Vail Resorts buys Peak Resorts for $11.00 per share

The deal is valued about $170 million

Peak Resorts (SKIS) announced that it has entered into a definitive merger agreement with Vail Resorts, Inc. (MTN) pursuant to which Vail Resorts will acquire all outstanding shares of common stock of Peak Resorts for $11.00 per share in cash.

Vail Resorts to buy Peak Resorts, Stockwinners

The transaction represents a 116% premium to Peak Resorts’ closing stock price on July 19, 2019.

The transaction is expected to close in fall 2019 and is subject to certain conditions, including a vote of Peak Resorts shareholders and antitrust clearance.

Vail Resorts buys Peak Resorts, shares jump. Stockwinners

The transaction was approved by the Boards of Directors of both companies. Peak Resorts’ Board of Directors also recommends that the Company’s shareholders approve the transaction.

Moelis & Company LLC is serving as financial advisor to Peak Resorts. Perkins Coie LLP, Sandberg Phoenix & von Gontard P.C. and Armstrong Teasdale LLP are serving as legal counsel to Peak Resorts.

About the Companies

Peak Resorts, Inc. owns, operates, and leases day and overnight drive ski resorts in the United States. Its resorts activities and amenities include skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction, golf, zip lines, mountain coasters, mountain biking, hiking, paint ball, and other summer activities. It operates 17 ski resorts primarily located in the Northeast, Mid-Atlantic, and Midwest.

Vail Resorts has been on a shopping spree, Stockwinners

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 11 mountain resorts, including Vail Mountain, Breckenridge Ski, Keystone, and Beaver Creek resorts in Colorado; Park City resort in Utah; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in Canada; Stowe Mountain resort in Vermont; and Perisher in Australia, as well as 3 urban ski areas, such as Wilmot Mountain in Wisconsin, Afton Alps in Minnesota, and Mount Brighton in Michigan.

Vail Resorts expands its footprint by purchasing Peak Resorts, Stockwinners

Its resorts offer various winter and summer recreational activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand, and other lodging properties; various condominiums located in proximity to the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 5,400 owned and managed hotel and condominium units.

The Real Estate segment owns, develops, and sells real estate properties in and around the company’s resort communities. 

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Tropicana Entertainment sold for $1.85B

Eldorado Resorts to acquire Tropicana Entertainment in $1.85B transaction 

Tropicana Entertainment sold for $1.85B, Stockwinners
Tropicana Entertainment sold for $1.85B, 

Eldorado Resorts (ERI) announced that it entered into a definitive agreement to acquire Tropicana Entertainment (TPCA) in a cash transaction that is valued at $1.85B.

The definitive agreement provides that Gaming and Leisure Properties (GLPI) will pay $1.21B, excluding taxes and expenses, for substantially all of Tropicana’s real estate and enter into a master lease with Eldorado for the acquired real estate and that Eldorado will fund the remaining $640M of cash consideration payable in the acquisition.

Tropicana Entertainment sold for $1.85B, Stockwinners.com
Tropicana Entertainment sold for $1.85B, 

 

The transaction is expected to be immediately accretive to Eldorado’s free cash flow and diluted earnings per share, inclusive of identified expected cost synergies of approximately $40M in the first year following its completion and when giving effect to the lease transaction described below.

Pursuant to the transaction, GLPI is expected to acquire the real estate associated with the Tropicana property portfolio, except the MontBleu Casino Resort & Spa in South Lake Tahoe and the Tropicana Aruba Resort and Casino.

Following the acquisition of the real estate portfolio by GLPI, Eldorado will enter into a triple net master lease for the acquired properties with an initial term of 15 years, with renewals of up to 20 years at the Eldorado’s option.

The initial annual rent under the terms of the lease is expected to be approximately $110M.

Tropicana intends to dispose of Tropicana Aruba Resort and Casino prior to closing.

Eldorado’s net purchase price after the application of Tropicana’s expected net cash on hand and cash flow generated from operations through closing represents an estimated trailing twelve months EBITDA multiple of approximately 6.6x at closing.

Including the $40M of identified cost synergies, the purchase price multiple is expected to be below 5.0x.

The board of directors of each of Eldorado, GLPI and Tropicana approved the transaction, which is expected to close by the end of 2018, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Eldorado intends to fund the transaction consideration of approximately $640M payable by Eldorado and repay debt outstanding under Tropicana’s credit facility with cash generated from its current operations, proceeds from pending asset sales, Tropicana’s cash on hand, cash flow generated from Tropicana operations through closing and $600M of committed debt financing from J.P. Morgan.


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Wyndham sells its European vacation business rental for $1.3B

Wyndham to sell European vacation rental business to Platinum Equity for $1.3B

 

Wyndham sells its European vacation rental for $1.3B. Stockwinners.com
Wyndham sells its European vacation rental for $1.3B

Wyndham (WYN) announced that it has entered into a definitive agreement for the sale of its European vacation rental business to Platinum Equity for approximately $1.3B.

In conjunction with the sale, the European vacation rental business has entered into a 20-year agreement under which it will pay a royalty fee of 1% of net revenue to Wyndham’s hotel business for the right to use the by Wyndham Vacation Rentals endorser brand.

