Pfizer to acquire Global Blood Therapeutics for $68.50 per share in cash
Pfizer (PFE) and Global Blood Therapeutics (GBT) announced the companies have entered into a definitive agreement under which Pfizer will acquire GBT, a biopharmaceutical company dedicated to the discovery, development and delivery of life-changing treatments that provide hope to underserved patient communities, starting with sickle cell disease.
Under the terms of the transaction, Pfizer will acquire all the outstanding shares of GBT for $68.50 per share in cash, for a total enterprise value of approximately $5.4B, including debt and net of cash acquired.
The Boards of Directors of both companies have unanimously approved the transaction. Pfizer expects to finance the transaction with existing cash on hand.
The proposed transaction is subject to customary closing conditions, including receipt of regulatory approvals and approval by GBT’s stockholders.
Due to the proposed transaction, GBT will not hold its previously scheduled conference call to discuss its second quarter 2022 financial results. The company will file its quarterly report on Form 10-Q for the quarter ending June 30, 2022 with the U.S. SEC announcing those results on August 8.
Global Blood Therapeutics, Inc., a biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities with sickle cell disease (SCD). The company offers Oxbryta tablets, an oral, once-daily therapy for SCD.
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.
iRobot to be acquired by Amazon for $61/share in deal valued at $1.7B
Amazon (AMZN) and iRobot (IRBT) announced that they have entered into a definitive merger agreement under which Amazon will acquire iRobot. Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.
We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, SVP of Amazon Devices.
“Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive-from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin.
Customers love iRobot products-and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
iRobot makes the popular Roomba
Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.
Completion of the transaction is subject to customary closing conditions, including approval by iRobot’s shareholders and regulatory approvals.
On completion, Colin Angle will remain as CEO of iRobot.
In light of the transaction with Amazon.com, iRobot will not hold its Q2 financial results conference call, which was originally scheduled for August 10.
In addition, iRobot has withdrawn its prior 2022 financial expectations issued in early May, as well as its long-term financial targets provided in December 2021. Given the ongoing disruptions and uncertainty that could impact the company’s outlook, iRobot is suspending its practice of providing financial guidance.
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.
Ancora pushes Everbridge for sale, sees over $70 per share takeout value
Everbridge, Inc. (EVBG) operates as a software company, providing enterprise software applications that automate and accelerate organizations operational response to critical events in the United States and internationally. The company has a market cap of around $1.6B.
Ancora Holdings Group, which owns approximately 4% of Everbridge’s outstanding common stock, issued an open letter to the company’s board.
It states in part: “We have spent a considerable amount of time reviewing Everbridge’s corporate governance, executive compensation, operations and sales, and overall strategy.
Given the immense destruction of shareholder value that has occurred under the current leadership team, we call on the Board of Directors to commence an immediate exploration of strategic alternatives.
We believe Everbridge is dramatically undervalued at current stock prices, and a sale to a well-capitalized acquirer could deliver more than $70 per share, or a more than 90% premium, for shareholders based on recent valuation multiples for both public and private company peers…
We believe Everbridge is a valuable strategic asset addressing a mission critical need in a large market with vast upside potential.
We believe Everbridge is dramatically undervalued at current share prices, representing an attractive acquisition target to both strategic and financial buyers.
In our view, the issues the Company is facing are not structural, but rather self-inflicted due to incompetent leadership that has failed to execute.”
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.
B. Riley Financial proposes to acquire the retailer for $25.00 per share cash
In a letter to Lazydays CEO Robert DeVincenzi , Bryant Riley (RILY), Chairman, Co-CEO of B. Riley Financial stated, in part,
“This non-binding letter is intended to summarize the principal terms of a proposal by B. Riley Financial or a subsidiary thereof regarding its possible acquisition of Lazydays Holdings.
The possible acquisition of the outstanding capital stock of the company is referred to as the ‘Transaction’ and Buyer and the company are referred to collectively as the ‘Parties.’
As you know, we are one of the company’s largest investors holding over one million shares of common stock. First, we want to thank you for initially meeting with us in January and for taking the time to hear our thoughts on the company’s direction soon after the resignation of the company’s longtime CEO and Chairman.
We have also had constructive conversations with other board members. We acknowledge and support recent increases to the share buyback program, but note that the market continues to discount company’s ability to grow.
