Cypress Semiconductor sold for $23.85 a share

Infineon to acquire Cypress Semi in deal with enterprise value of EUR9B

Infineon to acquire Cypress Semi in deal with enterprise value of EUR9B , Stockwinners

Infineon Technologies (IFNNY) and Cypress Semiconductor Corporation (CY) announced that the companies have signed a definitive agreement under which Infineon will acquire Cypress for $23.85 per share in cash, corresponding to an enterprise value of EUR9B.

The companies said that expected economies of scale will create cost synergies of EUR180M per annum by 2022.

The complementary portfolios will enable the offering of further chip solutions with a revenue synergies potential of more than EUR1.5B per annum in the long term.

The offer price represents a 46% premium to Cypress’s unaffected 30-day volume-weighted average price during the period from 15 April to 28 May 2019, the last trading day prior to media reports regarding a potential sale of Cypress.

Cypress expects to continue its quarterly cash dividend payments until the transaction closes.

This includes Cypress’s previously announced quarterly cash dividend of 11c per share, payable on July 18, 2019 to holders of record of Cypress’s common stock at the close of business on June 27, 2019.

The funding of the acquisition is fully underwritten by a consortium of banks. Infineon is committed to retaining a solid investment grade rating and, consequently, Infineon intends to ultimately finance approximately 30 percent of the total transaction value with equity and the remainder with debt as well as cash on hand.

The financial policy to preserve a strategic cash reserve remains in place. The acquisition is subject to approval by Cypress’s shareholders and the relevant regulatory bodies as well as other customary conditions.

The closing is expected by the end of calendar year 2019 or early 2020.

Hassane El-Khoury, President and CEO of Cypress, said:

“The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves. This announcement is not only a testament to the strength of our team in delivering industry-leading solutions worldwide, but also to what can be realized from uniting our two great companies. Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees.”

CY closed at $17.82. IFNNY closed at $17.77.

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HP Enterprise to acquire Cray for $35 per share

HP Enterprise to acquire Cray in deal valued at $1.3B

HP Enterprise to buy Cray Research, Stockwinners

Hewlett Packard Enterprise (HPE) and Cray (CRAY) announced that the companies have entered into a definitive agreement under which HPE will acquire Cray for $35.00 per share in cash, in a transaction valued at approximately $1.3B, net of cash.

Cray Inc. designs, develops, manufactures, markets, and services computing products for high-performance computing, data analytics, and AI markets. It operates through Supercomputing, Storage and Data Management, Maintenance and Support, and Engineering Services and Other segments. 

Cray sold to HPE for $1.3 billion, Stockwinners

“Bringing together HPE and Cray enables an enhanced financial profile for the combined company that includes several revenue growth opportunities and cost synergies.

The companies expect the combination to drive significant revenue growth opportunities by:

Capitalizing on the growing HPC segment of the market and Exascale opportunities; Enhancing HPE’s customer base with a complementary footprint in federal business and academia and the company’s ability to accelerate commercial supercomputing adoption; Introducing new offerings in AI / ML and HPC-as-a-service with HPE GreenLake; We also expect to deliver significant cost synergies through efficiencies and by leveraging proprietary Cray technology, like the Slingshot interconnect, to lower costs and improve product performance.”

As a result of the enhanced financial profiles of the combined companies, the deal is expected to be accretive to HPE non-GAAP operating profit and earnings in the first full year following the close.

As part of the transaction, HPE expects to incur one-time integration costs that will be absorbed within HPE’s FY20 free cash flow outlook of $1.9B-$2.1B that remains unchanged.

The transaction is expected to close by the first quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions.

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Quantenna sold for $1.07 billion

ON Semiconductor to acquire Quantenna for $24.50 per share

Quantenna sold for $1.07 billion, Stockwinners

ON Semiconductor Corporation (ON) and Quantenna Communications, Inc. (QTNA) announced that they have entered into a definitive agreement for ON Semiconductor to acquire Quantenna for $24.50 per share in an all cash transaction.

