ModSpace sold for $1.1 billion

Williams Scotsman to acquire ModSpace for approx. $1.1B

ModSpace sold for $1.1 billion, Stockwinners
ModSpace sold for $1.1 billion, Stockwinners

WillScot Corporation (WSC) announced that it has entered into a definitive agreement to acquire Modular Space Holdings, the parent holding company of Modular Space Corporation, for an enterprise value of approximately $1.1B. Williams Scotsman will indirectly acquire MS Holdings for a purchase price comprising $1,063,750,000 of cash consideration, 6,458,500 shares of WSC Class A common stock and warrants to purchase 10,000,000 shares of WSC Class A common stock at an exercise price of $15.50 per share, subject to customary adjustments.

The transaction, which is subject to customary closing conditions, is expected to close in 3Q18.

ModSpace, a privately-owned provider of office trailers, portable storage units and modular buildings, had approximately $1.1B of total assets as of March 31, 2018.

ModSpace generated $453M of total revenue, $18M of net income and $106M of Adjusted EBITDA for the twelve months ended March 31, 2018. Once combined, Williams Scotsman will have over 160,000 modular space and portable storage units serving a diverse customer base from approximately 120 locations across the United States, Canada and Mexico.

Williams Scotsman expects to capture $60M in annual cost synergies after integration, with approximately 80% of the forecast synergies expected to be realized on a full run-rate basis by the end of 2019.

Williams Scotsman also expects to benefit from the net operating tax loss carryforwards to be acquired in the transaction, and for the transaction to be accretive to earnings in 2019.

Williams Scotsman expects to expand its “Ready to Work” value proposition across the ModSpace fleet and customer base, a strategy that has driven double-digit organic Adjusted EBITDA growth in Williams Scotsman’s U.S. Modular segment in recent years and proven successful in Williams Scotsman’s acquisitions of Acton Mobile and Tyson Onsite.

Until the transaction closes, both companies will operate independently and execute on their respective strategic priorities. Williams Scotsman has secured committed financing to fund the transaction, which includes an amendment and expansion of its existing revolving ABL credit facility to $1.35B with an accordion feature allowing up to $1.8B of total capacity, a $280M secured bridge credit facility, and $320M unsecured bridge credit facility.

Williams Scotsman expects the permanent financing plan to include a combination of long-term debt and equity or equity-linked securities.

WSC closed at $12.15, it last traded at $14.10.


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Tesaro could be sold shortly

Analysts weigh in on Tesaro buyout value amid report of Roche interest 

 

Tesaro could be sold soon, Stockwinners
Tesaro could be sold soon, Stockwinners

According to a report by Intereconomia, Roche (RHHBY) is working with Citibank on a potential acquisition of Tesaro (TSRO).

While both companies are not commenting on the article, Citi analyst Robyn Karnauskas said Tesaro could be valued at $140-$213 per share in an M&A situation, while her peer at Suntrust sees a potential buyout value range of $109-$196.

INTERECONOMIA REPORT

Spanish media group Intereconomia reported that Roche, following its acquisition of Foundation Medicine (FMI) (see our blog here), is working with Citibank on a potential deal to buy Tesaro.

Earlier this month Tesaro entered into a clinical collaboration with Roche unit Genentech to evaluate the combination of the PD-L1 antibody atezolizumab.

Intereconomia, citing sources close to the situation, added that Roche could announce the acquisition of Tesaro in the coming days.

Tesaro said it does not “comment on market rumors,” while Roche gave a similar answer to Bloomberg.

TESARO TAKEOUT VALUE

In a research note to investors this morning, Citi’s Karnauskas said that her M&A analysis for Tesaro suggests the company could be valued at $140-$213 per share in a takeover scenario.

Karnauskas noted, however, that she does not assign any value to Zeluja expansion opportunities in platinum resistant ovarian cancer and metastatic castration resistant prostate cancer.

The analyst reiterated a Buy rating and $100 price target on Tesaro shares.

Meanwhile, SunTrust analyst Peter Lawson told investors that his takeover analysis suggests a potential buyout value of $153 per share for Tesaro, with a range of $109-$196.

The analyst argued that Intereconomia’s report could also be a potential positive for the biotechnology space, mainly Clovis Oncology (CLVS) and oncology peers.

