Fed pumps more money into economy

Fed says SMCCF will begin buying portfolio of corporate bonds

The Federal Reserve Board announced updates to the Secondary Market Corporate Credit Facility, or SMCCF, which will begin buying “a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers.”

The Fed added that “the SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds.

This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility’s minimum rating, maximum maturity, and other criteria.

Feds crank up their printing presses

This indexing approach will complement the facility’s current purchases of exchange-traded funds.

The Primary Market and Secondary Market Corporate Credit Facilities were established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.”

The SMCCF supports market liquidity by purchasing in the secondary market corporate bonds issued by investment grade U.S. companies or certain U.S. companies that were investment grade as of March 22, 2020, as well as U.S.-listed exchange-traded funds whose investment objective is to provide broad exposure to the market for U.S. corporate bonds.

Feds bailout Wall Street firms

The SMCCF’s purchases of corporate bonds will create a portfolio that tracks a broad, diversified market index of U.S. corporate bonds.

The Treasury, using funds appropriated to the ESF through the CARES Act, will make an equity investment in an SPV established by the Federal Reserve for the SMCCF and the Primary Market Corporate Credit Facility.

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Central Banks flood markets with cash

  • Fed lowers federal funds target rate to 0%-0.25% on coronavirus outbreak
  • Fed, other central banks announce action to enhance U.S. dollar liquidity
  • Fed to up Treasury securities holdings by at least $500B, MBS by at least $200B
  • Expect added volatility in financial markets
Corona slowdown leads to drastic decisions, Stockwinners

The Federal Reserve said in a Sunday night statement, “The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected.

Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress.

Global inflation from 2007-2017, Stockwinners

On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent.

Market-based measures of inflation compensation have declined; survey-based measures of longer-term inflation expectations are little changed. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook.

In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent.

The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2 percent objective.”


The Federal Reserve said “To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. The Committee will also reinvest all principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.

QE 4 initiated by the Feds on a Sunday night, Stockwinners

In addition, the Open Market Desk has recently expanded its overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate,” the central bank announced.


In an extraordinary move, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.

The Federal Reserve stated: “These central banks have agreed to lower the pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points, so that the new rate will be the U.S. dollar overnight index swap rate plus 25 basis points.

To increase the swap lines’ effectiveness in providing term liquidity, the foreign central banks with regular U.S. dollar liquidity operations have also agreed to begin offering U.S. dollars weekly in each jurisdiction with an 84-day maturity, in addition to the 1-week maturity operations currently offered. These changes will take effect with the next scheduled operations during the week of March 16.

The new pricing and maturity offerings will remain in place as long as appropriate to support the smooth functioning of U.S. dollar funding markets. The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.”

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Legg Mason sold for $6.5B including debt assumption

Franklin Templeton to acquire Legg Mason for $50.00 per share in cash

Franklin Resources (BEN) announced that it has entered into a definitive agreement to acquire Legg Mason (LM) for $50.00 per share of common stock in an all-cash transaction.

The company will also assume approximately $2B of Legg Mason’s outstanding debt.

Franklin Templeton buys Legg Mason for $4.5B, Stockwinners

The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage over $806 billion in assets as of January 31, will establish Franklin Templeton as one of the world’s largest independent, specialized global investment managers with a combined $1.5 trillion in assets under management, or AUM, across one of the broadest ranges of high-quality investment teams in the industry.

Legg Mason sold for $4.5B cash and $2B debt assumptions, Stockwinners

The combined footprint of the organization will significantly deepen Franklin Templeton’s presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client AUM.

In addition, the combined platform creates a strong separately managed account business. Trian Fund Management, L.P. and funds managed by it, which collectively own approximately 4 million shares or 4.5% of the outstanding stock of Legg Mason, have entered into a voting agreement in support of the transaction.

With this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged.

As with any acquisition, the pending integration of Legg Mason’s parent company into Franklin Templeton’s, including the global distribution operations at the parent company level, will take time and only commence after careful and deliberate consideration.