The acquisition consideration represents equity value of approximately $1.07B and enterprise value of approximately $936M, after accounting for Quantenna’s net cash of approximately $136M at the end of fourth quarter of 2018.

The acquisition significantly enhances ON Semiconductor’s connectivity portfolio with the addition of Quantenna’s industry leading Wi-Fi technology and software capabilities.

Following consummation, the transaction is expected to be immediately accretive to ON Semiconductor’s non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles.

The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction through cash on hand and available capacity under its existing revolving credit facility.

Completion of the transaction is subject to approval by Quantenna’s stockholders, regulatory approvals and other customary closing conditions.

The transaction has been approved by ON Semiconductor’s and Quantenna’s boards of directors and is expected to close in the second half of 2019.

No approval of the stockholders of ON Semiconductor is required in connection with the proposed transaction.

Note that QNTA was featured by Stockwinners on February 22 at $18.00.

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Economy expanded at a moderate rate

Fed’s Beige Book says “economic activity continued to expand”



Fed’s Beige Book says economic activity continued to expand , Stockwinners


Fed’s Beige Book: “economic activity continued to expand in late January and February,” said the report.

But 10 Districts noted “slight-to-moderate” growth, with Philly and St Louis reporting flat conditions. That’s the most tepid characterization in sometime, as the more normal description has been “moderate” to “modest.”

About half of the Districts said the shutdown weighed on some sectors, including consumer spending was mixed, but in part due to “harsh winter weather and higher costs of credit.”

Manufacturing generally strengthened but “numerous” contacts worries about weaker global growth, higher costs due to tariffs, and continued trade policy uncertainty.

The service sector increased at a modest-to-moderate pace. Also, residential construction activity was steady or slightly higher in most of the U.S., but home sales were generally lower.

There was little change in the employment outlook, with employment increasing in most Districts, with “modest-to-moderate gains in a majority of Districts and steady to slightly higher employment in the rest.

Labor markets remained tight for all skill levels.

Wages continued to increase for both low- and high-skilled positions, and a majority of Districts reported increases were moderate.

And for prices, they continued to increase at a modest-to-moderate pace, “with several Districts noting faster growth for input prices than selling prices. The ability to pass on higher input costs to consumers varied by region and industry.”

The report (prepared by KC Fed with data collected on or before February 25) is consistent with the FOMC’s outlook for slower growth with tame inflation.

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Top Stories for weekend of February 22

U.S. extends trade talk deadline with China

As a result of these very… productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1.

1. Using his Twitter account, President Donald Trump said that, “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.

Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

2. Kraft Heinz (KHC) has tapped investment bank Credit Suisse to review options for its Maxwell House coffee business, which could include a potential sale, CNBC’s Lauren Hirsch reported, citing people familiar with the matter. Based off valuations for other sales of consumer brands, a sale could fetch a price of at least $3B, sources said.

3. While investors are cheering indications of progress being made toward a resolution of trade issues between China and the U.S., the battle for tech supremacy between the two global superpowers shows few signs of abating, Reshma Kapadia wrote in this week’s edition of Barron’s. Global chip makers remain highly reliant on China, which makes just 30% of the chips it actually needs, the publication noted.

Companies with revenue exposure to china include Qualcomm (QCOM), Micron (MU), Marvell Technology (MRVL), Broadcom (AVGO), NXP Semiconductors (NXPI), AMD (AMD), Maxim Integrated Devices (MXIM), Applied Materials (AMAT), Intel (INTC), Xilinx (XLNX), Skyworks (SWKS), Nvidia (NVDA), Analog Devices (ADI), Lam Research (LRCX), and KLA-Tencor (KLAC).

How to train your dragon top the box office, Stockwinners

4. Comcast (CMCSA; CMCSK) subsidiary Universal’s “How to Train Your Dragon: The Hidden World” won the weekend with a franchise-best launch of $55.5M from 4,259 theaters in North America, the top opening of the year so far. Overseas, the threequel earned another $34.7M from 53 market for a foreign total of $216.9M and $274.9M globally. The movie sports an audience grade of A and a 92% Rotten Tomatoes score.

