Tesla nears China Manufacturing

The agreement with the city of Shanghai would allow Tesla to build facilities in its Lingang development zone

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Tesla Inc. (TSLA) said it is close to an agreement to produce vehicles in China for the first time.

The agreement with the city of Shanghai would allow Tesla to build facilities in its Lingang development zone. Tesla would need to set up a joint venture with at least one local partner under existing rules and it isn’t immediately clear who that would be.

Setting up local production is key for Tesla to continue growing in China, where Tesla’s revenue tripled to more than $1 billion last year.

Assembling vehicles locally would allow the company to avoid a 25 percent tax that renders Model S sedans and Model X sport utility vehicles more expensive than in the U.S.

Bringing down the costs of electric cars is crucial to Tesla’s ambitions to reach more mass market consumers. Next month, Tesla is slated to begin rolling out the Model 3, a more affordable and smaller electric sedan. Tesla has yet to launch the Model 3 in China.

In the U.S., consumers stood in long lines to place $1,000 deposits for the vehicle. Tesla sold 80,000 cars in 2016 and aims to boost it by about 7-fold to 500,000 annually by 2018.

In March, Tencent Holdings Ltd., China’s biggest internet company, bought a 5 percent stake in Tesla for $1.8 billion. Teaming up with Tencent could help the automaker gain traction in a market where more than 200 companies have announced plans to build new-energy vehicles.

Tesla purchased its only vehicle assembly plant in Fremont, California, from Toyota Motor Corp. in 2010 for just $42 million. The company has estimated the cost of its battery gigafactory near Reno, Nevada, may eventually reach about $5 billion. The company said it plans to build another 4-5 gigafactories in the next few years.

Shares of Tesla (TSLA) are trading at an all time high pre-market trading. Shares have gained 73% year-to-date in 2017.

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Parexel Sold for $5 billion

PAREXEL sold for $88.10 per share in cash for $5B, including PAREXEL’s net debt

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PAREXEL International Corporation (PRXL) and Pamplona Capital Management announced that they have entered into a definitive agreement under which Pamplona will acquire all of the outstanding shares of PAREXEL for $88.10 per share in cash in a transaction valued at approximately $5B, including PAREXEL’s net debt.

PAREXEL International Corporation provides clinical research and logistics, medical communications, consulting, commercialization, and advanced technology products and services for pharmaceutical, biotechnology, and medical device industries worldwide.

The purchase price represents a 27.9% premium to PAREXEL’s unaffected closing stock price on May 5, 2017, the last trading day prior to published market speculation regarding a potential transaction involving the Company; a 38.5% premium to the unaffected 30-day volume weighted average closing share price of PAREXEL’s common stock ended May 5, 2017; and a 23.3% premium to the Company’s undisturbed 52-week high.

“Today’s announcement is the culmination of a comprehensive review of the opportunities available to the Company, including interest solicited and received from multiple parties with the assistance of independent financial and legal advisors. Having considered these opportunities, the PAREXEL Board of Directors unanimously determined that this all-cash transaction and the significant, certain value it provides is in the best interest of PAREXEL shareholders, as well as our company,” said Josef von Rickenbach, Chairman and CEO of PAREXEL.

Bank of America Merrill Lynch (BAC) and J.P. Morgan Chase Bank, N.A. (JPM) have provided committed financing for the transaction. The transaction is expected to close early in the fourth quarter of 2017, subject to the approval of a majority of PAREXEL shareholders and the satisfaction of other customary closing conditions.

PAREXEL expects to hold a Special Meeting of Shareholders to consider and vote on the proposed agreement with Pamplona as soon as practicable after the mailing of the proxy statement to shareholders.

The PAREXEL Board of Directors unanimously approved the transaction and intends to recommend that all PAREXEL shareholders vote to approve the agreement with Pamplona.

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

Goldman Sachs & Co. LLC  (GS) is acting as financial advisor to PAREXEL, and Goodwin Procter LLP is serving as legal counsel. Perella Weinberg Partners LP is acting as financial advisor to Pamplona, and Kirkland & Ellis LLP is serving as legal counsel.

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Boeing Raises Forecast for Aircraft Demand

Boeing projects need for 41,030 new aircraft over 20 years, valued at $6.2T

The single-aisle segment will see the most growth over the forecast

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Boeing  (BA) has raised its forecast for new airplane demand, projecting the need for 41,030 new airplanes over the next 20 years valued at $6.1T.