After significant analysis and diligence based on publicly available information, we have concluded that the company would be better served away from the glare of the public markets in an environment where the necessary investments in growth can be made without market fixation on short-term results.
We are proposing a take-private transaction at a healthy premium to the current share price. The purchase price would be $25.00 per share payable in cash.”
Lazydays Holdings, Inc. operates recreation vehicle (RV) dealerships under the Lazydays name in the United States. It provides RV sales, RV-repair and services, financing and insurance products, third-party protection plans, after-market parts and accessories, and RV camping facilities.
The company also operates the Lazydays RV resort at Tampa, Florida.
Lazydays Holdings, Inc. (LAZY) is up 22% to $21.90.
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.
Epam Systems withdraws Q1, FY22 guidance due to events in Ukraine
EPAM Systems (EPAM) announced it is withdrawing its first quarter and 2022 financial outlook due to heightened uncertainties and regional impacts resulting from military actions in Ukraine.
EPAM Systems, Inc. provides digital platform engineering and software development services in North America, Europe, Russia, Belarus, Kazakhstan, Ukraine, Georgia, East Asia, Southeast Asia, and Australia.
“EPAM’s highest priority is the safety and security of its employees and their families in Ukraine. The company is proactively working to relocate its employees to lower risk locations in Ukraine and neighboring countries.
The company is executing business continuity plans and accelerating hiring across multiple locations in Central and Eastern Europe, Latin America, and India.
EPAM continues to operate productively in more than 40 countries and is committed to providing consistent high-quality delivery in all our geographies around the world,” the company said.
Shares of the Newton Pennsylvania company are down 46% to $207.75. Stock has a 52-week trading range of $198.25 to $725.40. Today’s loss took the shares back to 2020 levels, wiping out two years of gains.
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.
Ford CEO says no plans to spin off electric business or ICE business
Ford (F) CEO Jim Farley said while speaking at the Wolfe Research Auto, Auto Tech and Mobility conference:
Jim Farley, Ford CEO
“I wanted to talk quickly about running a successful ICE (internal combustion engines) business versus a BEV (battery-powered electric vehicle) business as we’re scaling. The customers are different.
The EV customers are not like our ICE customers. Our go-to-market as the result has to be digital, no inventory and remote. It’s different. We can bridge to it today, but we have to go much deeper…
Ford will ensure we have the right structure and talent in place to compete and win in this digital software-enabled vehicle business, but as well to revitalize our ICE business.
And here, I really want to emphasize the shift that we’re thinking about.
There’s a lot of focus on the digital electric growth opportunity. But we believe we have lots of room on our ICE business for better quality, lower structural costs and radical reduction in complexity.
All electric Ford Mustang
And despite the press speculation, we have no plans to spin off our electric business or ICE business. It’s really more around focus and capabilities, expertise and talent. Those are key for Ford, and this is what we’re working on. Now many companies have studied this.
Some even have a person in charge of EVs here and there. But trust me, Ford will go deeper because we know our competition is Nio and Tesla, and we have to beat them, not match them…
Nio electric car
We believe and we acknowledge that we have upside in our ICE business and it’s critical that we leverage that and we’ve been working on and making progress to get to that 8% EBIT margin as a company…
We believe that both ICE and BEV portfolios are under-earning. Let me say that one more time. This management team firmly believes that our ICE and BEV portfolios are under-earning and that is not price. That is lower structural costs, improving our bill of material for our BEV vehicles and scaling…
Tesla Model 3
The net all of this is we have ample headroom for growth, as you said, Rod, and increased our company EBIT margin target to get to that 8%… And what we want to get across to all of you is that we have a long view of Ford that we have rethought our entire portfolio.”
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.
“The Kohl’s Board of Directors (the Board) has determined, following a review with its independent financial advisors and upon the recommendation of its Finance Committee, that the valuations indicated in the current expressions of interest which it has received do not adequately reflect the Company’s value in light of its future growth and cash flow generation.
The Board is committed to maximizing the long-term value of the Company and will review and pursue opportunities that it believes would credibly lead to value consistent with its performance and future opportunities.
The Board has designated its Finance Committee to lead the ongoing review of any expressions of interest. The Finance Committee, which was formed pursuant to the 2021 settlement agreement with Macellum Advisors GP, LLC and other shareholders, is comprised exclusively of independent directors.