5. Altria Group’s (MO) and WellCare Health (WCG) saw positive mentions in Barron’s, while Windstream (WIN) was mentioned cautiously.

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Finisar sold for $3.2 billion

II-VI to acquire Finisar for $26 per share in cash/stock deal

Finisar sold for $3.2 billion, Stockwinners
Finisar sold for $3.2 billion, Stockwinners

II-VI (IIVI) and Finisar (FNSR) announced that they have entered into a definitive merger agreement under which II-VI will acquire Finisar in a cash and stock transaction with an equity value of approximately $3.2B.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, Finisar’s stockholders will receive, on a pro-rated basis, $15.60 per share in cash and 0.2218x shares of II-VI common stock, valued at $10.40 per share based on the closing price of II-VI’s common stock of $46.88 on November 8, 2018.

The transaction values Finisar at $26.00 per share, or approximately $3.2B in equity value and represents a premium of 37.7% to Finisar’s closing price on November 8, 2018. Finisar shareholders would own approximately 31% of the combined company.

The combination of II-VI and Finisar would unite two innovative, industry leaders with complementary capabilities and cultures to form a formidable industry leading photonics and compound semiconductor company capable of serving the broad set of fast growing markets of communications, consumer electronics, military, industrial processing lasers, automotive semiconductor equipment and life sciences.

Together, II-VI and Finisar will employ over 24,000 associates in 70 locations worldwide upon closing of the transaction. On a pro forma basis, the combined company had approximately $2.5B of annual revenue.

The combined broad base of talent, technology and manufacturing is expected to enhance the ability to better address near-to medium-term opportunities and accelerate revenue growth.

The combined company expects to realize $150M of run-rate cost synergies within 36 months of closing. Synergies are expected to be achieved from procurement savings, internal supply of materials and components, efficient research and development, consolidation of overlapping costs and sales and marketing efficiencies.

The transaction is expected to drive accretion in Non-GAAP earnings per share for the first full year post close of approximately 10% and more than double that thereafter.

II-VI intends to fund the cash consideration with a combination of cash on hand from the combined companies’ balance sheets and $2 billion in funded debt financing.

The transaction is expected to close in the middle of calendar year 2019, subject to approval by each company’s shareholders, antitrust regulatory approvals and other customary closing conditions.Upon closing of the transaction, Dr. Mattera will continue to serve as President and CEO of the combined company.

In addition, in connection with the closing of the transaction, three Finisar board members will be appointed to the II-VI board, which will be expanded to 11 directors.


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Electro Scientific sold for $1 billion

MKS Instruments to acquire Electro Scientific for $30.00 per share

Electro Scientific sold for $1 billion, Stockwinners
Electro Scientific sold for $1 billion, Stockwinners

MKS Instruments (MKSI) and Electro Scientific (ESIO) announced that they have entered into an agreement for MKS to acquire ESI for $30.00 per share.

The all-cash transaction is valued at approximately $1B.

The combined company is expected to have approximately $2.2B in pro forma annual revenue, based on the two companies’ calendar 2017 historical results.

The transaction is expected to be accretive to MKS’ non-GAAP net earnings and free cash flow during the first 12 months post-closing.

The combined company expects to realize $15M in annualized cost synergies within 18 to 36 months.

MKS anticipates the acquisition will further advance the MKS strategy to enhance our Surround the WorkpieceSM offerings by adding systems expertise and deep technical understanding of laser materials processing interactions.

ESI’s knowledge in printed circuit board processing systems and other capabilities will provide MKS the opportunity to accelerate the roadmaps and performance of laser, motion and photonics portfolio.

In addition, ESI brings a new platform of industrial markets enabling MKS to leverage its expertise more broadly. MKS intends to fund the transaction with a combination of available cash on hand and up to $650M in committed term loan debt financing.