The European vacation rentals operations will also participate as a redemption partner in the award-winning Wyndham Rewards loyalty program.

Wyndham’s industry-leading European vacation rental business is the largest manager of holiday rentals in Europe, with more than 110,000 units in over 600 destinations in more than 25 countries.

The business operates more than two dozen local brands, including cottages.com, James Villa Holidays, Landal GreenParks, Novasol and Hoseasons.

It generates approximately $750 million in annual revenue and approximately $130 million of EBITDA, including allocated costs.

Wyndham Worldwide originally announced its intent to explore strategic alternatives for its European rental brands in August 2017, in conjunction with the Company’s announcement of the planned separation of its hotel business from its vacation ownership and timeshare exchange businesses.

The transaction is expected to close in the second quarter of 2018, subject to customary closing conditions including works council consultation.


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McDonald’s announces changes to Happy Meals

McDonald’s announces changes to Happy Meals

No more Chocolate Milk or Cheeseburger in Happy Meals

McDonald's announces changes to Happy Meals, Stockwinners.com
McDonald’s announces changes to Happy Meals

McDonald’s (MCD) announced an expanded commitment to families, supporting the company’s long-term global growth plan by leveraging its reach to impact children’s meals, access to reading, and keeping families together through Ronald McDonald House Charities.

By 2022, McDonald’s will make improvements to the Happy Meal menu across 120 markets to offer more balanced meals, simplify ingredients, continue to be transparent with Happy Meal nutrition information, reinforce responsible marketing to children, and leverage innovative marketing to help impact the purchase of foods and beverages that contain recommended food groups in Happy Meals.

Using rigorous nutrition criteria grounded in science and nutrition policy, by the end of 2022, at least 50 percent or more of the Happy Meals listed on menus (restaurant menu boards, primary ordering screen of kiosks and owned mobile ordering applications) in each market will meet McDonald’s new Global Happy Meal Nutrition Criteria of less than or equal to 600 calories; 10 percent of calories from saturated fat; 650mg sodium; and 10 percent of calories from added sugar.

Currently, 28 percent of Happy Meal combinations offered on menu boards in 20 major markets meet these new nutrition criteria.

To reach the goal of 50 percent or more, markets will add new menu offerings, reformulate or remove menu offerings from the Happy Meal section of the menu board.

For example, last month McDonald’s Italy introduced a new Happy Meal entree called the “Junior Chicken,” a lean protein sandwich (grilled chicken).

McDonald’s Australia is currently exploring new vegetable and lean protein options and McDonald’s France is looking at new vegetable offerings.

As consumers’ tastes and preferences continue to evolve, markets will prioritize Happy Meals and simplify ingredients by removing artificial flavors, added colors from artificial sources, and reducing artificial preservatives where feasible.

The company has made a continuous effort to meet consumers’ desire for easy access to nutrition information for menu items it serves with a goal of ensuring that nutrition information for Happy Meals is available and accessible through all McDonald’s owned websites and mobile apps used for ordering where they exist.

Customers in the U.S. will see accelerated changes to the Happy Meal menu this year.

In June 2018, 100 percent of the meal combinations offered on Happy Meal menu boards in the U.S. will be 600 calories or fewer, and 100 percent of those meal combinations will be compliant with the new nutrition criteria for added sugar, saturated fat, and 78 percent compliant with the new sodium criteria. Listing only the following entree choices: Hamburger, 4-piece and 6-piece Chicken McNuggets.

The Cheeseburger will only be available at a customer’s request.

Replacing the small French fries with kids-sized fries in the 6-piece Chicken McNugget meal, which decreases the calories and sodium in the fries serving by half.

Reformulating chocolate milk to reduce the amount of added sugar.

During this period, chocolate milk will no longer be listed on the Happy Meal menu, but will be available at a customer’s request.

Later this year, bottled water will be added as a featured beverage choice on Happy Meal menu boards.

In December 2017, McDonald’s USA completed the transition to Honest Kids Appley Ever After organic juice drink, which has 45 less calories and half the total sugar than the prior 100 percent apple juice served in the U.S. With these planned menu updates, there will be average reductions of 20 percent in calories, 50 percent in added sugars,13 percent in saturated fat and/or 17 percent in sodium, depending on the customer’s specific meal selection.

These reductions reflect the average nutrition data of U.S. Happy Meal offerings on the menu last year compared to those planned for later this year.

Already, several of the Happy Meal combinations available on U.S. menu boards today meet the new nutrition criteria and will not be changing.

MCD closed at $160.00.


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Wyndham acquires La Quinta hotel for $1.95B

Wyndham acquires La Quinta hotel for $1.95B

Wyndham acquires La Quinta hotel for $1.95B. Stockwinners.com
Wyndham acquires La Quinta hotel for $1.95B.

Wyndham Worldwide (WYN) and La Quinta (LQ) announced that they have entered into a definitive agreement under which Wyndham Worldwide will acquire La Quinta’s hotel franchise and hotel management businesses for $1.95B in cash.

The acquisition is expected to close in Q2 of 2018.