The company’s annual Current Market Outlook, or CMO, was released today at the Paris Air Show, with total airplane demand rising 3.6 percent over last year’s forecast.

“Passenger traffic has been very strong so far this year, and we expect to see it grow 4.7 percent each year over the next two decades,” said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes.

“The market is especially hungry for single-aisle airplanes as more people start traveling by air.”

The single-aisle segment will see the most growth over the forecast, fueled by low-cost carriers and emerging markets. 29,530 new airplanes will be needed in this segment, an increase of almost 5 percent over last year.

The forecast for the widebody segment includes 9,130 airplanes, with a large wave of potential replacement demand beginning early in the next decade.

With more airlines shifting to small and medium/large widebody airplanes like the 787 and 777X, the primary demand for very large airplanes going forward will be in the cargo market.

Boeing projects the need for 920 new production widebody freighters over the forecast period.

The Asia market, including China, will continue to lead the way in total airplane deliveries over the next two decades. Worldwide, 57 percent of the new deliveries will be for airline growth, while 43 percent will be for replacement of older airplanes with new, more fuel efficient jets.

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GrubHub Could be next Amazon target

The hypothetical merger would be a “nice complement” to the Whole Foods purchase

 

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Research firm #Wedbush hypothetized Monday that #Amazon (AMZN) could look to acquire food delivery company GrubHub (GRUB) following its Whole Foods (WFM) deal.

GrubHub Inc. provides an online and mobile platform for restaurant pick-up and delivery orders in the United States. The company connects approximately 50,000 local restaurants with diners in approximately 1,100 cities.

POSSIBLE AMAZON TARGET

In an investor note Monday, Wedbush’s Aaron #Turner argued that #GrubHub “may be” Amazon’s next acquisition target after Whole Foods.

The ecommerce leader already tried an internally-developed delivery platform but achieved “minimal success.” Meanwhile, GrubHub has continued to successfully expand into new markets and an acquisition would allow Amazon to dominate food delivery, Turner argues.

The hypothetical merger would be a “nice complement” to the Whole Foods buy given their similar geographic and demographic overlap, the analyst contends, adding that Amazon could unlock synergies between GrubHub’s infrastructure and, for example, its own grocery delivery push.

Turner also believes it’s “not insignificant” that GrubHub is already fully integrated with Amazon’s #Echo device, arguing that that relationship could help “grease the pan” for a potential takeover.

Assuming a similar premium to Whole Foods, the analyst calls a deal price around $55 per share “well within the realm of possibility.” Turner reiterates an Outperform rating and $50 target on GrubHub.

PRICE ACTION:

Shares of GrubHub are up 5.3% to $45.62 in afternoon trading.

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Tegna to sell 85% of CareerBuilder to Apollo Global for $250 million

Apollo Global Management to buy CareerBuilder from Tegna

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TEGNA (TGNA) announced it has entered into a definitive agreement, together with the other owners of CareerBuilder to sell CareerBuilder to an investor group led by investments funds managed by affiliates of Apollo Global Management, LLC (APO) and the Ontario Teachers’ Pension Plan Board.
TEGNA’s estimated cash proceeds from the sale are expected to be approximately $250M, which will be used to retire existing debt and for other general corporate purposes.
As part of the agreement, TEGNA will remain an ongoing partner in CareerBuilder, reducing its current 53% controlling interest to 12.5% on a fully-diluted basis once the proposed transaction is complete.
As a result, CareerBuilder will no longer be consolidated within TEGNA’s reported operating results and will instead be reflected as an equity investment within TEGNA’s financial statements.
Earlier this years, TEGNA sold Cars.com in an IPO. The parent of USA Today, previously known as Gannett is spinning off parts of its operation to pay down debt.
The proposed transaction is subject to receipt of customary regulatory approvals and satisfaction of other conditions and is expected to close in the third quarter of 2017.
TEGNA was advised by Morgan Stanley on the proposed transaction and was also assisted by Greenhill & Co. Wachtell, Lipton, Rosen & Katz acted as legal advisor.

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Novadaq sold for $701 million

Stryker to buy Novadaq for $701M

The transaction will be carried out by way of a court approved plan of arrangement under the Canada Business Corporations Act

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#Novadaq Technologies (NVDQ) announced that it has entered into a definitive arrangement with Stryker (SYK) pursuant to which Stryker has agreed to acquire all of the issued and outstanding shares of Novadaq for $11.75 per share in cash, implying a total equity value of approximately $701M.