Following the closing of the transaction, Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue to serve as executive chairman of the Board of Franklin Resources, Inc.

There will be no changes to the senior management teams of Legg Mason’s investment affiliates.

Global headquarters will remain in San Mateo, CA and the combined firm will operate as Franklin Templeton.

The all-cash consideration of $4.5 billion will be funded from the Company’s existing balance sheet cash.

Franklin Templeton will also assume approximately $2 billion in Legg Mason’s outstanding debt.

Upon closing of the transaction, Franklin Templeton expects to maintain a robust balance sheet and considerable financial flexibility with pro forma gross debt of approximately $2.7 billion with remaining cash and investments of approximately $5.3 billion.

This transaction is designed to preserve the Company’s financial strength and stability with modest leverage, significant liquidity and strong cash flow to provide ongoing flexibility to invest in further growth and innovation.

This transaction is expected to generate upper twenties percentage GAAP EPS accretion in Fiscal 2021 (based on street consensus earnings estimates for each company), excluding one-time charges, non-recurring and acquisition related expenses.

While cost synergies have not been a strategic driver of the transaction, there are opportunities to realize efficiencies through parent company rationalization and global distribution optimization.

These are expected to result in approximately $200 million in annual cost savings, net of significant growth investments Franklin Templeton expects to make in the combined business and in addition to Legg Mason’s previously announced cost savings.

The majority of these savings are expected to be realized within a year, following the close of the transaction, with the remaining synergies being realized over the next one to two years.

The transaction has been unanimously approved by the boards of Franklin Resources, Inc. and Legg Mason, Inc.

This transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and approval by Legg Mason’s shareholders, and is expected to close no later than the third calendar quarter of 2020.

LM closed at $40.72. BEN closed at $24.36.

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FSB Bancorp sold for $17.80 per share

Evans Bancorp to acquire FSB for $17.80 per share, in accretive transaction

Evans Bancorp (EVBN) and FSB Bancorp (FSBC), jointly announced the execution of a definitive merger agreement whereby Evans will acquire FSB for $17.80 per share for total consideration of approximately $34.7M.

FSB sold for $34.8M, Stockwinners

The transaction is proposed to be comprised of 50% stock and 50% cash. Unanimously approved by the Boards of Directors of each company, the transaction is expected to close in the second quarter of 2020, subject to the satisfaction of customary closing conditions, including regulatory approval and FSB stockholder approval.

An investor presentation summarizing the transaction is available at www.evansbancorp.com.

Evans buys FSB for $17.80 per share, Stockwinners

Under the terms of the merger agreement, FSB stockholders will have the right to receive at their election either 0.4394 shares of Evans common stock or $17.80 in cash for each share of FSB common stock, subject to possible adjustment and 50/50 proration.

This transaction will qualify as a tax-free reorganization for those FSB stockholders who receive Evans common stock in the transaction. The merger consideration represents an 8% premium to FSB’s tangible book value as of September 30, 2019, and a 5.9% premium to FSB’s closing share price on December 18, 2019.

Evans’ management expects this transaction will be 4.7% accretive to 2021 earnings with tangible book value earn back of approximately 3.5 years.

Based on information as of September 30, 2019, the combined company will have 20 financial centers with approximately $1.8 billion in total assets, $1.5 billion in total deposits and $1.5 billion in total loans.

Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approvals and the approval of FSB stockholders.

Under the terms of the merger agreement, at closing of the transaction, FSB and its wholly owned bank subsidiary, Fairport Savings Bank, will be merged with and into Evans Bancorp and its subsidiary bank, Evans Bank.

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William Lyon Homes sold for $2.4B

Taylor Morrison to acquire William Lyon Homes for $21.45/share in cash and stock

Taylor Morrison Home (TMHC) and William Lyon Homes (WLH) announced they have entered into a definitive agreement pursuant to which Taylor Morrison will acquire all of the outstanding shares of William Lyon Homes common stock for per share consideration of $2.50 in cash and 0.800 shares of Taylor Morrison common stock, implying a company value for William Lyon Homes of $21.45 per share or $2.4B including assumption of debt.