Lawson reiterated a Buy rating and $150 price target on Tesaro’s shares.

PRICE ACTION

In Wednesday afternoon trading, shares of Tesaro have gained almost 15% to $45.92, while Roche’s stock has advanced over 2% to $27.11 and Clovis shares are up 5% to $48.10.


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Disney raises its offer for 21st Century Fox to $38 per share

Disney boosts offer for 21st Century Fox assets to $38 per share

Disney raises its offer for 21st Century Fox to $38 per share

Twenty-First Century Fox (FOXA) announced that it has entered into an amended and restated merger agreement with Walt Disney (DIS) pursuant to which Disney has agreed to acquire for a price of $38 per 21CF share the same businesses Disney agreed to acquire under the previously announced merger agreement between 21CF and Disney.

This price represents a “significant increase” over the purchase price of approximately $28 per share included in the Disney merger agreement when it was announced in December 2017.

The amended and restated Disney merger agreement offers a package of consideration, flexibility and deal certainty enhancements that is superior to the proposal made by the Comcast Corporation (CMCSA) on June 13, Fox stated.

Under the amended and restated Disney merger agreement, Disney would acquire those businesses on substantially the same terms, except that, among other things, Disney’s offer allows 21CF stockholders to elect to receive their consideration, on a value equalized basis, in the form of cash or stock, subject to 50/50 proration.

The collar on the stock consideration will ensure that 21st Century Fox shareholders will receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

In light of the revised terms contained in the amended and restated Disney Merger Agreement, 21CF’s board, after consultation with its outside legal counsel and financial advisors, has not concluded that the unsolicited proposal it received on June 13, 2018 from Comcast could reasonably be expected to result in a “Company Superior Proposal” under the Disney merger agreement.

However, the amended and restated Disney merger agreement contains no changes to the provisions relating to the company’s directors’ ability to evaluate a competing proposal.

As announced on May 30, 2018, 21CF has established a record date of May 29, 2018 and a meeting date of July 10, 2018, for a special meeting of its stockholders to, among other things, consider and vote on a proposal to adopt the Disney merger agreement.

21CF has determined to postpone its special meeting of stockholders to a future date in order to provide stockholders the opportunity to evaluate the terms of Disney’s revised proposal and other developments to date.

Once 21CF determines the new date for 21CF’s special meeting of stockholders, the date will be communicated to 21CF stockholders.


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Cotiviti sold for $4.9 billion

Cotiviti to be acquired by Veritas Capital-backed Verscend for $4.9B in cash

Cotiviti sold for $4.9 billion, Stockwinners
Cotiviti sold for $4.9 billion
Cotiviti Holdings (COTV) and Verscend Technologies, a portfolio company of Veritas Capital announced that they have entered into a definitive agreement whereby Verscend has agreed to acquire Cotiviti for $4.9B in cash.
Under the terms of the agreement, Cotiviti shareholders will receive $44.75 in cash per share of Cotiviti common stock, and Verscend will assume all of Cotiviti’s outstanding debt, resulting in an enterprise value of approximately $4.9B.
The offer price represents a 32% premium to Cotiviti’s unaffected share price as of June 4, 2018 and a 136% premium to the initial public offering price of Cotiviti’s common stock.
The transaction, which was unanimously approved by Cotiviti’s Board of Directors, is expected to close during the fourth quarter of 2018.
Closing of the transaction is subject to the approval of Cotiviti shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.
Advent International has entered into a voting agreement whereby it has agreed to vote shares representing approximately 44% of the company’s voting power in favor of the transaction.


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Rent-A-Center sold for $1.365 billion

Rent-A-Center to be acquired by Vintage Capital for $15 per share in cash

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Rent-A-Center sold for $1.365 billion

Rent-A-Center (RCII) announced that it has entered into a definitive agreement with Vintage Rodeo Parent, LLC, an affiliate of Vintage Capital Management, LLC, pursuant to which Vintage will acquire all of the outstanding shares of Rent-A-Center common stock for $15.00 per share in cash.

The transaction, which is not subject to a financing condition, and is expected to close by the end of 2018, subject to customary closing conditions including the receipt of stockholder and regulatory approvals, represents a total consideration of approximately $1.365B, including net debt.