On a pro forma basis, as if the transaction closed on June 30, we expect the combined company to have a strong balance sheet with combined pro forma net cash and investments of approximately $400M and total term loan debt outstanding of $1B. This would result in pro forma trailing twelve month leverage, defined as debt to Adjusted EBITDA of 1.3 times and pro forma net leverage of 0.8 times.

Actual leverage ratios will depend upon a number of factors and shall be determined at the time of the closing. The company has also obtained a commitment to upsize its asset based revolving credit facility to $100M.

The transaction has been unanimously approved by the MKS and ESI boards of directors and is subject to customary closing conditions, including regulatory approvals and approval by ESI’s shareholders, and is expected to close in Q1 of 2019.


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Integrated Device Technology sold for $6.7 billion

Renesas acquires Integrated Device for $49 per share or $6.7B

 

Integrated Device Technology sold for $6.7 billion, Stockwinners
Integrated Device Technology sold for $6.7 billion, Stockwinners

Renesas Electronics (RNECY) and Integrated Device Technology (IDTI) announced they have signed a definitive agreement under which Renesas will acquire IDT for $49.00 per share in an all-cash transaction representing an equity value of approximately $6.7B.

The stock closed yesterday down 58c to $42.08. Closing of the transaction is expected to occur in the first half of 2019, following approvals by IDT shareholders and the relevant regulatory authorities.

Renesas anticipates near- and long-term revenue growth from “expanded opportunities and access to fast-growing industries, and cost savings from a greater scale business platform to bring innovation and improvements” with an expected financial impact of approximately over $250M.

The transaction is expected to be accretive to Renesas’ non-GAAP gross margin and non-GAAP earnings per share by approximately 1.6%pts and 18%, respectively, immediately after closing.

Renesas plans to finance the transaction with cash reserves and approximately 679B yen of bank loans. Renesas does not intend to raise equity financing for this transaction. T

he companies said, “The acquisition combines two recognized leaders in embedded processors and analog mixed-signal semiconductors, each with unique strengths in delivering products to improve performance and efficiency in high-computing electronic systems. The boards of directors of both companies have unanimously approved the transaction.”


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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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Market higher at midday

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800 for the first time since the middle of March.

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners
Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners

The Dow has also been strong, though not much of that outperformance is due to JPMorgan (JPM) after the bank and several of its large peers kicked off earnings season with their reports this morning.

ECONOMIC EVENTS:

In the U.S., the June trade price report was mixed, with a weaker than expected 0.4% import price decline and a stronger than expected 0.3% increase in export prices.

The University of Michigan consumer sentiment survey was weaker than expected, falling 1.1 points to a 6-month low of 97.1 in the preliminary print for July. In Asia, China’s exports were strong in June, rising 11.3%, while imports fell a bit short of expectations with an increase of 14.1%.

COMPANY NEWS:

Shares of JPMorgan advanced fractionally after it started off this summer’s earnings season by reporting better than expected earnings for the second quarter. Of note, the bank’s CEO Jamie Dimon said he sees “good global economic growth, particularly in the U.S.”

Meanwhile, Wells Fargo (WFC) slipped 2% after reporting downbeat results for Q2, with the company noting in presentation slides that the third party review of customer accounts is “ongoing.”

Citi (C) shares also fell about 2% after its quarterly report, though the bank’s headline earnings for the quarter beat analysts’ estimates.

In addition, PNC Financial (PNC) reported better than expected results for the quarter and guided for third quarter net interest income to be up low-single digits…

Meanwhile, AT&T (T) was in focus after the U.S. Department of Justice said it plans to appeal the approval of the merger between AT&T and Time Warner. In an interview on CNBC this morning, AT&T CEO Randall Stephenson said that he doesn’t know exactly what the government basis will be for an appeal and that the move by the DOJ “changes nothing”.

Johnson & Johnson (JNJ) dipped about 1% after a Missouri jury awarded $4.69B to 22 women who alleged that use of J&J’s talcum powder products caused their ovarian cancer. The jury award includes $550M in compensatory damages and $4.14B in punitive damages against the company. J&J responded by saying it “intends to pursue all available appellate remedies.”

