Zoe’s Kitchen sold for $300 million

Zoe’s Kitchen to be acquired by CAVA Group for $12.75 per share

Zoe's Kitchen sold for $300 million, Stockwinners
Zoe’s Kitchen sold for $300 million, Stockwinners

Zoe’s Kitchen (ZOES) announced that it has entered into a definitive agreement to be acquired in a transaction by privately held Cava Group, fast-growing Mediterranean culinary brand with 66 restaurants.

The combined companies will have 327 restaurants in 24 states throughout the U.S. Under the terms of the agreement, Zoes Kitchen shareholders will receive $12.75 in cash for each share of common stock they hold.

This represents a premium of approximately 33% to Zoes Kitchen’s closing share price on August 16, 2018 and a premium of approximately 33% to Zoes Kitchen 30-day volume weighted average price ended on August 16, 2018, and an enterprise value of approximately $300M.

The acquisition of Zoes Kitchen will be financed through a significant equity investment in CAVA led by Act III Holdings, the investment vehicle created by Ron Shaich, founder, chairman, and former CEO of Panera Bread, and funds advised by The Invus Group, with participation from existing investors SWaN & Legend Venture Partners and Revolution Growth.

After closing, Brett Schulman, current CEO of CAVA, will serve as CEO of the combined company and will work closely with the existing leadership teams at Zoes Kitchen and CAVA to oversee their growth and evolution.

Ron Shaich will serve as Chairman of the combined company.

Consummation of the merger is subject to certain closing conditions, including the adoption of the merger agreement by the holders of a majority of the Company’s outstanding common stock, and the expiration or early termination of all applicable waiting periods under the HSR Act.

CAVA has agreed to pay to the Company a $17M termination fee if the merger agreement is terminated under certain circumstances and the merger does not occur.

The parties expect the merger to close in the fourth quarter of 2018.

Under the terms of the merger agreement, the Company is permitted to actively solicit, for a 35-day period, alternative acquisition proposals from potential buyer and business combination candidates.

There can be no assurance that any superior proposals will be received during this solicitation process or that any alternative transaction providing for a superior proposal will be consummated.

Except as may be required by law, the Company does not intend to disclose any developments with respect to such a solicitation process unless and until the Company’s board of directors determines that it has received a superior proposal. The Company would be required to pay to CAVA an $8.5M termination fee if the Company terminates the merger agreement to accept a superior proposal under certain circumstances. T

he Company’s Board of Directors has determined that the merger agreement with CAVA is fair to and in the best interests of the Company and the holders of the Company’s common stock.

Zoes Kitchen also announced that it will not hold its previously scheduled second quarter 2018 earnings conference call and web simulcast on the morning of Friday, August 17 and will not issue a press release with second quarter 2018 financial results.

The Company expects to file its quarterly report with second quarter 2018 financial results on or before August 20, 2018.


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KMG Chemicals sold for $1.6B

Cabot Microelectronics to acquire KMG Chemicals for $1.6B

KMG Chemicals sold for $1.6B, Stockwinners
KMG Chemicals sold for $1.6B, Stockwinners

Cabot Microelectronics (CCMP) and KMG Chemicals (KMG), a global provider of specialty chemicals and performance materials, have entered into a definitive agreement under which Cabot Microelectronics will acquire KMG in a cash and stock transaction with a total enterprise value of approximately $1.6B.

Under the terms of the agreement, KMG shareholders will be entitled to receive, per KMG share, $55.65 in cash and 0.2000 of a share of Cabot Microelectronics common stock, which represents an implied per share value of $79.50 based on the volume weighted average closing price of Cabot Microelectronics common stock over the 20-day trading period ended on August 13.

The transaction has been unanimously approved by the board of both companies and is expected to close near the end of calendar year 2018.

The combined company is expected to have annual revenues of approximately $1B and approximately $320M in EBITDA, including synergies, extending and strengthening Cabot Microelectronics’ position.

The transaction is subject to the satisfaction of customary closing conditions, including HSR clearance and approval by KMG shareholders.

Cabot Microelectronics expects to finance the cash portion of the transaction consideration through a combination of existing cash and additional debt supported by commitments from its key lenders.