The Company and the Board have also engaged financial advisors, including Goldman Sachs and PJT Partners, and have asked Goldman Sachs to engage with interested parties. The Board will continue to pursue all reasonable opportunities to drive value, consistent with its fiduciary obligations. The Company looks forward to updating shareholders on its ongoing strategic initiatives and capital allocation plans at Kohl’s Investor Day on March 7, 2022.”
Shareholders Disappointed:
Macellum Advisors GP, a long-term holder of nearly 5% of the outstanding common shares of Kohl’s Corporation, issued the below statement in response to the company’s announcement that its Board of Directors has rejected recent indications of interest and adopted a two-tiered shareholder rights plan that seems particularly punitive to any investor that may seek more active engagement with the Board. Jonathan Duskin, Macellum’s Managing Partner, commented:
“We are disappointed and shocked by Kohl’s hasty rejection of confirmed indications of interest.
This morning’s rejections – which come just two weeks after outreach from potential acquirers – only validates for us that a majority of the Board is entrenched and lacks objectivity when it comes to evaluating value-maximizing sale opportunities relative to management’s historically ineffective standalone plans. We doubt that interested parties were given adequate consideration or access to management, data rooms and the type of information required to inform upward adjustments to bids.
Moreover, it appears that the Board has not authorized its bankers to canvass the market and initiate substantive conversations with other logical suiters. Even if some of our fellow shareholders want the Board to compare sale opportunities to management’s go-forward strategy, we fear the Company’s actions and statements demonstrate a lack of impartiality and strategic thinking in the boardroom.”
Duskin added: “We will do everything in our power to prevent the current Board from continuing to chill a normal-course sales process. In our view, the Board’s cumbersome Friday morning press release and adoption of a poison pill that has a lower trigger for investors that may seek more active engagement with the Company demonstrate shareholders’ interests are not the top priority in the boardroom.
It seems to us that the Board is taking unprecedented steps to derail a credible process and kill interest among the growing crop of possible buyers of Kohl’s. Fortunately, the slate we plan to nominate in the coming days will be far more aligned, experienced and openminded when it comes to pursuing all paths to maximizing value.”
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.
SK Ecoplant to invest $500M in Bloom Energy through expanded partnership
Bloom Energy (BE) and SK Ecoplant, an affiliate of South Korean conglomerate SK Group (SKM), announced the companies are expanding their existing partnership.
The partnership includes purchasing a minimum of 500 megawatts, or MW, from Bloom Energy, representing a $4.5B revenue commitment; co-creating two hydrogen innovation centers; and targeting an equity investment of approximately $500M.
Since the start of their strategic partnership three years ago, Bloom Energy and SK ecoplant have transacted nearly 200 MW of projects together totaling more than $1.8B of equipment and expected service revenue.
Fuel Cells powered solely by Hydrogen
Over the next three years the companies will expand this existing business with contracts for at least an additional 500 MW of power between 2022 and 2025, representing approximately $4.5B in equipment and future service revenue.
Bloom Energy and SK ecoplant agreed to create Hydrogen Innovation Centers in the United States and South Korea.
The intent is to accelerate the global market expansion for Bloom Energy’s hydrogen fuel cell and hydrogen electrolyzer products.
The agreement also reflects both Bloom Energy and SK ecoplant’s enhanced commitment to a zero-carbon future and the further implementation of environmental, social and governance practices.
In addition, Bloom Energy and SK ecoplant agreed to strengthen their alliance through expanding business cooperation in global markets, which may include exclusive distribution rights in select new markets.
SK ecoplant will invest $255M in Bloom Energy by acquiring 10M shares of zero coupon, non-voting redeemable convertible preferred stock at a price of $25.50 per share.
SK ecoplant has the option to acquire a minimum of an additional 11M shares of Class A common stock at a 15% premium to the prevailing stock price at the time, which must be no later than November 30, 2023 and is subject to a maximum ownership of 15%.
Upon completion of SK ecoplant’s purchase of its second tranche, SK ecoplant will add a member to the Bloom Energy board of directors. SK will give an irrevocable proxy to vote its shares to Bloom Energy.
The investment is subject to customary closing conditions and regulatory approvals and is expected to close within 45 days.