MAJOR MOVERS:

Among the noteworthy gainers was Biocept (BIOC), which surged 58% after it announced a provider agreement with Alliance Global FZ.

Also higher was Achillion (ACHN), which gained 13% after it said it began dosing in its Phase 1 trial of ACH-5548. Among the notable losers was Gogo (GOGO), which fell 11%, reversing last night’s afterhours gains following the company’s announcement of a strategic review.

Also lower was Ingredion (INGR), which dropped 11% after it announced a $125M cost savings program, provided lower than expected Q2 guidance, and cut its outlook for fiscal 2018.

INDEXES:

Near midday, the Dow was up 93.18, or 0.37%, to 25,018.07, the Nasdaq was up 13.35, or 0.17%, to 7,837.26, and the S&P 500 was up 4.74, or 0.17%, to 2,803.03.


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Xplore Technologies sold for $90 million

Zebra Technologies to acquire Xplore Technologies for $6.00 per share 

 

Xplore Technologies sold for $90 million, Stockwinners
Xplore Technologies sold for $90 million, Stockwinners

Zebra Technologies (ZBRA) and Xplore Technologies (XPLR) announced that their boards of directors have approved a definitive agreement in which Zebra will acquire all outstanding common stock of Xplore for $6.00 per share in cash.

Under the terms of the agreement, Zebra plans to implement the acquisition via a tender offer. Xplore has established a leading position as an innovative developer of semi-, fully- and ultra-rugged tablets, 2-in-1 laptops, and a range of performance matched accessories.

These products serve existing vertical markets for Zebra such as retail, manufacturing, transportation & logistics and healthcare, and provide an inroad into new markets including oil & gas, utility, government and public safety. Xplore generated revenue of $87M in the 12-month period ended March 31.

Zebra is effecting the acquisition through a public tender offer for 100% of the shares of Xplore.

In connection with the execution of the merger agreement, certain Xplore shareholders have entered into tender support agreements with Zebra pursuant to which they have agreed to tender their shares to Zebra’s offer.

The aggregate consideration of the transaction, including assumed indebtedness, is expected to be less than or equal to $90M.

Zebra expects to fund the transaction with a combination of cash on hand along with fully committed financing available under its credit facility. The transaction is subject to customary closing conditions and is expected to close in Q3.

XPLR closed at $4.12.


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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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Xcerra sold for $796 million

Cohu to acquire Xcerra in cash, stock deal valued around $796M

Xcerra sold for $796 million, Stockwinners
Xcerra sold for $796 million, Stockwinners

Cohu (COHU) and Xcerra (XCRA) announced they have entered into a definitive merger agreement pursuant to which Cohu will acquire Xcerra for a combination of cash and stock.

The acquisition is expected to make Cohu a global leader in semiconductor test, with combined sales for Cohu and Xcerra in excess of $800M for the last twelve months.

Upon the closing of the transaction, Xcerra shareholders will be entitled to receive $9.00 in cash and 0.2109 of a share of Cohu common stock, subject to the terms of the definitive agreement.

Based on the closing price of Cohu common stock as of May 7, 2018, the transaction values Xcerra at $13.92 per share, or approximately $796M in equity value, with a total enterprise value of approximately $627M, after excluding Xcerra’s cash and marketable securities net of the debt on its balance sheet as of January 31, 2018.

The transaction value represents a premium of 8.4% to Xcerra’s closing price on May 7, 2018, and a premium of 15.4% to Xcerra’s 30-day average closing price.

The transaction is expected to be immediately accretive to non-GAAP earnings per share and generate over $20M of annual run-rate cost synergies within 2 years of closing, excluding stock-based compensation and other charges.

Xcerra shareholders are expected to own approximately 30% of the combined company upon the closing of the transaction. The transaction has been unanimously approved by the boards of both companies.

The transaction is expected to close in the second half of calendar year 2018, subject to approval by both companies’ respective shareholders, antitrust regulatory approvals and other customary closing conditions.