Under the terms of the agreement, stockholders of La Quinta will receive $8.40 per share in cash, approximately $1.0 billion in aggregate, and Wyndham Worldwide will repay approximately $715 million of La Quinta debt net of cash and set aside a reserve of $240 million for estimated taxes expected to be incurred in connection with the taxable spin-off of La Quinta’s owned real estate assets into CorePoint Lodging Inc.

Immediately prior to the sale of La Quinta to Wyndham Worldwide, La Quinta will spin off its owned real estate assets into a publicly-traded real estate investment trust, CorePoint Lodging. Wyndham’s Hotel Group is the world’s largest and most diverse hotel business based on number of properties.

With the acquisition of La Quinta’s asset-light, fee-for-service business consisting of nearly 900 managed and franchised hotels, Wyndham Hotel Group will span 21 brands and over 9,000 hotels across more than 75 countries.

The addition of La Quinta, one of the largest midscale brands in the industry, will build upon Wyndham Hotel Group’s strong midscale presence, expand its reach further into the fast-growing upper-midscale segment, and position Wyndham Hotel Group to be the preferred partner and accommodations provider of developers and guests.

The La Quinta Returns loyalty program, with its 13 million enrolled members, will be combined with the award-winning Wyndham Rewards program, with its 53 million enrolled members.

The transaction, which has been approved by the boards of directors of both companies, is expected to close upon the completion of the planned spin-off of La Quinta’s owned real estate assets into the separate entity.

Closing is subject to approval by La Quinta stockholders, regulatory and government approval and the satisfaction of other customary closing conditions.

La Quinta also announced today that Keith A. Cline has been appointed President and Chief Executive Officer of CorePoint Lodging effective upon completion of the planned spin-off.

Wyndham Worldwide’s planned spin-off of Wyndham Hotel Group remains on track for an expected distribution in the second quarter of 2018.

LQ closed at $19.45. WYN closed at $117.13.


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Pinnacle Entertainment sold for $2.8 billion

Pinnacle Entertainment sold for $32.47 per share

 Penn National to acquire Pinnacle Entertainment in deal valued at $2.8B. Stockwinners
Penn National to acquire Pinnacle Entertainment in deal valued at $2.8B

Penn National Gaming (PENN) and Pinnacle Entertainment (PNK) announced that they have entered into a definitive agreement under which Penn National will acquire Pinnacle in a cash and stock transaction valued at approximately $2.8B.

Under the terms of the agreement, Pinnacle shareholders will receive $20.00 in cash and 0.42 shares of Penn National common stock for each Pinnacle share, which implies a total purchase price of $32.47 per Pinnacle share based on Penn National’s closing price on December 15, 2017.

The transaction reflects a 36% premium for Pinnacle shareholders based on Pinnacle’s closing price of $21.86 and Penn National’s closing price of $22.91 on October 4, 2017.

The transaction has been approved by the boards of directors of both companies and is expected to close in the second half of 2018.

Pinnacle owns and operates 16 gaming and entertainment facilities in 11 jurisdictions across the United States.

Following the acquisition of Pinnacle and the planned divestiture of four of its properties to Boyd Gaming (BYD) , Penn National will have significantly greater operational and geographic diversity and operate a combined 41 properties in 20 jurisdictions throughout North America.

The transaction is expected to generate $100M in annual run-rate cost synergies following integration and is anticipated to be immediately accretive to free cash flow in the first year. Pro forma for the divestitures and synergies, the acquisition reflects a multiple of 6.6x LTM EBITDA.

Gaming and Leisure Properties (GLPI), the landlord for Penn National and Pinnacle under their respective master lease agreements, has entered into an agreement to amend the terms of the Pinnacle master lease to permit the divestitures.

In connection with the transaction, Penn National, GLPI and Boyd have agreed to the following:

Penn National and GLPI will enter into a sale and leaseback of the real estate associated with Belterra Park and Plainridge Park Casino for approximately $315M.

An amendment to the terms of the Pinnacle master lease following closing of the merger to reflect an annual fixed rent payment of $25M for Plainridge Park Casino and $13.9M in incremental annual rent to adjust to market conditions.

At closing, GLPI and Boyd will enter into a master lease agreement for the divestitures pursuant to which Boyd will lease the divested real property from GLPI.

Penn National will assume the existing master lease and Pinnacle’s existing lease for the Meadows Casino and Racetrack in Pennsylvania. Penn National’s master lease with GLPI will not be affected by this transaction. The companies expect the transaction to close in the second half of 2018.

PNK closed at $30.95.  PENN closed at $29.69.


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Buffalo Wildwing soars on takeover offer

Buffalo Wild Wings receives $2.3 billion offer

Buffalo-Wild-Wings gets $2.3 billion offer. See Stockwinners.com for details

Shares of Buffalo Wild Wings (BWLD) are sharply higher following a Wall Street Journal report saying that private-equity firm Roark Capital Group has made a bid for the company.

According to the report, Roark offered to pay “more than $150 a share,” or more than $2.3 billion, for Buffalo Wild Wings.

Buffalo Wild Wings has faced some trouble over the last year, as the company struggles with high wing costs and declining sales at stores open for at least 15 months.