Under the terms of the Merger Agreement, Rent-A-Center stockholders will receive $15.00 in cash for each share of Rent-A-Center common stock, which represents a premium of approximately 49 percent over the Company’s closing stock price on October 30, 2017, immediately prior to the announcement that the Company’s Board of Directors initiated a process to evaluate strategic and financial alternatives focused on maximizing stockholder value.

The Rent-A-Center Board has unanimously approved the transaction and recommends that stockholders vote in favor of the transaction.

Upon completion of the transaction, Rent-A-Center will become a privately held company and its common shares will no longer be listed on any public market.

“The Rent-A-Center Board, having just completed a comprehensive review of strategic and financial alternatives in consultation with outside legal and financial advisors, unanimously supports this transaction and is confident it maximizes value for stockholders while delivering a significant and immediate cash premium,” said Mitch Fadel, CEO of Rent-A-Center.

RCII closed at $12.03.


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Envision Healthcare sold for $9.9B

Envision Healthcare to be acquired by KKR for approximately $9.9B

 

Envision Healthcare sold for $9.9B, Stockwinners
Envision Healthcare sold for $9.9B, Stockwinners

Envision Healthcare (EVHC) announced it has entered into a definitive agreement to be acquired by global investment firm KKR (KKR) in an all-cash transaction for approximately $9.9B, including the assumption or repayment of debt.

Under the terms of the agreement, which has been unanimously approved by Envision’s Board of Directors, KKR will acquire all of the outstanding shares of Envision’s common stock for $46.00 per share in cash, representing a 32% premium to Envision’s volume-weighted average share price from November 1, 2017, the day immediately following the company’s first announcement that it was reviewing strategic alternatives.

The transaction price represents a multiple of 10.9x trailing 12 months Adjusted EBITDA and 10.1x 2018 anticipated Adjusted EBITDA.

The agreement represents the culmination of the Board’s comprehensive review of strategic alternatives to enhance shareholder value.

During the last seven months, the Board, with the assistance of three independent financial advisors and legal counsel, examined a full range of options to generate shareholder value, including capital structure alternatives, potential acquisitions, portfolio optimization, a potential sale of the whole company, and continued operation as a standalone business.

The Board oversaw an extensive process that involved outreach to 25 potential buyers, including financial sponsors and strategic entities, and invited proposals for all or parts of the business.

After consideration of the opportunities, risks and uncertainties facing the company and the broader sector, as well as the alternatives available to the company, the Board determined that the KKR proposal presented the best opportunity to maximize value for shareholders.

The completion of the transaction, which is targeted for the fourth quarter of 2018, is subject to customary closing conditions and regulatory approvals. Envision intends to present the proposed transaction to its shareholders for approval at the company’s 2018 Annual Meeting, which will be scheduled as soon as practicable following the filing and review of proxy materials.

The company intends to hold its Annual Meeting no later than October 1, 2018.

Upon the completion of the transaction, Envision will become a private company, and its common stock will no longer be traded on the New York Stock Exchange. KKR will be making the investment primarily from its KKR Americas Fund XII.


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Rockwell Automation to make $1B investment in PTC

Rockwell Automation to make $1B equity investment in PTC

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

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

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

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

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

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

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

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

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

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

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


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A.V. Homes sold for $963 million

Taylor Morrison to acquire A.V. Homes for $21.50 per share

A.V. Homes sold for $963 million, Stockwinners
A.V. Homes sold for $963 million

Taylor Morrison Home (TMHC) and AV Homes (AVHI) announced that they have entered into a definitive agreement pursuant to which Taylor Morrison will acquire all of the outstanding shares of AV Homes common stock at $21.50 per share in a cash and stock transaction valued, including outstanding AV Homes debt, at approximately $963M.

The transaction has been unanimously approved by the boards of both Taylor Morrison and AV Homes and will be submitted to the stockholders of AV Homes for approval.

The transaction is expected to close late in Q3 or early in Q4 and the closing is subject to customary closing conditions. TPG Capital, the holder of approximately 40% of AV Homes common stock, has agreed to vote all of its shares of AV Homes common stock in favor of the transaction.