William Lyon Homes sold for $2.4B in stock, Stockwinners

The transaction consideration mix consists of approximately 90% Taylor Morrison stock and 10% cash.

Based on current trading, Taylor Morrison stockholders will own approximately 77% of the combined company while William Lyon Homes stockholders will own approximately 23%.

The transaction has been unanimously approved by the Boards of Directors of both Taylor Morrison and William Lyon Homes and will be submitted to the stockholders of William Lyon Homes for approval.

Taylor Morrison Home buys William Lyon Homes to expand its footprint, Stockwinners

William Lyon Homes designs, constructs, markets, and sells single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington, Oregon, and Texas. It sells its homes primarily to entry-level, first-time move-up, and second-time move-up homebuyers. 

Taylor Morrison Home Corporation operates as a public homebuilder in the United States. The company designs, builds, and sells single-family and multi-family attached and detached homes; and develops lifestyle and master-planned communities. It operates under the Taylor Morrison and Darling Homes brand names in Arizona, California, Colorado, Florida, Georgia, Illinois, North Carolina and Texas. 

The issuance of shares of Taylor Morrison common stock in the transaction will also be submitted to the stockholders of Taylor Morrison for approval.

The transaction is expected to close late in the first quarter or early in the second quarter of 2020 and the closing is subject to the satisfaction of customary closing conditions.

William H. Lyon, executive chairman and chairman of the board and holder of approximately 42 percent of the voting power of William Lyon Homes common stock, has agreed to vote all of the shares of William Lyon Homes common stock controlled by him in support of the transaction.

“The strategic combination creates the nation’s fifth largest homebuilder based on the last 12 months of closings, and firmly places Taylor Morrison in a Top 5 position in 16 of the combined 23 markets with an estimated 14,200 closings for the pro forma combined company,” the companies stated.

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Federal Reserve cuts benchmark interest rate by 25 basis points

Fed Chair Powell says more rate cuts could be needed if economy weakens

The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in as many months to cushion the economy against a global slowdown amplified by the U.S.-China trade war. While they left the door open to additional cuts, officials were split over the decision and the outlook for further reductions.

Voting for the today’s 25 basis point cut today were Federal Reserve Chairman Jerome Powell, John Williams, Michelle #Bowman, Lael #Brainard, Richard #Clarida, Charles #Evans, and Randal #Quarles. Voting against the action were James #Bullard, who preferred at the meeting to lower the target range for the federal funds rate to 1.5% to 1.75%, and Esther George and Eric Rosengren, who preferred to maintain the target range at 2% to 2.25%.

FOMC Chair Powell votes for rate cut., Stockwinners

The Federal Reserve said in today’s statement, “Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

Trade Negotiations

Fed Chair Powell said the Fed has to try to look through near-term volatility due to “complex” trade negotiations to react to the underlying economic situation. Powell said the central bank needs to be careful to not overreact but also to not underreact.

The Fed continues to see a strong labor market and reiterated that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.

Stockwinners.com

There was still a split between solid household spending, but weakening in business fixed investment and exports. Inflation is still running below 2%, while market-based measures of remain low. The Committee continued to appeal to implications of global developments for the economic outlook and low inflation as rationale for the easing.

More from Powell: this is a time of difficult judgments and disparate perspectives. The bulk of the FOMC is taking it meeting-by-meeting. He continues to believe it’s better to be proactive when adjusting policy, and when trouble is seen approaching on the horizon, you should steer away from it if possible. The Fed has repeatedly shifted policy to support the economy, showing the Fed’s willingness to to move based on an evolving risk picture. There’s real uncertainty around the effects of the trade policy. On the funding issues seen this week, Powell said analysts took appropriate actions to address the pressures. If there are additional pressures, analysts have the tools to address the funding pressures and analysts will not hesitate to use them. The Fed will be returning to the question of when to build the balance sheet. The level remains uncertain, however.