Activist investors at Marcato Capital Management won several board seats during the summer and are pushing the company to franchise more of its restaurants and improve its technology.

ANALYST  COMMENTS

#Mizuho analyst Jeremy Scott wrote to clients that “we can only speculate as to whether or not this bid was solicited.” But he also thinks the company’s board is likely taking the offer seriously. “We anticipate that the activist refranchising initiative may have faced growing resistance both internally and externally,” he adds.

Wells Fargo analyst Jeff Farmer has “conviction in a potential Roark acquisition,” due to the company’s financial struggles as of late and its “leadership void” — CEO Sally Smith announced her resignation on the same day that Marcato won its board seats.

He thinks that there is “modest opportunity for a competing bid” but isn’t sure if one will come around. On one hand, investors might feel that a $150/share bid undervalues the company. But interested bidders might not want to pay much more for Buffalo Wild Wings given falling traffic and weak financials at the chain.

Credit Suisse analyst Jason West says he views the offer as a modest surprise given the latter’s negative same store sales and margins trends in recent years. The analyst reiterates a Neutral rating on Buffalo Wild Wings’ shares.

Maxim analyst Stephen Anderson notes yesterday’s press speculation of a bid for Buffalo Wild Wings from Roark Capital, saying that while the $150/share price is “plausible”, there is potential for a competing bid given the company-specific initiatives to cut expenses and an improving food cost climate.

Anderson says that despite the industry headwinds and the pending exit of CEO Sally Smith, the company is laying the groundwork for a return to SSS growth, margin expansion, and increased shareholder returns.

The analyst also says the recent decline in spot wing costs, already down 15% since summer end, will add to EPS next year. Anderson keeps his Buy rating and $160 price target on Buffalo Wild Wings.

Stifel analyst Chris O’Cull said he thinks Roark could be a credible buyer given its success with several restaurant investments, including Wingstop, and that BWW could be a willing seller given Marcato’s involvement and the company’s recent struggles defining a clear vision for improving shareholder value. O’Cull has a Hold rating and $115 price target on Buffalo Wild Wings shares.

BWLD closed at $117.25. It last traded at $148.40.


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Barron’s is bullish on biotechs, Target

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

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

BULLISH  MENTIONS

Local Chinese consumer plays to have significant advantages – China’s 19th Communist Party Congress gave expanded powers to President Xi Jinping to wield in a second five-year term as the country’s leader, endorsing the continued shift of China’s economy toward domestically focused consumer goods and services, which should be bullish for stocks such as Alibaba (BABA) and China Life Insurance (LFC), John Kimelman and Assif Shameen write in this week’s edition of Barron’s. Meanwhile, U.S. companies with footholds in the country’s consumer markets can expect to face regulatory and other roadblocks in the years ahead, they add.

Biotech selloff creates buying opportunity for investors – Biotech companies are not looking that healthy, with Amgen (AMGN), Biogen (BIIB), Celgene (CELG), and Gilead Sciences (GILD) all offering disappointments of one kind or another, but the selloff has created a buying opportunity for investors, Ben Levisohn writes in this week’s edition of Barron’s. Biotech looks like a victim of high expectations and could be ready to run again, he adds.

Tech giants continue to exploit their dominance – The latest earnings, particularly from Amazon.com (AMZN), Alphabet (GOOGL; GOOG), and Microsoft (MSFT), show that tech giants continue to exploit their dominance to Wall Street’s amazement, Tiernan Ray writes in this week’s edition of Barron’s. All three are examples of network effects, the ability of a business to exploit its position in a kind of virtuous cycle, and the payoff continues to astound Wall Street, he adds, noting that Apple (AAPL) is expected to report earnings this Thursday.

Playing double-up strategy with GE worth considering – General Electric (GE) stock is down 34% this year and seems poised to trade even lower amid fears that it may cut its dividend, Steven Sears writes in this week’s edition of Barron’s. While Sears has profitably recommended wagering against the stock since May, and still thinks bearish trades make sense, he recognizes that many investors feel stuck with their GE holdings and are not sure what to do. The “humble double-up strategy” is worth considering for anyone who wants to maintain ownership of the stock, and also realize a tax loss, he argues.

Target shares could return up to 30% amid renovation – Target’s (TGT) missteps have cost the company $15B in stock-market value over the past three years, Vito Racanelli writes in this week’s edition of Barron’s. The retailer is now remodeling stores, cutting costs and ramping up its online business to combat Amazon (AMZN), and store traffic and earnings look poised to rise in coming years, which could lead to an upward revaluation of the shares, he adds.

May be ‘lots to be gained’ from CVS/Aetna possible tie-up – In a follow-up story, Barron’s says that while CVS Health (CVS) shares were under pressure following a report by The Wall Street Journal saying the company and Aetna (AET) were in talks, there is “lots to be gained from a tie-up.” By securing better drug pricing from CVS than it gets now, Aetna stands to win more health-plan customers, and it can send many of them to CVS for drugs but also for care, the report explains, adding that the deal would help transform CVS into a company that also profits from health outcomes. Further, Barron’s argues that it could help protect it from future changes in health-care law, and from losing sales to Amazon (AMZN).