Under the terms of the agreement, AV Homes stockholders will have the option to receive, at their election, consideration per share equal to $21.50 in cash, 0.9793 shares of Taylor Morrison Class A common stock or the combination of $12.64 in cash and 0.4034 shares of Taylor Morrison Class A common stock, subject to an overall proration of approximately 60% cash and 40% stock.

On a pro forma basis, AV Homes stockholders are expected to own up to approximately 10% of the combined company, subject to conversion mechanics applicable to holders of AV Homes’ convertible notes.

AVHI closed at $16.50.


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Merck says KEYTRUDA demonstrated long-term survival benefit

Merck says KEYTRUDA demonstrated long-term survival benefit

Merck says KEYTRUDA demonstrated long-term survival benefit, Stockwinners
Merck says KEYTRUDA demonstrated long-term survival benefit

Merck (MRK) announced long-term efficacy data from the Phase 3 KEYNOTE-006 study and the melanoma cohort of the Phase 1b KEYNOTE-001 study investigating KEYTRUDA, Merck’s anti-PD-1 therapy, in patients with advanced melanoma.

KEYTRUDA is not chemotherapy or radiation therapy—it is an immunotherapy and it works with patient’s immune system to help fight certain cancers. KEYTRUDA can cause immune system to attack normal organs and tissues in any area of your body and can affect the way they work.

A new analysis from KEYNOTE-006 demonstrated durable efficacy benefits among patients who completed two years of KEYTRUDA treatment, combined with updated overall survival results across both studies, confirming anti-tumor activity in advanced melanoma patients.

At a median follow-up of 20.3 months after completion of KEYTRUDA in KEYNOTE-006, 86 percent of patients remained progression-free, the co-primary endpoint for the study.

For the primary endpoint of OS in KEYNOTE-006, the four-year OS rate was 41.7 percent in the pooled KEYTRUDA arms vs. 34.1 percent in the ipilimumab arm; in treatment-naive patients, OS rates were 44.3 percent in the pooled KEYTRUDA arms and 36.4 percent in the ipilimumab arm.

In KEYNOTE-001, the five-year OS rate, a secondary endpoint for the study, was 34 percent in all patients and 41 percent in treatment-naive patients.

The safety profile of KEYTRUDA in both studies was consistent with what has been seen in previous trials among patients with advanced melanoma.

KEYNOTE-006 is a global, open-label, randomized, pivotal, Phase 3 study evaluating KEYTRUDA compared to ipilimumab in patients with unresectable stage III or IV melanoma who had either not been treated previously or who had received a prior targeted therapy for BRAF-mutation positive melanoma/ The study randomized 834 patients to receive KEYTRUDA 10 mg/kg every three weeks, KEYTRUDA 10 mg/kg every two weeks, or four cycles of ipilimumab 3 mg/kg every three weeks.

Treatment continued until unacceptable toxicity or disease progression; patients without disease progression could be treated for up to 24 months.

Upon disease progression, eligible patients could receive an additional one year of KEYTRUDA. The co-primary endpoints were progression-free survival and OS; secondary endpoints were overall response rate, duration of response and safety, with an exploratory analysis for health-related quality of life.

With a median follow-up of 45.9 months, the four-year OS rate was 41.7 percent in the pooled KEYTRUDA arms and 34.1 percent in the ipilimumab arm; investigator-reported ORR was 42 percent and 17 percent, respectively.

Median DOR was not reached for KEYTRUDA or ipilimumab; 62 percent of patients in the KEYTRUDA arms and 59 percent of patients in the ipilimumab arm had a response lasting greater than or equal to 42 months.

In treatment-naive patients, the four-year OS rates were 44.3 percent in the pooled KEYTRUDA arms and 36.4 percent in the ipilimumab arm; ORR was 47 percent and 17 percent, respectively.

Median DOR was not reached for KEYTRUDA or ipilimumab; 65 percent of patients in the KEYTRUDA arms and 68 percent of patients in the ipilimumab arm had a response lasting greater than or equal to 42 months. Per study protocol, 18.5 percent of patients completed two years of KEYTRUDA.

With a median follow-up of 20.3 months 86 percent of patients remained progression-free. Eight patients received second-course KEYTRUDA; three discontinued treatment. Among the eight patients, there was one complete response and three partial responses; three patients had stable disease, while the remaining patient had progressive disease.