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Scotts Miracle-Gro dragged down by Bayer woes

Bayer drags Scotts Miracle-Gro down after Monsanto weed killer ruling

Scotts Miracle-Gro dragged down by Bayer woes, Stockwinners
Scotts Miracle-Gro dragged down by Bayer woes, Stockwinners

Shares of Bayer (BAYRY) trading in New York are sliding after the recently acquired Monsanto was ordered to pay $289M by a California court, who found it liable in a lawsuit alleging that the company’s Roundup caused cancer.

Commenting on the news, JPMorgan analyst Richard Vosser told investors that the selloff in the shares is “significantly overdone” as he sees the potential for the verdict to be overturned on appeal and for the damage amount to be greatly reduced.

Meanwhile, his peer at Bank of America Merrill Lynch argued that the ruling adds cloud over an important product for Scotts Miracle-Gro (SMG).

ROUNDUP RULING

Last week, a jury found Monsanto, which was recently acquired by Bayer for $63B, liable in a lawsuit alleging that the company’s glyphosate-based weedkillers, including its Roundup brand, caused cancer.

The case against Monsanto is the first of more than 5,000 similar lawsuits across the U.S.

The jury at San Francisco’s Superior Court of California found that Monsanto had failed to warn school groundskeeper Dewayne Johnson and other consumers of the cancer risks posed by its weed killers, and awarded Johnson $250M in punitive damages and about $39M in compensatory damages.

Monsanto, which plans to appeal the verdict, has denied that glyphosate causes cancer and has contended that decades of scientific studies have shown the chemical to be safe for human use.

SELLOFF ‘SIGNIFICANTLY OVERDONE’

In a research note to investors, JPMorgan’s Vosser said he views the selloff in shares of Bayer after a California jury ordered the company’s Monsanto unit to pay $289M for not warning of cancer risks posed by its weed killer, Roundup, as “significantly overdone.”

The analyst added that he sees the potential for the verdict to be overturned on appeal and for the damage amount to be greatly reduced. Overall, Vosser believes current share levels of Bayer provide a good long-term buying opportunity and reiterated an Overweight rating on the name.

RULING ‘ADDS CLOUD’ OVER IMPORTANT PRODUCT

Also commenting on the California court’s ruling, BofA/Merrill analyst Christopher Carey pointed out in a research note of his own that while the product is owned by Monsanto, Scotts Miracle-Gro is the exclusive distributor/marketer of consumer Roundup in the U.S. and Canada, with the brand on track to be about 15% to FY18 profit, but less in FY19 as a 3-year term for $20M annual payments from Monsanto ends in FY18.

Carey noted that he does not expect a ban of glyphosate, but argued that the court decision nevertheless “adds a cloud” over a product which is important for Scotts Miracle-Gro.

While any additional impact from Roundup is unclear, this adds another layer to risks, he contended, highlighting that the company already must overcome a number of headwinds in 2019.

The analyst reiterated an Underperform rating and $74 price target on Scotts Miracle-Gro’s shares. Meanwhile, his peer at SunTrust told investors that there is likely no legal risk to Scotts Miracle-Gro from Friday’s jury verdict in California.

As part of the master agreement between Scotts and Monsanto signed three years ago, Scotts is indemnified from any litigation relating to the Roundup/glyphosate issue, analyst William Chappell pointed out.

Further, the analyst noted that the company is not listed as a defendant in any of the cases filed against Monsanto.

Nevertheless, Chappell estimates that Roundup represents roughly 10% of Scotts’ EBITDA, and believes sales could be impacted over the long-term from these trials.

The analyst reiterated a Buy rating and $100 price target on Scotts Miracle-Gro’s shares.

PRICE ACTION

In Monday morning trading, shares of Bayer in New York have dropped over 10% to $23.75, while Scotts Miracle-Gro’s stock has slipped 2.25% to $73.65.


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Tribune Media terminates merger agreement with Sinclair Broadcast

Tribune Media terminates merger agreement with Sinclair Broadcast, files suit

Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners
Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners

Tribune Media (TRCO) announced that it has terminated its merger agreement with Sinclair Broadcast Group (SBGI), and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract.