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.
NY AG announces $1.1B agreement with big three drug distributors over opioids
New York Attorney General Letitia James announced an agreement with McKesson (MCK), Cardinal Health (CAH), and Amerisource Bergen (ABC) – three of the nation’s largest drug distributors – that will deliver up to $1.1B to New York state to combat the ongoing opioid epidemic.
“The $1.1B agreement is the largest monetary settlement ever negotiated by Attorney General James. The agreement resolves claims made by Attorney General James for the three companies’ role in helping to fuel the opioid epidemic and will remove the three distributors from New York’s ongoing opioid trial, currently underway in Suffolk County State Supreme Court…
Additionally, late last month, Attorney General James announced an agreement with Johnson & Johnson (JNJ) that removed the company from New York’s opioid trial in exchange for up to $230M for the state’s opioid prevention and treatment efforts, as well as it ending the sale of opioids nationwide.
The trial against the three remaining defendants – Endo Health Solutions (ENDP), Teva Pharmaceuticals USA (TEVA), and Allergan Finance (ABBV) – is currently underway and will continue in state court,” the AG stated.
As part of today’s agreement, McKesson, Cardinal Health, and Amerisource Bergen will pay New York state a total of up to $1,179,251,066.68, of which more than $1 billion will go towards abatement.
Payments will start in just two months and will continue over the course of the next 17 years, the AG said.
Opioids are a class of drugs that include the illegal drug heroin, synthetic opioids such as fentanyl, and pain relievers available legally by prescription, such as oxycodone (OxyContin®), hydrocodone (Vicodin®), codeine, morphine, and many others.
Fentanyl and similar compounds like carfentanil are powerful synthetic opioids — 50 to 100 times more potent than morphine. High doses of opioids, especially potent opioids such as fentanyl, can cause breathing to stop completely, which can lead to death.
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.
Welltower to acquire Holiday Retirement’s Seniors Housing Portfolio for $1.58B
Welltower (WELL) announced that it has entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties, including 80 nearly identical independent living and six combination independent living/assisted living properties, currently owned by Holiday Retirement.
Additionally, as announced on June 21, upon the closing date of this transaction, which is expected to be in the third quarter, Atria Senior Living will assume operations of the properties and retain Holiday’s in-place senior management and staff.
Through this landmark transaction, the 86-property portfolio will be acquired by Welltower for $1.58B, or $152,000 per unit, representing a discount to estimated replacement cost in excess of 30%.
The transaction is expected to be approximately 10c per diluted share accretive to Welltower’s normalized funds from operations during the first twelve months post-closing.
The portfolio is expected to deliver substantial net operating income growth in future quarters and in coming years as occupancy growth accelerates from near-trough levels of 76.3% as of June 20.
Portfolio occupancy has already increased over 2.7% since bottoming in March.
Additionally, the anticipated recovery in occupancy and Atria’s operational and technological expertise is expected to maximize community level performance and to generate meaningful expansion in operating margins going forward.
Welltower and Atria have agreed to a highly incentivized and strongly aligned enhanced RIDEA 3.0 management contract based on both top and bottom-line financial metrics. The contract will also include substantial promote opportunities to Atria upon achievement of certain long-term financial metrics.
The achievement of such hurdles would imply significant growth in underlying property level performance, resulting in a nominal yield in excess of 9% to Welltower and a net economic yield in excess of 8% to Welltower after capital expenditures and payment of the promote.
Welltower CEO
Atria expects to integrate Holiday’s corporate staff and retain its experienced and reputed management team, thereby de-risking the overall transaction.
Atria has significant experience with Holiday properties, having successfully assumed operations in recent years of two portfolios previously managed by Holiday: a 29-property portfolio across Canada in 2014 and, in April 2021, a 21-property portfolio owned by New Senior Investment Group Inc.
The portfolio is expected to benefit from Atria’s operating model and technology platform, which includes its proprietary Glennis software for staffing optimization, digital marketing, and CRM.
Atria’s digital marketing capabilities and front of house technology suite are also expected to reduce dependency on referral sources and increase organic lead generation.
Holiday’s management team expects that this significant investment in its platform and technology infrastructure will significantly enhance their ability to serve residents going forward.
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.