KEYNOTE-001 is a Phase 1b multicenter, open-label, multi-cohort trial evaluating KEYTRUDA in various advanced cancers, including 655 patients with advanced melanoma. Patients in the melanoma cohorts received 2 mg/kg or 10 mg/kg of KEYTRUDA every three weeks or 10 mg/kg of KEYTRUDA every two weeks until unacceptable toxicity or disease progression.

The primary endpoint was confirmed ORR. The secondary endpoints included PFS, OS and DOR. After median follow-up of 55 months, 35 patients remained on KEYTRUDA therapy.

The investigator-reported ORR, the primary endpoint for KEYNOTE-001, was 41 percent in all patients and 52 percent in treatment-naive patients.

The estimated five-year OS rate was 34 percent in all patients and 41 percent in treatment naive patients. Median OS was 23.8 months in all patients and 38.6 months in treatment-naive patients. Median PFS was 8.3 months and 16.9 months in all patients and treatment-naive patients, respectively. Median DOR was not reached in all responders and in treatment-naive patients; 73 percent of all responses and 82 percent of treatment-naive responses were ongoing at data cut-off.

The longest response observed in all patients was ongoing at 66 months.

The safety profile of KEYTRUDA was consistent with what has been seen in previously reported studies among patients with advanced melanoma. Treatment-related adverse events occurred in 86 percent of patients including 17 percent with grade 3-4 and eight percent who discontinued.

Twelve percent of patients experienced a serious TRAE including five percent who discontinued treatment. Immune-mediated adverse events and infusion reactions were reported in 23 percent of patients.

Most cases of immune-related adverse events, including hypothyroidism and pneumonitis, were grade 1 or 2. Hypothyroidism was the most commonly reported immune-mediated adverse event, followed by pneumonitis, colitis and skin disorders.

MRK closed at $60.56. It last traded at $61.65.


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SoftBank to invest $2.25B in GM

SoftBank Vision Fund to invest $2.25B in GM Cruise 

 

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SoftBank Vision Fund to invest $2.25B in GM Cruise 

General Motors (GM) announced that the SoftBank Vision Fund will invest $2.25B in GM Cruise Holdings, further strengthening the company’s plans to commercialize AV technology at large scale.

GM will also invest $1.1B in GM Cruise upon closing of the transaction.

“Our Cruise and GM teams together have made tremendous progress over the last two years,” said GM Chairman and CEO Mary Barra.

“Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”

“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers.

“The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”

The SoftBank Vision Fund investment will be made in two tranches.

At the closing of the transaction, the Vision Fund will invest the first tranche of $900M. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second tranche of $1.35B, subject to regulatory approval.

Together, this will result in the SoftBank Vision Fund owning a 19.6-percent equity stake in GM Cruise and will afford GM increased flexibility with respect to capital allocation.

The GM and SoftBank Vision Fund investments are expected to provide the capital necessary to reach commercialization at scale beginning in 2019.

GM (GM) Chairman and CEO Mary Barra confirmed the automaker’s plans to launch an autonomous ride-hailing vehicle in 2019.

President Dan Ammann noted that talks with SoftBank occurred over the course of several months. He said GM wasn’t looking for a partner, but found one that was “uniquely aligned” with it.

Ammann added that the Cruise team has grown to over 800 since the acquisition two years ago. He said the decision to report GM Cruise as a standalone segment is intended to enhance transparency around this part of the business.

ANALYST COMMENTS

Evercore ISI analyst George Galliers upgraded General Motors (GM) to Outperform from In Line after SoftBank’s (SFTBF) Vision Fund agreed to invest in the company’s Cruise autonomous driving unit in a deal that values the unit at $11.5B.

Galliers said he had been assigning no value to the Cruise assets before the announcement.

Under his new sum-of-the-parts valuation, Galliers applies a 6.0x multiple on GM’s core, attributes a value of about $8 per share for the Cruise assets and about 60c per share for GM’s stake in Lyft before applying a 25% discount to both of the latter. He raised his price target on GM shares to $50 from $47.