Enterprise Products Partners promises growth, income – Enterprise Product Partners (EPD) is a leader among U.S. energy master limited partnerships but its units are depressed like those of many peers, with investors worrying about slowing growth, competitive pressures, weak energy prices and cuts or moderating gains in distributions, Andre Bary writes in this week’s edition of Barron’s. However, he argues that compared with other MLPs, Enterprise has better corporate governance and a stronger sheet, offering an “enticing yield” of nearly 7% and a good growth outlook that investors should see as a “winning combination.”

Apple iPhone X may be catalyst for Sony – Long ago considered a rival of sorts for Apple (AAPL), Sony (SNE) has instead emerged as one of its key suppliers, but its stock is up just 10% over the past six months, while other suppliers have seen their shares almost double in the same period, Assif Shameen writes in this week’s edition of Barron’s. Sony supplies iPhone X’s12-megapixel camera, as well as state-of-the-art 3-D sensors designed to boost iPhone’s Face ID and augmented-reality capabilities, he adds, noting that Jefferies analyst Atul Goyal believes these attributes merit a re-rating for the shares, which he thinks can rise at least 40%.

Shire bear case may be too extreme – While Shire (SHPG) has struggled against generic pressures and rising competition, the bear case may be too extreme, Victor Reklaitis writes in this week’s edition of Barron’s.


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MoviePass membership jumps

Helios and Matheson jumps as MoviePass exceeds initial projections

Helios and Matheson jumps as MoviePass exceeds initial projections. See Stockwinners.com for details

Shares of Helios and Matheson Analytics (HMNY) jumped in Tuesday’s  trading after the company said its MoviePass theater subscription services surpassed over 600,000 paying monthly subscribers this month.

MOVIEPASS EXCEEDING PROJECTIONS

Helios and Matheson, a majority owner of MoviePass, said this morning that the subscriber base for the movie theater subscription service surpassed 600,000 paying monthly subscribers as of October 18, compared to about 20,000 as of August 14.

The company said the continued growth has exceeded initial expectations.

The company also said that its subscriber churn rate has been shrinking, to 2.4% in month two from 4.2% in month one.

Based on current churn rates, MoviePass said monthly subscriber retention is above 96% and average paying monthly subscriber life expectancy is 46.8 months.

“Month after month we aim to improve our service with faster card delivery, improved application updates, and an easier-to-use web site. We believe our strategy is paying off in terms of increased satisfaction, reduced churn, and faster growth,” MoviePass CEO Mitch Lowe said in a statement.

“When you apply computer science and machine learning to an industry that we believe has lacked significant innovation, useful patterns start to emerge,” said Helios and Matheson Chairman and CEO Ted Farnsworth.

WHAT’S NOTABLE

On August 15, Helios and Matheson announced that it had entered into a definitive agreement to acquire a majority stake of MoviePass, which is led by Lowe, a Netflix (NFLX) co-founder and former Redbox president.

Helios and Matheson also introduced a new monthly movie ticket subscription of $9.95, allowing customers to get into one showing every day at any theater in the U.S. that accepts debit cards for about the price of a single ticket each month.

The following month, MoviePass subscribers rose to over 400,000 from less than 20,000.

Earlier this month, Helios and Matheson increased its ownership stake in MoviePass to 53.71% from 53%. Helios and Matheson Analytics shareholders still have to approve the company’s purchase of its majority stake in MoviePass.

Following the price cut to $9.95, MoviePass said its website was overwhelmed by the volume of traffic from interested customers, forcing some theatergoers to wait almost a month before their passes arrived in the mail. At the time, Lowe said he “totally underestimated demand,” but the company boosted its team to 35 to deal with the backlog.

CITRON, STREET SWEEPER CAUTIOUS

Some are cautious on Helios and Matheson as shares have jumped over 1000% since announcing the acquisition of a majority stake in MoviePass.

Citron Research tweeted on October 11 that Helios and Matheson’s stock will “trade back to $20 Retail investors are warned. You might like product but $1+bill it isn’t. Giving away $1 for .90 no biz.”

A day later, Citron tweeted that “Don’t like to stay short companies that are expected to lose money high borrow $ hit tgt price in one day. all timing.” Helios and Matheson has also been mentioned cautiously by TheStreetSweeper.

PRICE ACTION

Helios and Matheson, while off earlier highs, is still up about 2% to $13.56.


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RXBAR sold for $600 million

Kellogg to acquire protein bar brand RXBAR for $600M

Kellogg to acquire protein bar brand RXBAR for $600M. See Stockwinners.com for details

Kellogg (K) shares are higher after the food maker announced it would acquire protein bar brand RXBAR for $600M.

WHAT’S NEW

Kellogg said in a statement this morning that it has agreed to acquire Chicago Bar Company, maker of RXBAR, a line of clean-label protein bars made with a base of egg whites, fruit and nuts.

The company also recently launched RXBAR Kids, which contain the same core ingredients as RXBARs, but in kid-friendly flavors and portions.

Kellogg said RXBAR will continue to operate independently as a standalone business, and will be able to leverage Kellogg’s scale and resources to continue driving its growth.