The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.

In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval.

Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay-all in derogation of Sinclair’s contractual obligations.

Ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.

As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media’s CEO.

“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”


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Dun & Bradstreet sold for $6.9 billion

Dun & Bradstreet to be acquired by investor group for $145 per share cash

Dun & Bradstreet sold for $6.9 billion, Stockwinners
Dun & Bradstreet sold for $6.9 billion, Stockwinners

Dun & Bradstreet (DNB) announced that it has entered into a definitive merger agreement to be acquired by an investor group led by CC Capital, Cannae Holdings and funds affiliated with Thomas H. Lee Partners, L.P., along with a group of other distinguished investors.

Under the terms of the agreement, which has been unanimously approved by Dun & Bradstreet’s Board of Directors, Dun & Bradstreet shareholders will receive $145.00 in cash for each share of common stock they own, in a transaction valued at $6.9 billion including the assumption of $1.5 billion of Dun & Bradstreet’s net debt and net pension obligations.

The purchase price represents a premium of approximately 30% over Dun & Bradstreet’s closing share price of $111.63 on February 12, 2018, the last day of trading prior to Dun & Bradstreet’s announcement of a strategic review and an indication of its willingness to consider all options for value creation.

The transaction is expected to close within six months, subject to Dun & Bradstreet shareholder approval, regulatory clearances and other customary closing conditions.

The Dun & Bradstreet Board is unanimously recommending that shareholders vote to adopt the merger agreement at an upcoming special meeting of the shareholders.

Upon the completion of the transaction, Dun & Bradstreet will become a privately held company and shares of Dun & Bradstreet common stock will no longer be listed on any public market.

DNB closed at $122.80.


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BofI to acquire $3B of deposits from Nationwide Bank

BofI in pact to acquire $3B of deposits from Nationwide Bank, sees accretion

BofI to acquire $3B of deposits from Nationwide Bank, Stockwinners
BofI to acquire $3B of deposits from Nationwide Bank, Stockwinners

BofI Holding (BOFI), parent of BofI Federal Bank, announced that the Bank has signed a deposit purchase and assumption agreement with Nationwide Bank to acquire approximately $3B in deposits from Nationwide Bank, including $1B in checking, savings and money market accounts and $2B in time deposit accounts.

BofI and Nationwide Bank expect to receive regulatory approval and complete the deposit acquisition and transfer during the fourth quarter of 2018.

“We are excited to welcome Nationwide Bank’s nearly 100,000 deposit customers to BofI,” began Gregory Garrabrants, President and Chief Executive Officer of BofI Holding, Inc.

“Our track record of successfully completing similar transactions with Principal Bank and H&R Block provide us with a high degree of confidence that we will have a seamless transition.

We look forward to offering Nationwide Bank customers our full suite of consumer, commercial and small business banking products and services once the transaction closes.”

A deposit premium commensurate with the fair market value of the deposits purchased will be funded from excess capital at the Bank. The Company expects the transaction to be immediately accretive to earnings and tangible book value.

BOFI closed at $39.64.


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US Foods to acquire SGA’s Food for $1.8B

US Foods to acquire SGA’s Food group of Companies for $1.8B 

US Foods to acquire SGA's Food for $1.8B, Stockwinners
US Foods to acquire SGA’s Food for $1.8B, Stockwinners

US Foods (USFD) and Services Group of America announced that they have entered into a definitive agreement under which US Foods will acquire five operating companies collectively known as SGA’s Food Group of Companies, for $1.8B in cash.

The transaction has been unanimously approved by US Foods’ Board of Directors.

Headquartered in Scottsdale, Arizona, SGA’s Food Group of Companies has combined 2017 net sales of $3.2B and approximately 3,400 employees.

SGA’s Food Group of Companies currently operates as five separate operating companies.

US Foods will finance the acquisition primarily with $1.5B in fully committed term loan financing from J.P. Morgan and Bank of America Merrill Lynch and will fund the balance of the purchase price through its existing liquidity resources.

At the closing of the acquisition, US Foods’ pro forma net leverage is expected to be 4.1x.