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Madrigal Pharmaceuticals sharply higher on NASH trial

Madrigal achieves liver biopsy endpoints in NASH trial of MGL-3196

Madrigal Pharmaceuticals higher on NASH trial, Stockwinners.com
Madrigal Pharmaceuticals higher on NASH trial,

Madrigal Pharmaceuticals (MDGL) announced top-line, 36-week results from a Phase 2 clinical trial in patients with biopsy-proven non-alcoholic steatohepatitis, or NASH.

In this trial, MGL-3196, a first-in-class, oral, once-daily, liver-directed, thyroid hormone receptor beta-selective agonist, demonstrated statistical significance in the primary endpoint, relative reduction of liver fat on magnetic resonance imaging-estimated proton density fat fraction at 12 Weeks in December 2017, and, reported here, statistically significant results in multiple Week 36 endpoints including key secondary endpoints, reduction and resolution of NASH.

“The degree of NASH resolution, an approvable FDA endpoint, in patients who received MGL-3196 for 9 months we believe suggests a high likelihood of success in a larger trial with a somewhat longer treatment period in a Phase 3 study designed similarly to this Phase 2 study, pending regulatory agreement with such a design. Further, considering what we have learned regarding drug exposure and dosing, we believe there is potential to resolve NASH in as little as 9 months in 30-40% of patients receiving only MGL-3196, a well-tolerated once a day oral therapy,” stated Paul Friedman, CEO of Madrigal.

In the trial, MGL-3196 demonstrated statistical significance in the primary endpoint, relative reduction of liver fat on magnetic resonance imaging-estimated proton density fat fraction at 12 weeks and statistically significant results in multiple week 36 endpoints.
Shares of Madrigal are up 67%, or $66.57, to $175.00 in premarket trading. Viking Therapeutics (VKTX), which has a thyroid beta agonist in Phase 2 development for the treatment of non-alcoholic fatty liver disease and hypercholesterolemia, is trading up 38% to $6.86. Intercept Pharmaceuticals (ICPT), which has a competing, and further along than Madrigal’s, drug to treat non-alcoholic steatohepatitis is trading down 6% to $69.01.

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Franklin American Mortgage sold for $511M

Citizens Financial to purchase Franklin American Mortgage for $511M

Citizens Financial to purchase Franklin American Mortgage for $511M, Stockwinners.com
Citizens Financial to purchase Franklin American Mortgage for $511M, 

Citizens Financial Group (CFG) announced a definitive agreement to purchase the assets of Franklin American Mortgage Company, a Franklin, Tennessee-based national mortgage servicing and origination firm with a leading position among private, non-bank mortgage companies.

As of March 31, 2018, Franklin American Mortgage managed a $41.4B mortgage servicing portfolio and generated approximately $13.7B in annualized originations for the first quarter 2018, nearly 100% of which was conforming.

“The addition of Franklin American Mortgage triples the size of Citizens’ off-balance sheet mortgage servicing portfolio, providing significantly more balance sheet leverage. The transaction also more than doubles Citizens’ origination platform while significantly diversifying its origination capabilities with the addition of correspondent and wholesale channels, which complement Citizens’ strong retail capabilities,” the bank said.

Under the terms of the asset purchase agreement, Citizens’ wholly-owned subsidiary, Citizens Bank, N.A., will purchase assets with a net book value of approximately $488M, which includes a mortgage servicing rights portfolio valued at $550M, for $511M in cash, or approximately 1.1 times tangible book value.

The transaction is expected to improve fee income, produce attractive returns and have a crossover earnback period of less than three years. The transaction is expected to reduce the company’s Basel III common equity tier one ratio by approximately 18 basis points at the transaction close.

This transaction has no impact on the execution of Citizens’ previously announced planned share repurchases under its 2017 capital plan. The company expects to achieve annual expense synergies of approximately $50M by 2020 with total estimated after-tax integration costs of $30M-$45M.

Return on average tangible common equity accretion is expected to be approximately 30 basis points in 2019 and approximately 45 basis points in 2020 with earnings per diluted common share accretion of approximately 2% in 2019 and approximately 3% in 2020.

The transaction is expected to close in the third quarter of 2018, subject to customary closing terms and conditions and regulatory approval.