RAPT Therapeutics, Inc. (RAPT) announced positive topline results from its randomized placebo-controlled Phase 1b clinical trial of RPT193 as monotherapy in 31 patients with moderate-to-severe atopic dermatitis (AD).
Atopic dermatitis (eczema) is a condition that makes your skin red and itchy. It’s common in children but can occur at any age. Atopic dermatitis is long lasting (chronic) and tends to flare periodically. It may be accompanied by asthma or hay fever.
After four weeks of treatment, patients with moderate-to-severe AD who received RPT193 showed a 36.3% improvement from baseline in the Eczema Area and Severity Index (EASI) score, a standard measure of disease severity, compared to 17.0% in the placebo group.
Notably, in the two-week period following the end of treatment, the RPT193 group showed continued improvement and further separation from placebo with a 53.2% improvement in EASI at the six-week time point compared to 9.6% in the placebo group. This continued improvement may be related to RPT193’s mechanism of action, which is upstream of other agents targeting cytokines or signaling pathways.
Emma Guttman-Yassky, M.D., Ph.D., the Waldman Professor of Dermatology and System Chair Department of Dermatology at the Icahn School of Medicine at Mount Sinai, and member of RAPT’s Scientific Advisory Board, added, “I am very excited about these results as they not only demonstrate clinically meaningful improvement after just four weeks of treatment, but also further improvement for two weeks after completion of treatment. This may suggest that this novel mechanism of action targeting CCR4 on Th2 cells could have prolonged, disease-modifying effects, which could differentiate it from other agents. Along with being an oral drug that seems to have promising clinical activity and a well-tolerated safety profile, RPT193 could fill a high unmet medical need for AD patients.”
Cantor Fitzgerald
Cantor Fitzgerald analyst Alethia Young raised the firm’s price target on Rapt Therapeutics to $71 from $51 and reiterates an Overweight rating on the shares. The stock in midday trading is up 110%, or $19.60, to $38.17. This morning’s RPT193 data update “was robust with clear clinical benefit compared to placebo on all exploratory endpoints,” Young tells investors in a research note.
The analyst took the drug’s probability of success in atopic dermatitis to 50% from 25% previously, and increased her peak sales estimates. Young sees a “large unmet need” for a safe and effective oral treatment which is separate from the injectable market, and models peak sales of $4B in atopic dermatitis by 2035. She views Rapt’s risk/benefit profile as potentially best-in-class for an oral treatment.
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.
Canadian Pacific says prepared to re-engage with Kansas City Southern
Canadian Pacific (CP) sent the following letter to the Surface Transportation Board in response to the Kansas City Southern (KSU) Board of Directors’ decision to terminate the Merger Agreement with CP:
Canadian Pacific wants to merge with Kansas City Southern
“I am writing on behalf of the Canadian Pacific Applicants in this proceeding to advise the Board and Interested Parties of the CP Applicants’ intentions in light of Kansas City Southern’s decision to terminate the merger agreement between CP and Kansas City Southern and to enter a merger agreement with Canadian National Railway.
For the reasons explained below, CP intends to proceed to prepare and file its Application in this docket seeking Board authority to control KCS and its U.S. rail carrier subsidiaries.
The decision of KCS’s board of directors to designate CN’s offer a “superior proposal” reflects the extreme price CN has offered KCS in order to extinguish CP’s proposed transaction,2 coupled with CN’s undertaking to attempt to absolve KCS and its shareholders of the regulatory risks associated with CN’s proposed acquisition through the use of a voting trust. In order to neutralize the regulatory risks posed by CN’s proposed transaction from the perspective of KCS’s shareholders,
CN’s agreement to acquire KCS is conditioned on CN’s ability to acquire KCS shares in advance of receiving Board approval to control KCS via the use of a voting trust.
On May 17, the Board ruled in Finance Docket No. 36514 that CN’s proposed acquisition of KCS is subject to the 2001 Major Merger rules, and, accordingly, that CN’s proposed use of a voting trust requires formal STB approval under 49 U.S.C. Section1180.4(b)(4)(iv).
The Combined network covers Gulf of Mexico to Pacific Ocean
The Board explained that it would “take a more cautious approach to a voting trust” in the CN proceeding and that its “consideration of whether the proposed use of a voting trust in a potential CN-KCS transaction is ‘consistent with the public interest’ would be informed by argument on both the potential benefits and costs of such use.”