Given the combined company’s strong cash flow generation, including synergies, US Foods expects to reduce net leverage to approximately 3.0x by the end of fiscal 2020. The acquisition is subject to regulatory approval and other customary closing conditions.

US Foods expects to achieve approximately $55M in annual run-rate cost synergies by the end of fiscal 2022, primarily driven by savings in distribution, procurement and administrative expenses.

The purchase price reflects a multiple of 12.5x SGA’s Food Group of Companies 2018E Adjusted EBITDA of $123 million, after taking into account the approximately $260 million estimated present value of cash tax benefits to be realized as a result of the acquisition. Including $55M in annual run-rate synergies, the price reflects a 2018E Adjusted EBITDA multiple of 8.6x.

Excluding amortization, the transaction is expected to become accretive to US Foods’ Adjusted EPS in the second full year following closing.

USFD closed at $40.60.


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Supervalu sold for $2.9 billion

United Natural Foods to acquire Supervalu for $32.50 per share in cash, or $2.9B

Supervalu sold for $32.50 per share in cash, or $2.9B, Stockwinners
Supervalu sold for $32.50 per share in cash, or $2.9B, Stockwinners

United Natural Foods (UNFI) and SUPERVALU (SVU) announced that they have entered into a definitive agreement under which UNFI will acquire SUPERVALU for $32.50 per share in cash, or approximately $2.9B, including the assumption of outstanding debt and liabilities.

UNFI expects to finance the transaction substantially with debt and Goldman Sachs provided committed financing in the transaction.

Over time, UNFI plans to divest SUPERVALU retail assets in a thoughtful and economic manner. Upon closing, UNFI’s net debt-to-EBITDA ratio is expected to be high.

With strong cash flows, proceeds from divestitures and commitment to reducing debt, the company anticipates reducing leverage by at least two full turns in the first three years.

The transaction has been approved by the boards of directors of both companies and is subject to antitrust approvals, SUPERVALU shareholder approval and other customary closing conditions, and is expected to close in the fourth quarter of calendar year 2018.

UNFI Chief Executive Officer and Chairman Steven Spinner will lead the combined entity. Sean Griffin, UNFI Chief Operating Officer, will lead the SUPERVALU integration efforts, post close and lead an integration committee comprised of executives from both companies to drive the implementation of best practices from each company and the delivery of important synergies and a rapid and smooth integration.

UNFI closed at $41.18.


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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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 Apollo in talks to acquire LifePoint Health

Apollo in advanced discussions to acquire LifePoint Health

Apollo in advanced discussions to acquire LifePoint Health, Stockwinners
Apollo in advanced discussions to acquire LifePoint Health, Stockwinners

Apollo Global (APO) is in advanced talks to buy LifePoint Health (LPNT), two people familiar with the matter told Reuters on Friday.

The deal could value LifePoint at nearly $6B, including debt, the sources said, adding that Apollo plans to combine LifePoint with RegionalCare Hospital Partners, another regional hospital operator that it owns.

If the negotiations are completed successfully, a deal could be announced as early as next week, the sources said, cautioning that it was possible talks could fail at the last minute. The sources asked not to be identified because the matter is confidential.

Rural healthcare providers such as LifePoint have been challenged in recent years because their reliance on federal insurers such as Medicare and Medicaid has made them particularly vulnerable to changing reimbursement programs. In addition, hospital operating costs have been rising faster than reimbursement rate increases.

Apollo, which raised a $24.6 billion private equity fund last year, acquired RegionalCare in 2015, and merged it with another hospital operator, Capella Healthcare, in 2016.

It would be by far the biggest acquisition for Apollo this year. LifePoint currently has a market capitalization of $1.9 billion and long-term net debt of $2.9 billion.

LPNT closed at $47.90.


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Dropbox drops as Facebook mulls switch to Google

Dropbox drops as Facebook mulls switch to Google for cloud storage

Dropbox drops as Facebook mulls switch to Google, Stockwinners
Dropbox drops as Facebook mulls switch to Google, Stockwinners

Shares of Dropbox (DBX) fell in morning trading following a report that said Facebook (FB) is considering moving its cloud storage away from the file hosting service.