Novadaq Technologies Inc. develops, manufactures, and markets fluorescence imaging products for use by surgeons in the operating room and other clinical settings in the United States and internationally. The company offers SPY Elite, a fluorescence imaging system that enables surgeons performing open procedures, such as breast and other reconstruction, gastrointestinal, and cardiothoracic surgery, to visualize microvascular blood flow and perfusion in tissue intraoperatively. It also provides PINPOINT endoscopic fluorescence imaging systems; LUNA fluorescence angiography system that provides clinicians with real-time visualization of tissue perfusion in patients.

Stryker Corporation (SYK) operates as a medical technology company.

The transaction will be carried out by way of a court approved plan of arrangement under the Canada Business Corporations Act and will require the approval of, among others, the holders of at least 66 2/3% of the Novadaq Shares present in person or represented by proxy at a special meeting of Novadaq shareholders to be called to consider the Arrangement.

The Special Meeting is expected to be held on or about August 4.

Novadaq’s board and the Special Committee have also received a fairness opinion from each of Piper Jaffray and Perella Weinberg Partners in connection with the Arrangement to the effect that, as of the date of such opinions, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Novadaq’s shareholders pursuant to the Arrangement is fair from a financial point of view.

In addition to shareholder and court approvals, the Arrangement is subject to applicable regulatory approvals, including Canadian Competition Act and U.S. Hart-Scott-Rodino approvals, and the satisfaction of certain other closing conditions customary in transactions of this nature. The transaction is not subject to a financing condition.

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PerkinElmer to buy EUROIMMUN for $1.3B in cash

PerkinElmer to buy Germany’s EuroImmun for $1.3B in cash

PerkinElmer reaffirms its 2017 revenue and EPS guidance

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PerkinElmer (PKI) announced that it has entered into a definitive agreement to acquire EUROIMMUN Medical Laboratory Diagnostics AG. The agreement provides that PerkinElmer will acquire up to a 100% stake in EUROIMMUN.

The total purchase price of the transaction based on all outstanding shares being acquired will be approximately $1.3B in cash.

EUROIMMUN is based in Lubeck, Germany, with approximately 2,400 employees. The company has extensive expertise and capabilities across immunology, cell biology, histology, biochemistry and molecular biology.

EUROIMMUN is expected to generate approximately $310M in revenue this year, and over the last five years, the company has averaged revenue growth of 19%.

In 2016, the company generated sales in more than 130 countries worldwide, with approximately 45% of revenues in China, 30% in Europe, Middle East & Africa, 5% in the Americas and 20% in Rest of World.

The transaction is subject to customary closing conditions and is currently anticipated to close in the fourth quarter of 2017 following the receipt of required standard regulatory approvals. The acquisition is expected to be accretive to PerkinElmer’s 2018 non-GAAP EPS results by approximately 28c-30c. Additionally, PerkinElmer is reaffirming its 2017 revenue and EPS guidance.

PerkinElmer is reaffirming its 2017 revenue and EPS guidance following the  announcement of the EUROIMMUN acquisition.

PerkinElmer, Inc. provides products, services, and solutions to the diagnostics, research, environmental, industrial, food, and laboratory services markets worldwide. The company operates through two segments, Discovery and Analytical Solutions and Diagnostics.

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Clovis Oncology reports positive ovarian cancer results, Shares Soars

Clovis Oncology  announced topline data from the confirmatory phase 3 #ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint for Ovarian Cancer.

Shares of competitor Tesaro (TSRO) tumble on the news

CLVS to submit NDA to FDAShares of Clovis Oncology (CLVS) are surging after the company this morning announced topline data from the confirmatory phase 3 ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint of improved progression-free survival, or PFS, by investigator review in each of the three populations studied.

Clovis Oncology (CLVS) announced topline data from the confirmatory phase 3 #ARIEL3 trial of rucaparib, which successfully achieved the primary endpoint of improved progression-free survival, or #PFS, by investigator review in each of the three populations studied. PFS was also improved in the rucaparib group compared with placebo by blinded independent central review, or #BICR, a key secondary endpoint.

Based on these findings, the company plans to submit a supplemental New Drug Application, or sNDA, within the next four months for a second-line and later maintenance treatment indication for all women with platinum-sensitive ovarian cancer who have responded to their most recent platinum therapy. #NDA

“We are very pleased with these positive #ARIEL3 topline results that strongly demonstrate the potential of rucaparib to help women with platinum-sensitive, advanced ovarian cancer,” said Patrick Mahaffy, President and CEO of Clovis Oncology.