FINANCIAL TERMS

The purchase price of the acquisition, which is expected to close by year-end, is $600M, or approximately $400M net of tax benefits.

RXBAR’s net sales are expected to be approximately $120M in 2017 and Kellogg expects the multiple on projected 2018 EBITDA to be in the range of 12-14x, inclusive of the tax benefits to the purchase price. Excluding one-time costs, the acquisition is expected to be immaterial to EPS in 2017 and 2018.

“EXCELLENT STRATEGIC FIT”

Kellogg CEO Steve #Cahillane commented that “RXBAR is a unique and innovative company. Its values, people and cutting-edge approach represent an exciting opportunity for our business. Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering. #RXBAR is an excellent strategic fit for Kellogg as we pivot to growth.

With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends.

Kellogg and other processed food makers have been dealing with weak sales amid a growing preference by consumers for healthier foods, and has been making changes to its offerings by removing artificial ingredients and introducing healthier foods.

Several of Kellogg’s peers have also been buying healthier brands, including Conagra (CAG), which recently acquired Angie’s Artisan Treats, and Campbell Soup (CPB), which previously said it would buy organic soup maker Pacific Foods.


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Barron’s is bullish on Applied Materials and Expedia

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

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

BULLISH  MENTIONS

Applied Materials, TSMC among ‘heroes’ of AI – Shares of Applied Materials (AMAT), the largest vendor of tools to Intel (INTC) and others, and TSMC (TSM), the largest contract manufacturer of circuits, which serves chip vendors such as Nvidia (NVDA) seem a good bet for the foreseeable future as computer-chip technology enters a bold new phase, Tiernan Ray writes in this week’s edition of Barron’s.

General Dynamics most promising amid corporate aircraft comeback – The business-jet market is showing signs of a comeback and the plane maker that offers the most promise to investors appears to be General Dynamics (GD), whose Gulfstream models are among the most popular corporate jets, Lawrence Strauss writes in this week’s edition of Barron’s.

First Solar to benefit from potential aggressive tariff hike – Cheap imported solar cells have fueled an alternative-energy boom in the U.S., but now President Donald Trump is considering tariffs that could slow the flow of foreign cells, Avi Salzman and Bill Alpert write in this week’s edition of Barron’s. If the White House pushes ahead with an aggressive tariff hike, the major beneficiary would be First Solar (FSLR), the U.S. industry leader, whose products would become cheaper than those sold by foreign competitors, while residential solar firms such as Sunrun (RUN) would be hurt, as they would no longer have access to cheap cells, they added.

Expedia still has room to rise – In a follow-up story, Barron’s says that Expedia’s HomeAway is starting to look like a “home run” as it is contributing a hefty portion of overall growth. That bodes well for Expedia (EXPE) stock, the publication notes, adding that a double-digit return seems likely over the next year.

Senate Health funding helps Thermo Fisher – In a follow-up story, Barron’s says that by blocking President Trump’s proposed research funding cuts, the Senate helps Thermo Fisher’s (TMO) key market.

Target lifts pay as retailers bid for workers in tight market – In a follow-up story, Barron’s notes that with the jobless rate at a 16-year low, it could be challenging for retailers to find sufficient holiday sales help this year. As retailers bid for workers in a tight labor market, Target (TGT) followed Wal-Mart (WMT) in lifting hourly pay, the publication noted.

BEARISH MENTIONS

Competition may be coming after Tesla – While electric vehicles currently sell for about $8,000 more than gas guzzlers, they will be cheaper than traditional cars by the early to mid-2020s, Emily Bary writes in this week’s edition of Barron’s, citing Cowen analyst Jeffrey Osborne. The increasing affordability of electric vehicles may not be good news for Tesla (TSLA), as rivals may see it as an incentive to take the space seriously, Bary adds


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Barron’s is bullish on Oracle, bearish on Six Flags

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

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BULLISH  MENTIONS

Gene therapy may be nearing ‘major breakthrough.’  – Gene therapy is rapidly emerging as one of the most exciting areas in biotechnology, and generating new hope for patients with rare and often deadly inherited diseases, Andre Bary writes in this week’s edition of Barron’s. The first regulatory approval for replacement gene therapy could come as soon as January, if the FDA gives the go-ahead to Spark Therapeutics (ONCE) for its one-time treatment that targets a rare, inherited retinal condition leading to blindness, he adds. Other publicly traded companies developing treatments in this area include AveXis’ (AVXS), Regenxbio (RGNX), Audentes Therapeutics (BOLD), and Voyager Therapeutics (VYGR).

Key events may create ‘short squeeze’ in GoPro stock.  GoPro (GPRO), a heavily shorted stock, could be the object of “one of the most interesting trades in the options market,” Steven Sears writes in this week’s edition of Barron’s. Options on the shares are relatively inexpensive ahead of key events that may create a short squeeze in the stock, he argues, adding that a recommended upside call trade that expires in January could produce “extraordinary profits” if that happens.

Oracle shares could return 20% in a year. – Oracle (ORCL) is a latecomer to the cloud, but the company’s revenue from that business has been growing quickly from a small base, and shares have responded, Jack Hough writes in this week’s edition of Barron’s. At a recent $48, shares look like “a good deal,” he argues, adding that they could return 20% in a year.