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Synovus to acquire FCB Financial for $2.9B

Synovus to acquire FCB Financial for $2.9B

 

Synovus to acquire FCB Financial for $2.9B, Stockwinners
Synovus to acquire FCB Financial for $2.9B, Stockwinners

Synovus Financial Corp. (SNV) and FCB Financial Holdings, Inc. (FCB) jointly announced their entry into a definitive merger agreement under which Synovus will acquire FCB Financial Holdings, Inc., owner of Florida Community Bank.

The transaction is expected to close by the first quarter of 2019.

Following the closing, FCB will merge with Synovus Bank and operate under the Synovus brand, and FCB Financial Holdings President and CEO Kent Ellert will be executive vice president of Synovus and Florida market president.

Under the terms of the merger agreement, FCB shareholders will receive a fixed ratio of 1.055 shares of Synovus common stock for each common share of FCB in an all-stock transaction.

Based on Synovus’ closing share price on July 23, 2018, the transaction is valued at $58.15 per FCB share or $2.9 billion in aggregate.

Following completion of the merger, former FCB shareholders will own approximately 30% of the combined company. In addition, based on the exchange ratio, Synovus’ most recent quarterly dividend translates to a pro forma annualized dividend of $1.06 per FCB share.

The transaction is expected to be tax free to FCB shareholders. Synovus expects approximately $40 million in pretax synergies to be fully realized by 2020.

Excluding one-time charges, Synovus expects the acquisition to be approximately 6.5% accretive to earnings per common share in 2020 and to deliver strong returns on capital.

The transaction is expected to produce tangible book value per share dilution of 3.3% with an earnback period of less than two years.

The merger agreement has been unanimously approved by both companies’ Boards of Directors.

The merger is subject to customary closing conditions, including approval by Synovus and FCB Financial Holdings shareholders and approval by state and federal bank regulators. BofA Merrill Lynch and J.P. Morgan Securities LLC served as financial advisors to Synovus on this transaction, while Simpson Thacher & Bartlett LLP and Alston & Bird LLP served as legal advisors.

Sandler O’Neill + Partners L.P., Guggenheim Securities, LLC, and Evercore Group L.L.C. served as financial advisors to FCB Financial Holdings, and Wachtell, Lipton, Rosen & Katz served as legal advisor.


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Zillow enters house flipping, shares decline

Zillow falls after announces house flipping plans, competitor Redfin declines

Zillow tumble on Amazon news. See Stockwinners.com Market Radar
Zillow enters house flipping, shares decline

Shares of Zillow (Z,ZG) dropped in Friday’s trading after the company announced plans to enter the home-flipping business just in time for the Spring selling season.

Zillow, which has focused on just the listing part of the real estate business, announced last night along with quarterly and yearly revenue, that it will expand Zillow Instant Offers to Phoenix this month.

With this expansion, Zillow said it plans to participate in the marketplace, buying and selling homes with Premier Agent partners in the Phoenix and Las Vegas markets.

Zillow began testing Instant Offers in May 2017 with Premier Agent partners in Las Vegas and Orlando, and will add Phoenix this month.

According to Zillow, the program “gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home.

Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

“Even in today’s hot market, many sellers are stressed and searching for a more seamless way to sell their homes,” Zillow Chief Marketing Officer Jeremy Wacksman said in a statement.

“They want help, and while most prefer to sell their home on the open market with an agent, some value convenience and time over price. This expansion of Instant Offers, and Zillow’s entrance into the marketplace, will help us better serve both types of consumers as well as provide an opportunity for Premier Agents to connect with sellers.

A “WASH” FOR SHAREHOLDERS

Craig-Hallum analyst Brad Berning downgraded Zillow to Hold from Buy after the company announced the expansion of the Instant Offers program to Phoenix in addition to Las Vegas and Orlando.