CP believes that CN cannot demonstrate that its proposed use of a voting trust would be “consistent with the public interest” for reasons CP has already summarized and will address further in its comments on CN’s proposal in Finance Docket No. 36514, once CN refiles its motion seeking Board approval and the Board establishes a comment period.
Because STB Voting Trust Approval is a condition to closing, were CN unable to use a voting trust, CN’s proposed acquisition of KCS could not be consummated. KCS would then face the choice of whether to renegotiate the CN-KCS merger agreement in order to proceed with CN without the use of a voting trust.
Were KCS presented with the question of how to proceed following a decision by the Board not to approve CN’s proposed use of a voting trust, CP anticipates being available to engage with KCS to enter into another agreement to acquire KCS.
CP expects that such an agreement would be in substantially the form of the merger agreement previously entered into by CP and KCS, which was previously noticed in this docket and reviewed by the Board in connection with its approval of CP’s proposed voting trust agreement.
Accordingly, CP intends to proceed forward with the preparation of its Application in this docket seeking Board authority to acquire control of KCS.
CP believes that pursuing its Application is in the best interests of both KCS and the public so that the pro-competitive CP/KCS transaction can proceed to be reviewed by the Board and – in the event KCS’s agreement with CN is terminated or CN is otherwise unable to acquire control of KCS – a potential acquisition of KCS by CP could be implemented without undue delay, all in accord with the rulings and processes already established by the Board in this docket.
CP looks forward to establishing that its acquisition of control of KCS would be consistent with the public interest.”
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.
AT&T, Discovery to create global DTC business through Reverse Morris Trust
AT&T (T) and Discovery (DISCA) announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s nonfiction and international entertainment and sports businesses to create a standalone global entertainment company.
ATT to merge it’s media assets with Discovery
Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T would receive $43B in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71% of the new company; Discovery shareholders would own 29% of the new company.
The boards of both AT&T and Discovery have approved the transaction.
Discovery to merge with ATT media
Bringing together the leadership teams, content creators, and series and film libraries.
The new company is projected for 2023 revenue of approximately $52B, adjusted EBITDA of approximately $14B, and free cash flow conversion rate of approximately 60%.
The transaction is expected to create at least $3B in expected cost synergies annually for the new company.
The new company will compete globally in the direct-to-consumer business bringing content to DTC subscribers across its portfolio, including HBO Max and the recently launched discovery+.
The transaction will combine WarnerMedia’s content library of IP with Discovery’s global footprint, local-language content and regional expertise across more than 200 countries and territories.
The companies announced that Discovery president and CEO David Zaslav will lead the proposed new company with a management team and operational and creative leadership from both companies.
Discovery’s current multiple classes of shares will be consolidated to a single class with one vote per share.
The new company’s board will consist of 13 members, seven initially appointed by AT&T, including the chairperson of the board; Discovery will initially appoint six members, including CEO David Zaslav.
The combination will be executed through a Reverse Morris Trust, under which WarnerMedia will be spun or split off to AT&T’s shareholders via dividend or through an exchange offer or a combination of both and simultaneously combined with Discovery.
The transaction is expected to be tax-free to AT&T and AT&T’s shareholders. In connection with the spin-off or split-off of WarnerMedia, AT&T will receive $43B in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.
David Zaslav to head the new company
The new company expects to maintain investment grade rating and utilize the significant cash flow of the combined company to rapidly de-lever to approximately 3.0x within 24 months, and to target a new, longer term gross leverage target of 2.5x-3.0x.
WarnerMedia has secured fully committed financing for the purposes of funding the distribution.
The transaction is anticipated to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions, including receipt of regulatory approvals.
No vote is required by AT&T shareholders. Agreements are in place with John Malone and Advance to vote in favor of the transaction.
Elliott Management
Elliott Investment Management released a statement on behalf of Managing Partner Jesse Cohn and Portfolio Manager Marc Steinberg regarding AT&T’s plan to merge media assets with Discovery:
Elliott is a major shareholder in ATT
“It has been a transformational year at AT&T year since John Stankey took over as CEO, and today’s announcement represents another impressive step in the Company’s recent evolution.