Xilinx, Synopsys are ‘rising stars’ amid natural evolution of AI. – As everyday items get “smart,” the technology around artificial intelligence gets more real, Tiernan Ray writes in this week’s edition of Barron’s, adding that the “rising stars” in this natural evolution of AI include Xilinx (XLNX), Synopsys (SNPS), and Cadence Design (CDNS).

BEARISH  MENTIONS

iRobot suffering after onslaught of SharkNinja cheaper models. – In a follow up story, Barron’s notes that as it warned in July, iRobot’s (IRBT) Roomba robot vacuum now has a “formidable” new rival, with the recent introduction of cheaper products from SharkNinja. While IRobot has maintained a commanding share of the product category it pioneered, aggressive marketing, broad sales distribution, and value-priced products have quickly won SharkNinja a hunk of the market for conventional vacuum cleaners, the publication adds.

Six Flags may have peaked– Investors have had an incredible ride with theme-park operator Six Flags (SIX), with shares climbing sixfold since it exited bankruptcy in 2010, Bill Alpert writes in this week’s edition of Barron’s. However, “every ride ends,” and with the number of individuals coming to the parks flat for years, upside looks limited.

Major aircraft makers, suppliers face off – While United Technologies (UTX) proposed $30B acquisition of Rockwell Collins (COL) is not a done deal, its aggressive expansion strategy illustrates trends unfolding in the industry, namely a shift in traditional turf boundaries, Lawrence Strauss writes in this week’s edition of Barron’s. This is just the latest in a spate of recent M&A deals that illustrate a battle between major commercial aircraft manufacturers, namely Boeing (BA) and Airbus (EADSY), and some of their suppliers, he argues, pointing out that there is “lots of maneuvering” to see who will dominate the lucrative business of being an aerospace hardware and service provider.


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Bob Evans Sold for $1.5 billion

Post Holdings to acquire Bob Evans for $77.00 per share

Post Holdings to acquire Bob Evans for $77.00 per share. See Stockwinners.com for details

Post Holdings (POST) and Bob Evans Farms (BOBE) announced that they have entered into a definitive agreement in which Post will acquire Bob Evans for $77.00 per share.

The highly complementary combination will significantly strengthen Post’s portfolio of brands, expand choices for customers and increase Post’s presence in higher growth categories of the packaged food market.

The addition of Bob Evans’ highly complementary portfolio of brands and products will meaningfully enhance Post’s refrigerated side dish offering, provide Post with a presence in breakfast sausage and will immediately provide Post with a leading position in the higher growth perimeter of the store.

The combination with Bob Evans will also strengthen Post’s presence in commercial foodservice, create opportunities for future growth and enhance Post’s position as one of North America’s largest packaged food companies.

The transaction, which was approved by the boards of both companies, is expected to be completed in the first calendar quarter of 2018, Post’s Q2 of fiscal year 2018, subject to customary closing conditions including the expiration of waiting periods under U.S. antitrust laws and approval of Bob Evans’ stockholders.

The equity value of the transaction is approximately $1.5 billion.

The acquisition purchase price represents a 15% premium on the 30 day volume weighted average price of Bob Evans shares.

Post expects to finance the purchase with cash on hand and through borrowings under Post’s existing revolving credit facility. Bob Evans will continue its dividend payments in the ordinary course of business pending closing.

Post management expects Bob Evans to contribute approximately $107 million of adjusted EBITDA on an annual basis, which is the midpoint of Bob Evans’ current fiscal year 2018 adjusted EBITDA outlook.

This outlook is before the realization of cost synergies which Post management expects to be approximately $25 annually by the third full fiscal year post-closing, resulting from benefits of scale, shared administrative services and infrastructure optimization.

One-time costs to achieve synergies are estimated to be approximately $25M.

The transaction is expected to be immediately accretive to Post’s top-line growth, Adjusted EBITDA margins and free cash flow, excluding one-time transaction expenses.


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Barron’s is Bullish on Carlyle Group, Bearish on Nike

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

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BULLISH  MENTIONS

Altaba could reward investors ‘nicely’  – Alibaba (BABA) is having a stellar year and a cheap way to play it is through Altaba (AABA), whose 15% stake in Alibaba is valued at $65B, Andrew Bary writes in this week’s edition of Barron’s. While Altaba shares are up 65% this year on Alibaba’s big gains, it trades at a 30% discount to the value of the company’s assets, the publication adds’

New Apple Watch may threaten telecoms – As the world awaits the 10th-anniversary iPhone, the real news may be buried within a redesigned Apple Watch 3, Tiernan Ray writes in this week’s edition of Barron’s. Apple (AAPL) has said that the next smartwatch will gain the ability to dial up the internet wirelessly even when not connected to an iPhone, the publication notes, adding that the new Apple Watch will probably make use of an embedded SIM. Apple already allows people using its iPad tablet to select which wireless carrier they want on a month-by-month basis, and Apple Watch will allow the same, signaling that Apple may want to take more control of the mobile subscriber, Tiernan says.