“These results reinforce the potentially foundational role of #rucaparib in the management of advanced ovarian cancer, as demonstrated by both investigator review and the blinded independent central review. Most importantly, we are grateful to the patients, caregivers and investigators who participated in this study. We look forward to sharing these data in greater detail at a medical meeting later this year and submitting our sNDA as rapidly as possible, with the ultimate goal of making rucaparib available to more women battling ovarian cancer.”

Possible $40 Gain

Janney Capital’s analyst Debjit #Chattopadhyay previewed some potential outcomes for the release of topline data from Clovis’ (CLVS) ARIEL3 trial, which is expected over the next two weeks. If Hazard Ratios in g+sBRCA patients are in below 0.3, he sees Clovis shares potentially trading up to $85-$100 per share, which, at the high end, would be about $40 above Clovis’ Friday closing price of $60.

In such a scenario, he thinks competitor Tesaro (TSRO) sliding to $80-$90. With HRs in the range of 0.3-0.35, which he gives a 70% probability of occurring, he sees Clovis trading at $75-$85 and Tesaro falling to $90-$100. Tesaro has a competing drug for ovarian cancer.

PRICE ACTION

In pre-market trading on Monday, CLVS is up $26 to $86.00 in heavy trading. TSRO is down $16 to $128.

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Rice Energy Sold for $6.7B

EQT will acquire all of the outstanding shares of Rice common stock for total consideration of approximately $6.7B – consisting of 0.37 shares of EQT common stock and $5.30 in cash

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EQT Corporation (EQT) and Rice Energy (RICE) announce that they have entered into a definitive merger agreement under which EQT will acquire all of the outstanding shares of Rice common stock for total consideration of approximately $6.7B – consisting of 0.37 shares of EQT common stock and $5.30 in cash per share of Rice common stock. That is about $27 per share.

EQT will also assume or refinance approximately $1.5B of net debt and preferred equity.

The transaction is expected to close in Q4 subject to customary closing conditions. As the vast majority of the acquired acreage is contiguous with EQT’s existing acreage position, EQT anticipates a 50% increase in average lateral lengths for future wells located in Greene and Washington Counties in Pennsylvania.

This same land synergy also complements the infrastructure footprint of EQT Midstream Partners, (EQM), where growth opportunities are expected through drop-downs and additional organic projects.

Rice Energy Inc. engages in the acquisition, exploration, and development of natural gas, oil, and natural gas liquid (NGL) properties in the Appalachian Basin.

Already a leading producer in the Appalachian Basin, this acquisition will make EQT the largest natural gas producer in the United States.

EQT will also obtain Rice’s midstream assets, including a 92% interest in Rice Midstream GP Holdings LP, which owns 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners LP and the retained midstream assets currently held at Rice.

The retained midstream assets, which EQT intends to sell to EQM in the future through drop-down transactions, are expected to generate approximately $130M of EBITDA in 2018.

The boards of directors of both companies have unanimously approved the transaction. Completion of the transaction is subject to the approval of both EQT and Rice shareholders, as well as certain customary regulatory and other closing conditions.

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Rig Counts Continue to Rise!

As long as rig counts continue to rise, crude will stay under pressure

Baker Hughes reports U.S. rig count up 6 to 933 rigs

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Baker Hughes  (BHI) reports that the U.S. rig count is up 6 rigs from last week to 933, with oil rigs up 6 to 747, gas rigs up 1 to 186, and miscellaneous rigs down 1 to 0.

The U.S. Rig Count is up 509 rigs from last year’s count of 424, with oil rigs up 410, gas rigs up 100, and miscellaneous rigs down 1.

The U.S. Offshore Rig Count is unchanged from last week at 22 and up 1 rig year over year.

The Canadian Rig Count is up 27 rigs from last week to 159, with oil rigs up 17 to 91 and gas rigs up 10 to 68.

The Canadian Rig Count is up 90 rigs from last year’s count of 69, with oil rigs up 63, gas rigs up 28, and miscellaneous rigs down 1 to 0.

STOCKS TO WATCH

The one group that should be benefit from the rig count rise would be Sand and Basic Materials. Stocks such as SLCA, SND, EMES, and HCLP should benefit from the rise, however these stocks are also near their 52-weeks low. These stocks should gradually bottom out at these levels. Other service companies such as SLB, HAL, BHI, TDW, and OII.