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Apple announces new $100B buyback program, boosts dividend by 16%

Apple announces new $100B buyback program, boosts dividend by 16%

Stocks to Buy, Stocks to Buy on Margin, Stocks to invest in, stocks to own
Apple announces new $100B buyback program, boosts dividend by 16%

Apple (AAPL) said it will complete the execution of the previous $210B share repurchase authorization during fiscal Q3 and announced a new $100B buyback program.

Its board has declared a cash dividend of 73c per share of Apple’s common stock payable on May 17, to shareholders of record as of the close of business on May 14.

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO.

“With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure.

Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Separately, Apple reported Q2 EPS $2.73, consensus $2.69 – Reported Q2 revenue $61.1B, consensus $60.98B.

Apple reported Q2 iPhone units 52.22M vs. 50.76M last year – Reported Q2 iPad units 9.11M vs. 8.92M last year. Reported Q2 Mac units 4.08M vs. 4.2M last year.

AAPL closed at $169.10.


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Barron’s is bullish on GM and Delta

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

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BULLISH   MENTIONS:

Delta, GM look cheap, with growth potential – While a solid start to earnings season helped push share prices higher earlier this week, some remain deeply discounted, Jack Hough writes in this week’s edition of Barron’s. Despite Delta Air Lines’ (DAL) pessimistic valuation, consolidation has left only a handful of key players and the company faces less competition in key markets than some of its peers, the report adds. Additionally, Goodyear Tire (GT), General Motors (GM) and Lincoln National (LNC) also made the valuation cutoff, Hough says.

General Mills shares fall to ‘bargain territory.’  – General Mills (GIS) has fallen 27% so far this year and while the drop seems deserved because earnings growth has stalled, a closer look suggests sales trends are improving, thanks in part to new-product launches, Jack Hough writes in this week’s edition of Barron’s.

Cruise operators can offer ‘nice’ yields, solid dividend growth – Cruise operators, like Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH), can offer nice yields and solid dividend growth, but economic downturns can pressure payouts, Lawrence Strauss writes in this week’s edition of Barron’s. Another option for investors looking for yield among cruise operators is Walt Disney (DIS), the report added. The entertainment company has a wide variety of holdings, and while its cruise business did not account for a large portion of its $55B of sales last year, it is not insignificant either.

Tech giants may make own custom chips to get edge on one another. – There has been a tension between the world’s largest tech companies- Alphabet (GOOG; GOOGL), Amazon (AMZN), Facebook (FB), Apple (AAPL), Microsoft (MSFT), Baidu (BIDU), and Alibaba (BABA)-and the chip companies they rely on, especially Intel (INTC) and Nvidia (NVDA), Tiernan Ray writes in this week’s edition of Barron’s. While the giants buy massive quantities of Intel’s microprocessors, and Nvidia’s graphics chips, or GPUs, to power their data centers, they are also in an arms race to have the best artificial-intelligence-based machine-learning functions, the report noted, adding that there was always the possibility they may decide to buy fewer off-the-shelf parts and make their own custom chips to get an edge on one another.

 MPL valuations look cheap – Master limited partnerships’ valuations appear cheap, and U.S. energy production is thriving, lifting cash flows for pipeline firms, Darren Fonda writes in this week’s edition of Barron’s. MLP, such as Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), MPLX (MPLX), Plains All American Pipeline (PAA), could reward investors with higher yields as cash flows rise, Fonda adds.

OTHER MENTIONS

Trump’s tweets politicize U.S. markets, Barron’s says – With President Donald Trump, both politics and business appear personal as he continues his tweets aimed at individual companies, Vito Racanelli writes in this week’s edition of Barron’s. Before and after the election, he consistently aimed arrows at Amazon.com (AMZN) and at the proposed acquisition of Time Warner (TWX) by AT&T (T), the report noted. The President is not alone in singling out companies, Racanelli points out, adding that Democratic candidate Hillary Clinton also took issue with Mylan’s (MYL) price increases for its EpiPen. Maybe it is a sign of the times, but the rise of powerful social-media platforms is the key enabling factor, the report said.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.