Carlyle Group may be ‘best deal’ in private equity – Carlyle Group (CG) is one of the world’s largest private-equity managers, with $170B in assets under management spread over six continents, but has had a much lower profile with investors, with its units fallen 24% over the past five years, Jack Willoughby writes in this week’s edition of Barron’s. Carlyle has finally put its hedge fund woes behind it and expects a big jump in earnings, Willoughby notes, while questioning if the stock price can double.

Texas Instruments, CVS Health worth a look for income investors.  Barron’s has looked for firms with the highest dividend-safety rankings that yield at least 2% and have market caps above $25B. The top five finishers based on those criteria were Texas Instruments (TXN), CVS Health (CVS), PNC Financial (PNC), Sysco (SYY) and Medtronic (MDT), Lawrence Strauss writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Nike could fall another 10% – As Adidas (ADDYY) picks up the pace, Nike (NKE) is losing ground in the sneaker race, and its stumbling stock could fall another 10% or more in the coming year, Jack Hough writes in this week’s edition of Barron’s. Hough argues that Nike’s problem is twofold, namely the growth of e-commerce which has rattled Nike’s retail partners, including Foot Locker (FL), and Adidas that seems to have finally figured out how to sell sneakers in the U.S.


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Disney Tumbles on guidance, streaming service, and Irma

Disney slides after CEO comments on guidance, streaming service

This blog was updated with Disney World Closure Information

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

During Bank of America Merrill Lynch’s Media, Communications & Entertainment Conference, Disney (DIS) CEO Bob Iger said that he expects the company’s 2017 earnings per share to be roughly in line with last fiscal year, sending the stock into negative territory.

The executive also said Marvel and Star Wars will go exclusively to the company’s upcoming streaming service.

GUIDANCE

Disney CEO Bob Iger expects the company’s fiscal year 2017 earnings per share to be roughly in line with last fiscal year.

In 2016, Disney reported adjusted earnings per share of $5.72, according to Bloomberg data. The consensus estimate for 2017 prior to Iger’s comments today was for 2017 earnings per share of $5.88, according to First Call.

“I think you have to look at the year as being roughly in line with an EPS basis that we delivered in fiscal ’16, and that’s for a few reasons, some, by the way, very topical. We mentioned all the way at the beginning of the year the impact of the NBA, big growth in cost to ESPN on the rights front. We also did not have a big Star Wars movie. […]

HURRICANE  IRMA

In addition to that, we have had some impact already from Hurricane Irma. There, we’ve seen cancellations in Orlando, and we’ve also had to cancel three cruise itineraries and shorten a couple of others. Lastly, there will be some expense us in fiscal ’17 that are tied to the BAMTech acquisition,” the executive said during the media conference.

[youtube https://www.youtube.com/watch?v=Ki6q5KaGqrA?rel=0&controls=0&w=560&h=315]

Walt Disney World to close from Saturday until Tuesday or later – Walt Disney World will begin closing its theme parks from Saturday September 9 and “hopes” to resume normal operations on Tuesday September 12, the company stated in an update on Hurricane Irma posted to its website. 

DISNEY STREAMING SERVICE

During the presentation, CEO Bob Iger also said that Marvel and Star Wars titles will go exclusively to the new Disney streaming platform, a service that is set to launch in late 2019.

“We’re going to launch it in late 2019. We’re doing that for two reasons. First of all, as we exit the Netflix (NFLX) output deal, we don’t get access to our theatrical release movies until the beginning of ’19.  Secondly, we wanted time to actually develop and build up original programming for the platform. So late ’19, we’ll launch a Disney-branded service.

It will have — it will be the output distributor for the theatrical release movies. […] We’ve now decided that we will put the Marvel and Star Wars movies on this app as well. So it will have the entire output of the studio: animation, live action, Disney including Pixar, Star Wars and all the Marvel films,” he explained.

Additionally, it will also have four to five original Disney series as well as three to four exclusive Disney movies. “We are going to make less costly movies that are going to be on our proprietary service,” he said.

ESPN

Discussing the company’s ESPN sports network, Iger pointed out that he expects its own streaming service to launch sometime in the Spring, and that ultimately each user will be able to choose the events and sports he wants to watch.

“We will launch with 10,000 live sporting events that are not currently on ESPN’s linear channels. And those will include Major League Baseball, the National Hockey League, MLS, some other tenants and a lot of college in sports that we own the rights to already. […] It will be an ESPN app that exists today. Today, on that ESPN app, you can watch ESPN’s linear channels live authenticated. That will continue to exist. On top of that in the same app, you’ll be able to subscribe to, let’s call it, a plus service. You’ll be able to subscribe to significantly more sports programming than you get just through the linear channels. […] Over time, I think the way you have to look at this is this will be a sports marketplace platform.

You’ll be able to pick and choose over time what it is you want. It won’t necessarily be a one-size-fits-all. We may launch it that way, but the goal eventually is to create something that the sports fan can essentially use to design what their sports media experience can be,” Iger stated.

PRICE ACTION

On Thursday shares of Disney dropped about 4.4% to $97.06, while Netflix’s stock closed fractionally lower to $179.00.


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