publicis will acquire Alliance Data’s Epsilon business for a net purchase price of $3.95B after tax step-up – total cash consideration of $4.40B – and build a strategic partnership with Alliance Data remaining business.


Publicis to acquire Epsilon for $4.40B in cash , Stockwinners

The acquisition gives Publicis access to Epsilon’s data capabilities. The company says, for example, it has more than 250 million unique consumers identified in the U.S. The company says it can build on top of a client’s first-party data with its own assets, like behavioral and transactional data.

The Directoire, or Management Board, and the Conseil de Surveillance, or Supervisory Board, of Publicis have unanimously approved this transaction.

Alliance Data sells Epsilon for $4.4 billion, Stockwinners

Arthur Sadoun, Chairman and CEO of Publicis, said that, “Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative.”

Edward Heffernan, Alliance Data Systems’ President and CEO, added that, “I’m pleased to say today’s announcement represents a trifecta win for Alliance Data, Epsilon and Publicis Groupe.

The announcement of this transaction represents the culmination of an extensive assessment of strategic options for our Epsilon business.

With this transaction, we have found what we believe to be the right home for Epsilon’s technology, data assets and associates.

Publicis Groupe will be the ideal cultural and strategic fit for Epsilon and its Conversant business, and will help drive Publicis Groupe’s own transformation in today’s data-driven digital world.

Furthermore, the unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward.”

Under the terms of the agreed transaction, Publicis will acquire Epsilon for a cash consideration of $4.40B, representing a net purchase price of $3.95B after deducting the benefit of acquisition-related tax step-up.

This implies an 8.2-times multiple, based on a 2018 Adjusted EBITDA of $485M.

According to Publicis, the transaction will be double digit accretive to its headline EPS and free Cash Flow per share from year one.

Publicis also said that it “remains committed” to its 45% dividend payout ratio and will put on hold its share repurchase program in the context of this acquisition.

The transaction remains subject to customary approvals and is expected to close in Q3 2019.

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Altaba to dissolve itself

Altaba board approves plan of complete liquidation and dissolution

Altaba to dissolve itself, Stockwinners

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

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

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

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

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

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

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

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

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Quantenna sold for $1.07 billion

ON Semiconductor to acquire Quantenna for $24.50 per share

Quantenna sold for $1.07 billion, Stockwinners

ON Semiconductor Corporation (ON) and Quantenna Communications, Inc. (QTNA) announced that they have entered into a definitive agreement for ON Semiconductor to acquire Quantenna for $24.50 per share in an all cash transaction.

The acquisition consideration represents equity value of approximately $1.07B and enterprise value of approximately $936M, after accounting for Quantenna’s net cash of approximately $136M at the end of fourth quarter of 2018.

The acquisition significantly enhances ON Semiconductor’s connectivity portfolio with the addition of Quantenna’s industry leading Wi-Fi technology and software capabilities.

Following consummation, the transaction is expected to be immediately accretive to ON Semiconductor’s non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles.

The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction through cash on hand and available capacity under its existing revolving credit facility.

Completion of the transaction is subject to approval by Quantenna’s stockholders, regulatory approvals and other customary closing conditions.

The transaction has been approved by ON Semiconductor’s and Quantenna’s boards of directors and is expected to close in the second half of 2019.

No approval of the stockholders of ON Semiconductor is required in connection with the proposed transaction.

Note that QNTA was featured by Stockwinners on February 22 at $18.00.

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