The program will require what he estimates to be about $3B of capital, which Zillow intends to fund using its balance sheet, while only creating what he estimates will be about $3B in incremental shareholder value, Berning told investors.

Thus, he sees the expansion as “a wash” for shareholder value, but one that comes at the price of potential added risk. Berning lowered his price target on Zillow to $50 from $58.

COMPETITION FOR REDFIN

Redfin (RDFN), an online real-estate brokerage, “began experimenting with buying homes a little more than a year ago,” said The Wall Street Journal, citing Redfin CEO Glenn Kelman.

Redfin falls after Zillow enters house flipping; Stockwinners
Redfin falls after Zillow enters house flipping;

PRICE ACTION

Shares of Zillow are down over 10% to $48.19 per share, while Redfin is lower by 2.5% to $22.15 in Friday’s trading.


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Stewart to be acquired by Fidelity National in deal valued at $1.2B

Stewart to be acquired by Fidelity National in deal valued at about $1.2B

Stewart to be acquired by Fidelity National in deal valued at about $1.2B , Stockwinners.com
Stewart to be acquired by Fidelity National in deal valued at about $1.2B ,

Stewart Information Services Corporation (STC) announced that it has entered into a definitive agreement to be acquired by Fidelity National Financial (FNF).

Under the terms of the agreement which has been unanimously approved by Stewart’s Board of Directors following a comprehensive review of strategic alternatives, Stewart shareholders will receive $25.00 in cash and 0.6425 common shares of Fidelity for each share of Stewart common stock they hold at closing, subject to the adjustment and election mechanisms described below.

“Last year, our Board initiated a review of strategic alternatives for the company, and after an extensive process, we determined that capitalizing on the Fidelity platform will best enable us to support the Stewart brand and continue providing the service our customers have come to expect,” said Thomas G. Apel, Stewart’s Chairman of the Board.

“Combining with Fidelity National Financial will create a strong portfolio of customers and business relationships, and will provide us with the ability to grow the Stewart brand.”

Based on Fidelity’s closing stock price on March 16, 2018, the merger consideration represents total value per Stewart share of $50.20, a 23% premium to Stewart’s closing stock price on March 16, 2018 and a 32% premium to Stewart’s closing stock price on November 3, 2017, the trading day prior to Stewart’s announcement that it would undertake a review of strategic alternatives.

If the combined company is required to divest assets or businesses exceeding $75 million in order to procure required regulatory approvals up to a cap of $225 million of divested revenues, the purchase price will be adjusted down from $50.20 on a pro-rata basis relative to the actual amount of revenues required to be divested between $75 and $225 million to a minimum purchase price of $45.50 per share of common stock.

As an alternative to the default mixed transaction consideration described above, each Stewart shareholder will have the ability to instead receive either $50.00 in cash or 1.285 common shares of Fidelity for each Stewart share held, subject to a customary pro ration mechanism to the extent that either the cash or the stock portion of the merger consideration is over-subscribed.

The proposed transaction is subject to approval by Stewart’s shareholders and regulatory authorities and the satisfaction of customary closing conditions.

The company will be closely working with regulators to obtain the necessary approvals as soon as possible, and the transaction is expected to close by the first or second quarter of 2019.

If the deal is not completed for failure to obtain the required regulatory approvals, Fidelity is required to pay a reverse break-up fee of $50 million to Stewart.


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United Community Bancorp sold for $26.22 per share

Civista to acquire United Community Bancorp for $26.22 per share

Civista to acquire United Community Bancorp for $26.22 per share. Stockwinners.com
Civista to acquire United Community Bancorp for $26.22 per share.

Civista Bancshares (CIVB) and United Community Bancorp (UCBA), the parent company of United Community Bank, announced the signing of a definitive merger agreement pursuant to which Civista will acquire United.

Based on financial data as of December 31, 2017, the combined company would have total assets of $2.1B, total loans of $1.5B and total deposits of $1.7B. United operates an eight branch network in southeastern Indiana, five of which are located in the Cincinnati MSA.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, the consideration United shareholders will receive is equivalent to 1.027 shares of Civista common stock and $2.54 in cash per share of United common stock.

