Netflix provides update on sharing guidelines as 100M households share accounts
In an “update on sharing,” Netflix (NFLX) said that,
“Today, over 100 million households are sharing accounts – impacting our ability to invest in great new TV and films.
So over the last year, we’ve been exploring different approaches to address this issue in Latin America, and we’re now ready to roll them out more broadly in the coming months, starting today in Canada, New Zealand, Portugal and Spain.
Our focus has been on giving members greater control over who can access their account.
Set primary location: We’ll help members set this up, ensuring that anyone who lives in their household can use their Netflix account.
Manage account access and devices: Members can now easily manage who has access to their account from our new Manage Access and Devices page.
Transfer profile: People using an account can now easily transfer a profile to a new account, which they pay for – keeping their personalized recommendations, viewing history, My List, saved games and more.
Netflix Spain raises prices
Watch while you travel: Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental.
Netflix Canada raises prices
Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with – each with a profile, personalized recommendations, login and password – for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
MaxLinear to acquire Silicon Motion for $114.34 per share consideration
MaxLinear (MXL) and Silicon Motion (SIMO) announced that they have entered into a definitive agreement under which MaxLinear will acquire Silicon Motion in a cash and stock transaction that values the combined company at $8B in enterprise value.
Combined revenues are expected to be more than $2B annually and are supported by the technology breadth to address a total market opportunity of roughly $15B.
The transaction is expected to generate annual run-rate synergies of at least $100M to be realized within 18 months after the transaction closes and is expected to be immediately and materially accretive to MaxLinear’s non-GAAP earnings per share and cash flow.
Under the terms of the definitive agreement, the transaction consideration will consist of $93.54 in cash and 0.388 shares of MaxLinear stock for each Silicon Motion ADS and $23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS.
Upon closing of the transaction, MaxLinear shareholders will own approximately 86% of the combined company and Silicon Motion stockholders will own approximately 14% of the combined company.
Based on the closing price of MaxLinear shares on May 4, the implied value of the total transaction consideration for Silicon Motion is $3.8B. MaxLinear intends to fund the $3.1B of cash consideration with cash on hand from the combined companies and fully committed debt financing from Wells Fargo Bank, N.A.
The transaction is not subject to any financing conditions and is expected to close by the first half of calendar 2023, pending satisfaction of customary closing conditions, including Silicon Motion shareholders’ approval and regulatory approvals in various jurisdictions.
Silicon Motion Technology Corporation designs, develops, and markets NAND flash controllers for solid-state storage devices. It offers controllers for computing-grade solid state drives (SSDs), which are used in PCs and other client devices; enterprise-grade SSDs used in data centers; eMMC and UFS mobile embedded storage for use in smartphones and IoT devices; flash memory cards and flash drives for use in expandable storage; and specialized SSDs that are used in industrial, commercial, and automotive applications.
SIMO last traded $96.52. MXL last traded at $44.26.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Xilinx to be acquired by AMD for $35B in all-stock transaction
AMD (AMD) and Xilinx (XLNX) announced they have entered into a definitive agreement for AMD to acquire Xilinx in an all-stock transaction valued at $35B.
Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction.
Xilinx makes programmable logic devices
Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock. Post-closing, current AMD stockholders will own approximately 74% of the combined company on a fully diluted basis, while Xilinx stockholders will own approximately 26%.
The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
AMD expects to achieve operational efficiencies of approximately $300 million within 18 months of closing the transaction, primarily based on synergies in costs of goods sold, shared infrastructure and through streamlining common areas.
AMD goes shopping taking advantage of Intel’s troubles
The transaction has been unanimously approved by the AMD and Xilinx Boards of Directors.
The acquisition is subject to approval by AMD and Xilinx shareholders, certain regulatory approvals and other customary closing conditions.
The transaction is currently expected to close by the end of calendar year 2021.
Until close, the parties remain separate, independent companies. Dr. Lisa Su will lead the combined company as CEO. Xilinx President and CEO, Victor Peng, will join AMD as president responsible for the Xilinx business and strategic growth initiatives, effective upon closing of the transaction.
In addition, at least two Xilinx directors will join the AMD Board of Directors upon closing.
Xilinx, Inc. designs and develops programmable devices and associated technologies worldwide. The company offers integrated circuits (ICs) in the form of programmable logic devices (PLDs), such as programmable system on chips, and three dimensional ICs; adaptive compute acceleration platform; software design tools to program the PLDs; software development environments and embedded platforms; targeted reference designs; printed circuit boards; and intellectual property (IP) core licenses covering Ethernet, memory controllers, Interlaken, and peripheral component interconnect express interfaces, as well as domain-specific IP in the areas of embedded, digital signal processing and connectivity, and market-specific IP cores. XLNX closed at $114.55.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Sina enters $2.59B ‘Going Private’ transaction with New Wave Holdings
Sina (SINA) announced that it has entered into an agreement and plan of merger with New Wave Holdings and New Wave Merger sub, a wholly owned subsidiary of parent, pursuant to which parent will acquire all of the company’s outstanding ordinary shares not currently owned by parent and its affiliates in an all-cash transaction implying an equity value of the company of approximately $2.59B for all the ordinary shares.