FACEBOOK CONSIDERING SWITCH

Facebook is considering switching to Google (GOOG, GOOGL) for email and productivity applications, The Information reported earlier, citing two people with knowledge of the discussions.

The move would be a setback for Microsoft (MSFT), whose applications Facebook currently uses. Facebook, which has about 27,000 employees, stopped using Google apps inside the company several years ago. Additionally, Facebook is also considering moving its cloud storage to Google from Dropbox, according to The Information.

WHAT’S NOTABLE

Last month, Dropbox announced a new chapter in the evolution of Magic Pocket, its custom-built storage infrastructure, saying it is deploying Shingled Magnetic Recording, or SMR, drive technology to increase overall storage density, reduce the company’s physical data center footprint and provide significant cost savings without sacrificing performance or reliability.

Dropbox said at the time that it expects to have a quarter of its Magic Pocket infrastructure on SMR drive capacity by 2019. In its debut earnings report, Dropbox reported revenue of $316.3M, up 28% from the year-ago period.

PRICE ACTION

Shares of Dropbox are down about 4% to $31.03 in morning trading following the report.


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Arconic higher following report of private equity interest

Arconic higher following report of private equity interest

Arconic higher following report of private equity interest, Stockwinners
Arconic higher following report of private equity interest, Stockwinners

Shares of Arconic (ARNC) are rising following a report that the aluminum producer has received interest from private equity firms including Apollo Global Management (APO).

PE  INTEREST

Arconic has received takeover interest from private-equity firms, including Apollo Global, The Wall Street Journal reported Friday.

A deal for the aerospace parts maker, which currently has a market value of $8.3B, could be worth over $10B, but no buyout agreement is imminent, the report said.

The company, which also holds $6.4B in debt, has a tumultuous recent history, facing an activist investor campaign from Elliott Management after being separated from the aluminum business now known as Alcoa (AA) in 2016.

The campaign led to the resignation of former Arconic Chief Executive Officer Klaus Kleinfeld and an overhaul of the company’s board.

In addition, the company came under scrutiny after investigators discovered its aluminum composite panels contributed to the spread of a fire last year at London’s Grenfell Tower that killed 80 people.

At the time, Arconic said it had no control over how its products were used in the building.

‘PLAUSIBLE LBO CANDIDATE’

Following the WSJ report, Morgan Stanley analyst Rajeev Lalwani said two things stand out to make Arconic a “plausible” leveraged buyout candidate: Its low EV/EBITDA multiple, which creates potentially favorable entry and exit points, and its cash flow profile, which has room for improvement.

The analyst stated that a more lean and efficient approach could support considerably better cash generation.

While the reported private equity interest “adds a level of intrigue,” Lalwani still believes headwinds within it rings and disks business, working capital and CapEx issues and volatility associated with aluminum prices will be the key driver of shares in the near-term.

Given the aforementioned execution concerns, Lalwani kept an Equal Weight rating and $20 price target on Arconic shares.

‘VERY VIABLE LBO CANDIDATE’

Credit Suisse analyst Curt Woodworth said he views Arconic as a “very viable” leveraged buyout candidate given its “highly depressed” multiples, operational and financial mismanagement, and “very strong” positions in automotive and aerospace end markets.

The analyst believes the issues at Firth Rixson are “very fixable” as the company is a new entrant into the disks market and said Arconic could be worth $24-$26 per share in a buyout. Woodworth has an Outperform rating on the shares with a $28 price target.

WHAT’S NOTABLE

On Monday, Arconic announced it had signed a new long-term contract with Boeing (BA) to supply aluminum sheet and plate for all models produced by Boeing Commercial Airplanes.

The multiyear contract, which extends and adds to the companies’ 2014 contract, is the largest to date and captures growth in the build rate increases of the Boeing 737 program.

PRICE ACTION

Arconic rose about 10%, or $1.73, to $19.12 in morning.


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Dell to become a Public company again

Dell Technologies concludes strategic review

Dell to become a Public company again, Stockwinners
Dell to become a Public company again, Stockwinners

Dell Technologies (DVMT) announced that it has reached an agreement with its Special Committee of independent directors to exchange the outstanding Class V tracking stock for Class C common stock of Dell Technologies or an optional cash election.