WTI crude prices are up 0.6% at $44.72, rebounding after declining by 4.3% over the two previous sessions. This puts in a little space from yesterday’s six-week low at $44.22.

#WTI = West Texas Intermediate

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Kenon Jumps on $942M Cash Infusion

Kenon ($KEN) unit in pact with Wuhu Chery

Qoros Automobile, a unit of Kenon, to receive $942 million in cash investment

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Qoros Automobile, which is 50%-owned by Quantum, a wholly-owned subsidiary of Kenon Holdings, announces that Qoros, Quantum, Wuhu Chery Automobile Investment Company Limited, which owns the other 50% of Qoros, and a new China-based investor, have entered into an investment agreement that provides for the new investor investing approximately RMB6.5B, approximately $942M, in Qoros for a controlling interest in Qoros.

The new investor’s investment is subject to a number of conditions which must be satisfied by a certain date, some of which are beyond the parties’ control and which the parties may be unable to satisfy. These conditions include regulatory approvals and completion of regulatory processes, consents from lenders and further documentation, including entry into additional agreements.

Kenon also announces that Qoros, Quantum and Wuhu Chery’s investment agreement with Yibin Municipal Government, through its investment platform company, which was announced on April 6,, will not take effect, and that Yibin will not make an equity investment in Qoros.

Kenon Holdings Ltd. (KEN) is a Singapore based holding company. It owns, develops, and operates power generation and distribution facilities primarily in Latin America, the Caribbean, and Israel. It also designs, manufactures, distributes, and services passenger vehicles through a network of independent authorized retail dealers in the People’s Republic of China.

Qoros Automotive Co. Ltd. designs, engineers, manufactures, and markets cars. It offers SUV, sedan, and other cars. The company also provides financing and insurance options, as well as test drive services. It offers its products through dealers. Qoros Automotive Co. Ltd. operates as a joint venture between Chery Automobile Co., Ltd. and Israel Corporation Ltd.

KEN last traded at $14.00 up 8.8%. Shares have a 52-week range of $8.81 to $16.00.

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Amazon’s Move on Whole Foods Creates Opportunities

Shares of virtually every major retailer that sells food is lower

Shares of Impinj (PI) surged after Amazon’s announcement

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Shares of virtually every major retailer that sells food – including Wal-Mart (WMT), Target (TGT), Costco (COST), Kroger (KR), Sprouts Farmers Market (SFM), Dollar General (DG) and Dollar Tree (DLTR) – are down after Amazon (AMZN) announced it will acquire Whole Foods Market (WFM).

BACKGROUND

Amazon and Whole Foods announced a definitive merger agreement under which Amazon will buy the natural and organic grocery chain for $42 per share in a transaction valued at approximately $13.7B, including debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand and “source from trusted vendors and partners around the world,” the company stated. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’s headquarters will stay in Austin, Texas. The parties expect to close the transaction during the second half of 2017.

JANA PUSH FOR SALE

The news comes after activist investor JANA Partners took an 8.3% stake in the grocery chain in April urging it to address chronic underperformance for shareholders, change the board and senior management, optimize real estate and capital allocation strategies and pursue opportunities to improve performance. Whole Foods restructured its board in May, appointing five new independent directors, which pleased JANA, but the investor remained skeptical of the company’s operational plan and had concerns about a lack of grocery experience on the board.

Speaking in an interview with Texas Monthly just this week, Whole Foods CEO John Mackey said: “Yes, we need to evolve. We need to get better, and we’re doing that. But these guys [JANA] just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”

STOCK TO WATCH

Shares of Impinj (PI) surged after Amazon’s announcement due to a small connection between the RFID technology maker and Amazon. Impinj manufactures non-volatile-memory chips and radio frequency chips that are used in “tags” that can be attached to objects, and it also makes wireless scanning devices to read those tags at a distances, including for inventory management for groceries. Amazon is a member of Impinj’s industry group to promote RFID tech, though it is not yet clear if Amazon will utilize the startup’s technology

PRICE ACTION

In Friday’s trading, Wal-Mart fell over 6%, Target dropped more than 10%, Costco declined 7% and Kroger, which also cut its fiscal year profit outlook along with its earnings report last night, plunged 14%. Meanwhile, Whole Foods shares are up 27% to $41.94 and Amazon has risen 3% to $993.14 per share.