This implies a deal value per share of $26.22 or approximately $114.4M based on the 15-day average closing price of Civista’s common stock on March 9, 2018 of $23.06.

Civista and United anticipate that the transaction will qualify as a tax-free reorganization to the extent that United shareholders receive Civista common stock in the merger.

The transaction is expected to close in the third quarter of 2018, subject to each company receiving the required approval of its shareholders, receipt of all required regulatory approvals and fulfillment of other customary closing conditions.

Under terms of the agreement, the directors of Civista and the directors and executive officers of United have agreed to vote all shares that they own in their respective organizations in favor of the merger.

In addition, a total of three existing United directors will join the Civista Bank Board of Directors and two of those directors will join the Civista Bancshares, Inc. Board of Directors. E.G. McLaughlin is expected to be one of the directors to join both boards. In preparation for the merger, extensive due diligence was performed over a multi-week period.

Under the proposed merger terms, the acquisition of United is expected to be immediately accretive to Civista’s earnings in 2018 and thereafter.

In addition, any tangible book value dilution created in the transaction is expected to be earned back in approximately 3.5 years after closing.

Post-closing, Civista’s capital ratios are expected to continue to exceed “well-capitalized” regulatory standards.

“This acquisition will allow Civista to bring its enhanced commercial lending platform to United’s demographically strong markets.

United will provide Civista with low cost core deposit funding and excess liquidity,” the bank stated.


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WMIH and Nationstar to merge

WMIH, Nationstar enter definitive merger agreement

Nationstar and WMIH to merge. Stockwinners.com
Nationstar and WMIH to merge.

WMIH Corp. (WMIH) and Nationstar Mortgage Holdings (NSM) with its flagship brand Mr. Cooper announced that they have entered into a definitive merger agreement.

Under the terms of the agreement, Nationstar shareholders may elect to receive $18.00 in cash or 12.7793 shares of WMIH common stock for each share of Nationstar common stock they own, subject to an overall proration to ensure that 32% of the total outstanding Nationstar shares are exchanged for the stock consideration.

Upon completion of the transaction, Nationstar shareholders will own approximately 36% of the combined company and WMIH shareholders will own approximately 64%.

The aggregate consideration payable to Nationstar shareholders will consist of $1.2 billion in cash and WMIH shares currently anticipated to be valued at approximately $702 million.

In addition, approximately $1.9 billion of Nationstar’s existing senior unsecured notes will be refinanced at closing.

WMIH has secured $2.75 billion of financing commitments in connection with the transaction. Upon closing the Transaction, all outstanding WMIH Series B Preferred Stock and all outstanding warrants to purchase shares of WMIH common stock will be converted into common stock of WMIH.

The shares issued pursuant to these conversions are included in the pro forma ownership percentages referenced above. Holders of WMIH’s Series B 5% Convertible Preferred Stock (the “Series B Stock”) will receive approximately 444 million shares of common stock following the mandatory conversion of the Series B Stock at a fixed conversion price of $1.35 per share.

Between signing and closing of the transaction, we expect that holders of the Series B Stock will receive approximately 21 million shares of common stock in accordance with the terms of the Series B Stock.

Finally, upon closing of the transaction, holders of the Series B Stock also will receive a special distribution of approximately 11 million shares of common stock.

As a result, upon consummating the transaction, and on a pro forma basis, holders of the Series B Stock will be expected to own approximately 477 million shares of common stock or approximately 43% of the combined company.

The transaction has been unanimously approved by the Boards of Directors of both companies and is subject to approval by the shareholders of both companies, as well as regulatory approvals and other customary closing conditions.

An entity owned by investment funds managed by an affiliate of Fortress Investment Group LLC, holding approximately 68% of Nationstar’s voting shares, has contractually agreed to support the transaction and elect cash consideration for approximately 34 million shares, subject to proration.