Dell Technologies Class C common stock will become publicly listed on the New York Stock Exchange.

Dell Technologies will propose to exchange each share of Dell Technologies Class V tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or at the holder’s election, $109 in cash, subject to the aggregate amount of cash consideration not exceeding $9B.

All of the shares of Class V tracking stock of holders who do not opt to receive cash will be converted into Class C common stock, and the Class V tracking stock will be eliminated.

The offer of $109 in cash consideration per share represents a 29% premium to the Class V share closing price prior to announcement and gives holders of Class C common stock the opportunity to participate in Dell Technologies’ future value creation.

Following the close, current Class V stockholders will own 20.8%-31.0% of Dell Technologies, depending on cash election amounts. Based on an implied value of $109 per share, Dell Technologies, excluding the Class V common stock, had a pre-transaction equity value of $48.4 billion and a pro forma fully diluted equity value of $61.1 – 70.1 billion.

VMware’s board of directors, on the recommendation of a special committee of its directors, has voted to declare an $11 billion cash dividend pro rata to all VMware stockholders contingent on satisfaction of the other conditions to the completion of the transaction. Dell Technologies’ share of such dividend will be approximately $9 billion.

Dell Technologies intends to use the dividend proceeds to finance the cash consideration paid to Class V stockholders, with remaining cash proceeds, if any, being used to fund future share repurchases or debt pay-down.

In the most recent quarter, the company generated revenue of $21.4 billion, a 19% increase year-over-year, net loss decreased 55% to $0.5 billion and the company generated $2.4 billion of adjusted EBITDA, a 33% increase year-over-year.

Over the trailing twelve-month period Dell Technologies generated $82.4 billion of revenue with a net loss of $2.3 billion and cash flow from operations of $7.7 billion.

Over the same period, Dell generated $83.5 billion of non-GAAP revenue, $4.8 billion of non-GAAP net income and $9.7 billion of adjusted EBITDA.

Dell Technologies has maintained a disciplined pace of deleveraging, having paid down $13 billion of gross debt since its merger with EMC in September 2016.

A special committee of independent members of VMware’s board of directors recommended that the VMware board declare the contingent cash dividend to support the transaction.

Dell Technologies believes the elimination of the Class V tracking stock and simplification of the VMware ownership structure is beneficial to VMware Class A public stockholders. VMware Class A public stockholders will also participate pro rata in the significant return of capital.

VMware will remain an independent publicly traded company. VMware has benefited from substantial synergies as part of the Dell Technologies family. VMware generated approximately $400 million in growth synergies in FY18 related to its affiliation with Dell Technologies, and in FY19 is on track to achieve $700 million faster than initially expected.


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Pinnacle Foods sold for $10.9B in cash

Conagra Brands to acquire Pinnacle Foods for $10.9B in cash  and stock

 

Pinnacle Foods sold for $10.9B in cash , Stockwinners

Conagra Brands (CAG) and Pinnacle Foods (PF) announced that their boards of directors have unanimously approved a definitive agreement under which Conagra Brands will acquire all outstanding shares of Pinnacle Foods in a cash and stock transaction valued at approximately $10.9B, including Pinnacle Foods’ outstanding net debt.

Under the terms of the transaction, Pinnacle Foods shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock for each share of Pinnacle Foods held.

The implied price of $68.00 per Pinnacle Foods share is based on the volume-weighted average price of Conagra Brands’ stock for the five days ended June 21, 2018.

The purchase price reflects an adjusted EBITDA multiple of 15.8x, based on Pinnacle Foods’ estimated fiscal year 2018 results excluding synergies, and 12.1x adjusted EBITDA including run-rate cost synergies.

The combination of two growing portfolios of iconic brands will serve as a catalyst to accelerate value creation for shareholders.

The transaction will enhance Conagra Brands’ multi-year transformation plan and expand its presence and capabilities in its most strategic categories, including frozen foods and snacks.

With annual net sales in excess of $3B, Pinnacle Foods’ portfolio of frozen, refrigerated and shelf-stable products includes such well-known brands as Birds Eye, Duncan Hines, Earth Balance, EVOL, Erin’s, Gardein, Glutino, Hawaiian Kettle Style Potato Chips, Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others.