AT&T has now executed on its promise to streamline operations and re-focus on its core businesses, all while improving operational execution, enhancing its financial position and advancing its corporate governance. As investors, Elliott supports AT&T in its efforts to best position the company for future success.”
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.
Equity Commonwealth to acquire Monmouth Real Estate for $3.4B
Equity Commonwealth (EQC) and Monmouth Real Estate (MNR) announced that they have entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4B, including the assumption of debt.
The combined company is expected to have a pro forma equity market capitalization of approximately $5.5B.
Under the terms of the agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own.
Based on the closing price for Equity Commonwealth on May 4, this represents approximately $19.40 per Monmouth share.
The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of 18c per share without Equity Commonwealth paying a corresponding common dividend to its shareholders.
Accordingly, the total consideration to be received by the Monmouth shareholders in the transaction is $19.58 per Monmouth share.
Equity Commonwealth and Monmouth shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction.
Monmouth’s portfolio is comprised of 120 properties totaling 24.5M square feet. In addition, Monmouth has six properties totaling 1.8M square feet under contract and leased to investment grade tenants.
Closings for these acquisitions are expected in 2021 and 2022.
The company will continue to be led by president and CEO David Helfand and the existing senior management team.
Upon closing, the number of trustees on Equity Commonwealth’s board will be expanded to 10, with two individuals designated by Monmouth’s board.
Sam Zell will remain the chairman of the board of trustees.
The transaction is expected to close during the second half of 2021, subject to customary closing conditions, including approval by the common shareholders of both Equity Commonwealth and Monmouth.
Sam Zell to become Chairman of the new company
The board of trustees of Equity Commonwealth and the board of directors of Monmouth Real Estate have each unanimously approved the transaction.
Equity Commonwealth ( EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.
Monmouth Real Estate Investment specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 121 properties, containing a total of approximately 24.5 million rentable square feet, geographically diversified across 31 states.
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.
Middleby to acquire Welbilt in an all-stock transaction
The Middleby Corporation (MIDD) and Welbilt (WBT) have entered into a definitive agreement under which Middleby will acquire Welbilt in an all-stock transaction, enhancing the Middleby Commercial Foodservice platform with an attractive portfolio of products, brands and technologies.
This transaction will bring together two complementary businesses, accelerate the Middleby growth strategy into key markets globally and increase core capabilities in highly attractive segments.
The combined company will have approximately $3.7B in combined 2020 sales, 73% of which will come from the Commercial Foodservice segment.
Under the terms of the agreement, Welbilt shareholders will receive a fixed exchange ratio of 0.1240x shares of Middleby common stock for each share of Welbilt common stock in an all-stock transaction, with an implied enterprise value of $4.3B.
Based on Middleby’s volume-weighted average price during the 30 consecutive trading days ending April 20, the offer price represents a 28% premium to Welbilt’s 30-day VWAP.
Upon closing, Middleby shareholders will own approximately 76% and Welbilt shareholders will own approximately 24% of the combined company on a fully diluted basis.
The Boards of both companies have unanimously approved the transaction. In addition, Carl C. Icahn, Welbilt’s largest shareholder with an 8.4% ownership position, has entered into a support agreement in favor of the transaction.
Following closing, Timothy FitzGerald will continue as CEO and as a member of the Middleby Board of Directors. Bryan Mittelman will continue to serve as Middleby’s CFO.
Middleby will expand its Board to include two new directors from the Welbilt board, Chairperson Cynthia Egnotovich and William Johnson. Middleby intends to refinance Welbilt’s existing debt through its committed Senior Secured Facility.
Based on the expected pro forma leverage ratio at closing, the interest on the incremental financing would be approximately L + 162.5 bps.
The transaction is expected to close in late 2021, subject to customary closing conditions, including regulatory and Middleby and Welbilt shareholder approvals.
The Middleby Corporation designs, manufactures, markets, distributes, and services a range of foodservice, food processing, and residential kitchen equipment.
Welbilt, Inc., designs, manufactures, and supplies foodservice equipment for commercial foodservice market worldwide. The company offers commercial upright and undercounter refrigerators and freezers, blast freezers and chillers, and cook-chill systems under the Delfield brand; and walk-in refrigerators, coolers and freezers, and prefabricated cooler and freezer panels under the Kolpak brand.
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.