KKR, which owns 24% of WMIH’s voting shares, has also agreed to support the transaction.

The transaction is anticipated to close in the second half of 2018.

WMIH Corp. engages in reinsurance business with respect to mortgage insurance in runoff mode.

Nationstar Mortgage Holdings Inc. provides servicing, origination, and transaction based services primarily to single-family residences in the United States.

Jay Bray, CEO and Chairman of Nationstar, said, “We expect this merger to create value for our shareholders in both the near and long-term, including immediate accretion on a cash EPS basis and a cash premium for those of our stockholders who elect to receive the cash merger consideration.

I am passionately committed to continuing and accelerating our growth and investment as a leader in our industry, leveraging our best-in-class integrated servicing and originations platform.

The Nationstar Board and management team have taken considerable steps to make homeownership simpler and more rewarding for our three million customers and we look forward to identifying additional opportunities to enhance value for the combined company’s shareholders.” The operating business will retain the Nationstar Mortgage name and Dallas Headquarters and, at least initially, be traded on the NASDAQ under the ticker symbol “WMIH”.


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Validus sold for $5.56B, or $68 per share

AIG to acquire Validus for $5.56B, or $68 per share, in cash

AIG to acquire Validus for $5.56B, or $68 per share. Stockwinners.com
AIG to acquire Validus for $5.56B, or $68 per share.

American International Group (AIG) announced it has entered into a definitive agreement to acquire all outstanding common shares of Validus Holdings (VR), a provider of reinsurance, primary insurance, and asset management services.

The transaction enhances AIG’s General Insurance business, adding a leading reinsurance platform, an insurance-linked securities asset manager, a meaningful presence at Lloyd’s and complementary capabilities in the U.S. crop and excess and surplus markets.

Holders of Validus common shares will receive cash consideration of $68.00 per share, for an aggregate transaction value of $5.56 billion, funded by cash on hand.

The transaction is expected to be immediately accretive to AIG’s earnings per share and return on equity.

Validus brings complementary, market-leading capabilities to AIG, enhancing AIG’s platform and long-term growth opportunities for both companies.

The diversification benefits of the transaction also provide significant additional capital efficiencies over time.

The transaction has been unanimously recommended by the boards of directors of AIG and Validus.

The transaction is expected to close mid-2018, subject to approval by Validus shareholders and other customary closing conditions, including regulatory approvals in relevant jurisdictions and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.


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Amazon names 20 finalists in race for second headquarters

Amazon names 20 finalists in race for second headquarters

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Amazon names 20 finalists in race for second headquarters

Shares of Amazon.com (AMZN) are in focus in morning trading after the company shortlisted 20 metropolitan areas for its new headquarters.

Among the candidates are New York City, Boston, Toronto, and Atlanta.

AMAZON NARROWS CHOICES FOR NEW HQ

Amazon on Thursday announced a narrowed down list of 20 metropolitan cities for its planned second headquarters.

The finalists, whittled down from 283 places that applied in October, include New York City, Boston, Atlanta and Chicago, which all have access to airports and mass transportation.

Other candidates include Dallas, Columbus, Denver, Newark, Philadelphia, Miami, Washington D.C., Toronto, Chicago, Los Angeles, Nashville and Indianapolis.

Amazon said it expects to create as many as 50,000 jobs that will be “high-paying” and generate more than $5B in investments over the next 10-15 years.

In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community, Amazon said.

In a statement, Holly Sullivan of Amazon Public Policy, said that “getting from 238 to 20 was very tough — all the proposals showed tremendous enthusiasm and creativity. Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”

WHAT’S NOTABLE

Amazon solicited proposals in September for its second corporate headquarters.

In its request for proposals, Amazon said it was looking for a metro area with at least 1M residents, proximity to an international airport, mass transit and amenities that give it the “potential to attract and retain strong technical talent.”

The company plans to make a decision this year and will continue discussions with the 20 finalists, it said.