Sina, the Chinese social media company, is taken private
Parent is a wholly owned subsidiary of New Wave MMXV, a British Virgin Islands company controlled by Charles Chao, chairman and CEO of the company.
Pursuant to the merger agreement, at the effective time of the merger, each ordinary share issued and outstanding immediately prior to the effective time will be cancelled and cease to exist in exchange for the right to receive $43.30 in cash per ordinary share without interest, other than shares held by the chairman, New Wave and any of their respective affiliates.
The per share merger consideration represents a premium of approximately 18.1% to the closing price of the company’s ordinary shares on July 2, the last trading day prior to the company’s announcement of its receipt of the preliminary non-binding “going-private” proposal from New Wave on July 6, and premiums of approximately 23.6% and 28.6% to the volume-weighted average traded price of the company’s ordinary shares during the last one month and three months, respectively, prior to and including July 2.
The per share merger consideration also represents an increase of approximately 5.6% over the $41 per ordinary share initially offered in the “going-private” proposal from New Wave.
The merger consideration will be funded through a combination of certain committed term loan facilities obtained by New Wave from China Minsheng Banking and cash contribution by the chairman and New Wave.
The company’s board of directors, acting upon the unanimous recommendation of a committee of independent directors established by the board, approved the merger agreement and the merger and resolved to recommend that the company’s shareholders vote to authorize and approve the merger agreement and the merger.
The merger is currently expected to close during the Q1 of 2021 and is subject to customary closing conditions, including the approval of the merger agreement by the affirmative vote of shareholders representing at least two-thirds of the voting power of the outstanding shares of the company present and voting in person or by proxy at a meeting of the company’s shareholders.
If completed, the merger will result in the company becoming a privately held company and its ordinary shares will no longer be listed on Nasdaq.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Twitter faces FTC fine of up to $250M over alleged misuse of email, phone data
On July 28, 2020, Twitter (TWTR) received a draft complaint from the Federal Trade Commission alleging violations of the company’s 2011 consent order with the FTC and the FTC Act, the company said in a regulatory filing.
Twitter books a $150M charge., Stockwinners
The allegations relate to the company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019.
The company estimates that the range of probable loss in this matter is $150M to $250M and has recorded an accrual of $150M.
The accrual is included in accrued and other current liabilities in the consolidated balance sheet and in general and administrative expenses in the consolidated statements of operations.
FTC complaint relates to misuse of phone number and email addresses
The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.
The company is also currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business.
These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights.
Class Action suits have been filed against Twitter
Legal fees and other costs associated with such actions are expensed as incurred.
The company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies.
Litigation accruals are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable.
Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure.
Twitter used customer phone numbers for marketing purposes, Stockwinners
As of June 30, 2020, except for the referenced class actions, derivative actions and FTC matter, there was no litigation or contingency with at least a reasonable possibility of a material loss.
Except for the aforementioned accrual of $150M recorded in relation to the FTC matter, no other material losses were recorded during the three and six months ended June 30, 2020 and 2019 with respect to litigation or loss contingencies.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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 Eatsto 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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Bitauto enters definitive agreement for going-private transaction
Bitauto (BITA) announced that it has entered into an Agreement and Plan of Merger with Yiche Holding and Yiche Mergersub Limited, a wholly owned Subsidiary of Parent, pursuant to which the company will be acquired by an investor consortium led by Morespark Limited, an affiliate of Tencent Holdings (TCEHY) and Hammer Capital Opportunities Fund L.P. in an all-cash transaction that values the company’s equity at approximately $1.1B.
BitAuto taken private
Pursuant to the Merger Agreement, at the effective time of the Merger, each ordinary share of the company issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist in exchange for the right to receive $16 in cash without interest, and each outstanding American depositary share of the company will be cancelled in exchange for the right to receive $16 in cash without interest, except for
(a) certain Shares owned by affiliates of Tencent, an affiliate of JD.com (JD), and Bin Li, chairman of the board of directors of the company, which will be rolled over in the transaction ,
(b) Shares owned by Parent, Merger Sub, the company or any of their respective subsidiaries,
(c) Shares held by the ADS depositary and reserved for issuance, settlement and allocation upon exercise or vesting of company’s options and/or restricted share unit awards, and
(d) Shares held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 238 of the Companies Law of the Cayman Islands.
The Merger is currently expected to close in the second half of 2020 and is subject to customary closing conditions including the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the company’s shareholders. those dissenting shares in accordance with Section 238 of the Companies Law of the Cayman Islands.
Bitauto Holdings Limited provides internet content and marketing services, and transaction services for the automobile industry in the People’s Republic of China.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
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.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility
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.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Netflix lost more than $18 billion in market capitalization in 2 days
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 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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
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.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