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Armo BioSciences sold for $1.6 billion

Eli Lilly to acquire Armo BioSciences for $50 per share

Armo BioSciences sold for $1.6 billion, Stockwinners
Armo BioSciences sold for $1.6 billion, Stockwinners

Eli Lilly and Company (LLY) and ARMO BioSciences (ARMO) announced a definitive agreement for Lilly to acquire ARMO for $50 per share, or approximately $1.6B, in an all-cash transaction.

ARMO BioSciences is a late-stage immuno-oncology company that is developing a pipeline of novel, proprietary product candidates designed to activate the immune system of cancer patients to recognize and eradicate tumors.

The acquisition will bolster Lilly’s immuno-oncology program through the addition of ARMO’s lead product candidate, pegilodecakin, a PEGylated IL-10 which has demonstrated clinical benefit as a single agent, and in combination with both chemotherapy and checkpoint inhibitor therapy, across several tumor types.

#Pegilodecakin is currently being studied in a Phase 3 clinical trial in pancreatic cancer, as well as earlier-Phase trials in lung and renal cell cancer, melanoma and other solid tumor types.

ARMO also has a number of other immuno-oncology product candidates in various stages of pre-clinical development.

Under the terms of the agreement, Lilly will promptly commence a tender offer to acquire all shares of ARMO BioSciences for a purchase price of $50 per share in cash, or approximately $1.6B.

The transaction is expected to close by the end of the second quarter of 2018, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of ARMO’s common stock.

Very shortly after the closing of the tender offer, Lilly will acquire any shares of ARMO that are not tendered into the tender offer through a second-step merger at the tender offer price.

This transaction will be reflected in Lilly’s reported results and financial guidance according to Generally Accepted Accounting Principles, and is subject to customary closing conditions.

There will be no change to Lilly’s 2018 non-GAAP earnings per share guidance as a result of this transaction.


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Walmart to pay $16B for about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India's Flipkart, Stockwinners
Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners

Walmart (WMT) announced it has signed definitive agreements to become the largest shareholder in Flipkart Group.

The investment will help accelerate Flipkart’s customer-focused mission to transform commerce in India through technology and underscores Walmart’s commitment to sustained job creation and investment in India, the company said.

Subject to regulatory approval in India, Walmart will pay approximately $16B for an initial stake of approximately 77% in Flipkart, formally Flipkart Private Limited.

The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings (TCEHY), Tiger Global Management and Microsoft (MSFT).

While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future.

While Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures.

Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India, with more than 95 percent of sourcing coming from India, aiding suppliers, creating skilled jobs and contributing to local economies across the country.

Krish Iyer, president and chief executive officer of Walmart India, will continue to lead that part of the business.


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Shire sold for $62 billion

Takeda reaches agreement to acquire Shire for $62B in cash and stock

Shire sold for $62 billion, Stockwinners
Shire sold for $62 billion, Stockwinners

Japan’s Takeda Pharmaceutical (TKPYY) and Shire (SHPG) announced that they have reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire.

Under the terms of the acquisition, each Shire shareholder will be entitled to receive $30.33 in cash for each Shire share and either 0.839 new Takeda shares or 1.678 Takeda ADSs. The transaction has been approved by both companies’ boards of directors, and is expected to close in the first half of calendar year 2019.

Upon the closing of the transaction, Takeda shareholders will own approximately 50% of the combined group. “With leading market positions in prioritized therapeutic areas, an attractive geographic footprint, greater scale and efficiencies, and an even more productive R&D engine, the combined group will be better positioned to deliver highly-innovative medicines and transformative care providing better health and a brighter future for patients around the world,” Takeda said.

Takeda has entered into a bridge facility agreement of $30.85B with, among others, J.P. Morgan Chase Bank, Sumitomo Mitsui Banking and MUFG Bank, part of the proceeds of which will be used to fund the cash consideration payable to Shire shareholders in connection with the acquisition.

It is currently contemplated that, prior to completion, the commitments under the bridge facility agreement will be reduced or refinanced with a combination of long-term debt, hybrid capital and available cash resources.

Shire plc, an Irish biotechnology company, researches, develops, licenses, manufactures, markets, distributes, and sells medicines for rare diseases and other specialized conditions worldwide.

Takeda Pharmaceutical Company Limited engages in the research and development, manufacture, marketing, and sale of pharmaceutical products worldwide. The company operates in three segments: Prescription Drug, Consumer Healthcare, and Other.


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