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Amazon to acquire Whole Foods for $42 per share

Amazon will acquire Whole Foods Market for $13.7 billion in cash

John Mackey will remain as CEO of Whole Foods Market

Amazon to buy Whole Foods

Amazon (AMZN) and Whole Foods Market (WFM) announced that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7B, including Whole Foods Market’s net debt.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.

John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’s headquarters will stay in Austin, Texas.

Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions.

The parties expect to close the transaction during the second half of 2017.

Amazon (AMZN) said Whole Foods (WFM) “will be obligated to pay a fee equal to $400M if the Merger Agreement is terminated (i) by the company because the Whole Foods Market board of directors has changed its recommendation of the Merger prior to the Whole Foods Market shareholder approval having been obtained, or (ii) by Whole Foods Market if, prior to the time the Whole Foods Market shareholder approval is obtained, Whole Foods Market enters into an Alternative Acquisition Agreement that provides for a Superior Proposal.

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Weight Watchers Higher on Insider Buy

Weight Watchers said in a regulatory filing that its general counsel purchased 7,110 shares in the company

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Weight Watchers (WTW) shares are getting a boost following a filing by the company’s general counsel showing he purchased shares in the weight loss company.

SHARE PURCHASE

Weight Watchers said in a regulatory filing on Thursday afternoon that general counsel Michael Colosi purchased 7,110 shares in the company.

RECENT COMPANY NEWS

In May, the Oprah Winfrey-backed diet company posted a surprise profit for the first quarter and reported revenue that also beat analysts’ expectations.

The company also said it ended the quarter with 3.6M subscribers, up 16% from a year ago. The gains prompted the company to raise its earnings per share view for fiscal year 2017.

Weight Watchers has been on a turnaround track since Winfrey took a stake in the company and agreed to become a company spokesperson in October 2015.

In addition to “the Oprah Effect,” CFO Nick Hotchkin said the company is retaining customers through technology investments and an improved weight loss program.

New CEO

Weight Watchers announced in late April that Mindy Grossman, CEO of HSN, Inc (HSNI), would join the company as president and CEO in July. The company had been seeking a replacement for Jim Chambers, who resigned in September 2016.

Weight Watchers recently announced results from a two-year study published in The Lancet which found that adults with obesity referred to Weight Watchers for one year lost significantly more weight and were able to keep it off for longer “compared to those who either received brief advice and self-help materials, or were referred to a 12-week Weight Watchers program.” Those on both the 12- and 52-week Weight Watchers program also had greater blood sugar control and greater reductions in body fat than those on the brief intervention program.

PRICE ACTION:

Weight Watchers closed on Thursday up 6.3% at $28.80, just off the 52-week high of $28.95 hit during the session.

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Trump plans executive order on drug prices

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The Trump administration is preparing an executive order regarding U.S. drug costs, which may express support for value-based agreements via which drug companies and health insurers make arrangements to pay for products depending on how well they work, Bloomberg reported yesterday afternoon, citing people familiar with the matter.

A first executive order on drug prices may come out soon, followed by a second, more extensive one later, sources told the news service.

Top health and budget officials in the administration will meet today to discuss the issue, according to the people, who asked not to be identified because the session is private. Trump sought recommendations from the nation’s health agencies on reducing medication costs, Health and Human Services Secretary Tom Price told senators last week.

Unlike other advanced economies, the U.S. doesn’t directly regulate medicine prices. The pricing system is opaque, with list prices set by drugmakers and rebates negotiated in private with intermediaries like PBMs.

The industry wants the government to modify the law so that companies can reach more value-based payment agreements, whereby reimbursements are based on a drug’s results. Swiss pharma giant Novartis AG has such a “pay-for-performance” plan in place for heart failure treatment #Entresto, in which insurers pay more if the drug keeps patients out of the hospital and lowers associated costs.

Another idea discussed by the industry would allow insurers to pay by increments for very expensive drugs that essentially cure diseases.

The president has threatened on several occasions to force drugmakers to bid for government business as a way to reduce prices. He’s also talked about letting consumers import drugs from other countries with lower prices. Neither of those policies, which would likely require a change in law to be implemented in a meaningful way, are in drafts of the orders, according to one person familiar with the effort.

Publicly traded large-cap drugmakers include AstraZeneca (AZN), Bristol-Myers (BMY), Eli Lilly (LLY), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis (NVS), Pfizer (PFE), Roche (RHHBY) and Sanofi (SNY).

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