Based on both companies’ latest fiscal year results, pro forma net sales would have been approximately $11B.

Under the terms of the agreement, each share of Pinnacle Foods common stock will be converted into the right to receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock.

Conagra Brands has secured $9B in fully committed bridge financing from affiliates of Goldman Sachs Group (GS).

The $10.9B purchase price is expected to be financed with $3B of Conagra Brands equity issued to Pinnacle Foods shareholders and $7.9B in cash consideration funded with $7.3B of transaction debt and approximately $600M of incremental cash proceeds from a public equity offering and/or divestitures.

On a pro forma basis, Pinnacle Foods shareholders are expected to own approximately 16% of the combined company, assuming issuance of the incremental equity to the public.

Following the transaction, Conagra Brands’ pro forma net debt-to-EBITDA ratio is expected to be approximately 5.0x. Conagra Brands is committed to maintaining a solid investment grade credit rating and targeting a debt-to-EBITDA ratio of 3.5x.

Conagra Brands intends to maintain its quarterly dividend at the current annual rate of $0.85 per share during fiscal 2019.

In the future, it expects modest dividend increases while it focuses on deleveraging, subject to the approval of its board of directors.

The company also plans to repurchase shares under its authorized program only at times and in amounts as is consistent with the prioritization of achieving its leverage targets.

Pinnacle Foods will continue to pay its quarterly dividend at the current annual rate of $1.30 per share until the transaction is completed. The transaction is expected to close by the end of calendar 2018, subject to the approval of Pinnacle Foods shareholders, the receipt of regulatory approvals and other customary closing conditions.


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GE to spin off several divisions

  • GE Healthcare to become standalone company

  • GE plans to fully separate Baker Hughes

GE introduces new company AiRXOS, Stockwinners
GE to spin off several of its divisions

GE (GE) announced the results of its strategic review.

GE will focus on Aviation, Power and Renewable Energy, creating a simpler, stronger, leading high-tech Industrial company.

In addition to the pending combination of its Transportation business with Wabtec, GE plans to separate GE Healthcare into a standalone company, pursue an orderly separation from BHGE (BHGE) over the next two to three years, make its corporate structure leaner and substantially reduce debt.

GE’s Board of Directors unanimously approved the plans announced today.

GE is making fundamental changes to how it will run the company.

The new GE Operating System will result in a smaller corporate headquarters focused primarily on strategy, capital allocation, talent and governance.

It will result in better execution, increased speed and is expected to generate at least $500 million in corporate savings by the end of 2020.

Under the new GE Operating System, most resources and services traditionally held at the headquarters level will be realigned to the businesses. GE is targeting an Industrial net debt-to-EBITDA ratio of less than 2.5 times and a long-term A credit rating.

GE also plans to reduce Industrial net debt by approximately $25 billion by 2020 and maintain more than $15 billion of cash on the balance sheet.

GE expects to maintain its current quarterly dividend, subject to Board approval, until GE Healthcare is established as an independent entity.

At that time, the new GE Healthcare Board of Directors will determine GE Healthcare’s dividend policy, which GE expects to reflect healthcare industry practices.

Also at that time, the GE Board expects to adjust the GE dividend with a target dividend policy in line with industrial peers. Kieran Murphy, president and CEO of GE Healthcare, will continue to lead GE Healthcare as a standalone company, maintaining the GE brand.

GE expects to generate cash from the disposition of approximately 20% of its interest in the Healthcare business and to distribute the remaining 80% to GE shareholders through a tax-free distribution.

The structure, sequence and timing of these transactions will be determined and announced at a later date, but are expected to be completed over the next 12 to 18 months.

GE Healthcare will conduct business as usual throughout this process, continuing to serve its partners and customers.

GE plans to fully separate its 62.5% interest in BHGE in an orderly manner over the next two to three years. BHGE’s full stream offering brings together equipment, services and digital solutions to help its customers be more productive-a unique and powerful value proposition in a changing market.

The separation will provide BHGE with enhanced agility and the ability to focus on leading in the oil and gas industry.

Shares of the former DJIA component closed at $12.75.


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