Amazon is also planning to grow in Seattle. In an interview with The Wall Street Journal in late 2017, Jeff Wilke, Amazon’s CEO of Worldwide Consumer, said the company planned to add 2M square feet and 6,000 people over 12 months to the Seattle headquarters.

RECENT TRUMP COMMENTS

President Donald Trump tweeted critically about the company on December 29, calling on the U.S. Postal Service to charge the online retailing giant “much more” for shipping.

Trump tweeted, “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”

Stockwinners.com believers Toronto will be the winning city, given Trump’s hostile immigration policy. Amazon hires a large number of technical staff from other countries and an immigration-friendly policy of Canada makes a lot of sense for the company. The company already has a huge presence in that city.


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MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth offers to buy VICI Properties for $19.50 per share. Stockwinners.com
MGM Growth offers to buy VICI Properties for $19.50 per share

MGM Growth Properties (MGM) announced that it sent a letter to the CEO and the Chairman of the Board of Directors of VICI Properties (VICI) proposing to acquire 100% of VICI’s outstanding common stock for $19.50 per share, and to date, VICI has elected not to engage in meaningful discussions.

MGP believes that a proposed combination is extremely attractive strategically and financially for both VICI and MGP. MGP is making its proposal public in an effort to engage and move forward quickly to consummate a transaction.

Under the terms of the proposal, the consideration would be in the form of MGP shares, with the exchange ratio fixed at signing of a definitive agreement.

If desired by VICI shareholders, MGP would be willing to offer a portion of the consideration in the form of cash. Upon completion of the proposed transaction, VICI shareholders would own approximately 43% of the combined company assuming an all-stock transaction and based on MGP’s current share price.

MGM Growth Properties has substantial financial resources to complete the transaction and its offer is not contingent on any financing condition.

Any transaction would be subject to regulatory and shareholder approvals and other customary closing conditions.

MGM Growth Properties believes that a combination with VICI would be accretive to AFFO and represents a compelling opportunity to create significant value for both companies’ respective shareholders.

The combination of the Company and VICI would create the largest triple-net lease REIT and a Top 15 public REIT in the RMZ by enterprise value.

The combined company will have a leading portfolio of premier large scale destination leisure, entertainment and hospitality assets with even greater geographic, asset and tenant diversity.

The combination would also establish a larger combined company with greater efficiencies and an enhanced financial profile that in our view will provide a better path toward maximizing the value of future growth opportunities.

In addition, the ownership in the combined company would enable VICI shareholders to participate meaningfully in the benefits of the transaction, including synergies, a potential trading multiple expansion, more efficient cost of capital and additional liquidity in a significantly larger company.

Furthermore, MGM Growth Properties strongly believes that its proposal provides VICI shareholders with clear value without the execution risk associated with VICI’s proposed public offering, particularly given the fees, discounts, dilution, lock-ups, risks and uncertainties associated with such an offering.


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Atlantic Coast Financial sold for $145 million

Ameris Bancorp to acquire Atlantic Coast Financial in $145M transaction

Atlantic Coast Bank sold for $145 million. See Stockwinners.com for details

Ameris Bancorp (ABCB) announced the signing of a definitive merger agreement under which Ameris will acquire Atlantic Coast Financial (ACFC), the parent company of Atlantic Coast Bank, Jacksonville, Florida.

Upon completion of the transaction, the combined company will have approximately $8.6B in assets, $6.9B in loans, $6.6B in deposits and a branching network across four states.

Under the terms of the definitive merger agreement, each share of Atlantic Coast common stock will be converted into the right to receive 0.17 shares of Ameris common stock and $1.39 in cash.

The transaction is valued at approximately $145M in the aggregate based on Ameris’ closing stock price of $47.30 as of November 16.

The merger agreement has been unanimously approved by the board of directors of each company.

The transaction is expected to close in the second quarter of 2018 and is subject to customary closing conditions, including the receipt of regulatory approvals and the approval of the stockholders of Atlantic Coast.


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