ironSource drops as AppLovin’s Unity bid contingent on ironSource deal exit
Shares of ironSource (IS) are down 12%, to $4.16 in Tuesday morning trading after AppLovin (APP) announced it has submitted a non-binding proposal to the board of directors of Unity Software (U) to combine AppLovin with Unity in a stock-based transaction.
Under the terms offered, current Unity shareholders would receive approximately 55% of the outstanding shares of the combined company, with the Class A shares representing approximately 49% of the outstanding voting rights of the combined company.
AppLovin, which markets software platforms for app developers to help them find customers and bring in revenue, is offering gaming platform Unity an alternative to its recently announced a deal to buy IronSource.
The all-stock merger consideration payable in a mix of AppLovin Class A and Class C common stock would value Unity at$58.85 per share and $20B enterprise value, representing a 48% premium to the Unity share price as of July 12 and 18% to yesterday’s closing price based on the closing price of AppLovin’s Class A common stock on August 8, AppLovin stated.
The execution of a definitive merger agreement between AppLovin and Unity would be subject to approval by each company’s board of directors, the termination of the proposed acquisition of ironSource LTD, and other customary signing conditions, the company noted.
Previously, on July 13, Unity and ironSource had announced that they entered into a definitive agreement under which ironSource will merge into a wholly-owned subsidiary of Unity via an all-stock deal, where each ordinary share of ironSource will be exchanged for 0.1089 shares of Unity common stock.
Under the terms of that deal, current Unity stockholders will own approximately 73.5% and current ironSource shareholders will own approximately 26.5% of the combined company.
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.
North American rail traffic fell 7.5% for the week ending April 16
The Association of American Railroads, AAR, reported U.S. rail traffic for the week ending April 16.
For this week, total U.S. weekly rail traffic was 489,801 carloads and intermodal units, down 8.1% compared with the same week last year.
Total carloads for the week ending April 16 were 221,228 carloads, down 6.8% compared with the same week in 2021, while U.S. weekly intermodal volume was 268,573 containers and trailers, down 9.2% compared to 2021. North American rail volume for the week ending April 16 on 12 reporting U.S., Canadian and Mexican railroads totaled 319,064 carloads, down 6.8% compared with the same week last year, and 354,060 intermodal units, down 8.1% compared with last year.
Total combined weekly rail traffic in North America was 673,124 carloads and intermodal units, down 7.5%.
North American rail volume for the first 15 weeks of 2022 was 9,987,458 carloads and intermodal units, down 3.9% compared with 2021.
Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Kansas City Southern (KSU), Norfolk Southern (NSC), Trinity Industries (TRN), Greenbrier (GBX), Wabtec (WAB), FreightCar America (RAIL), Union Pacific (UNP) and GATX (GATX).
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.
Culper Research short Core Scientific on ‘rigged deals,’ oversold businesses
In a recently published report titled “Core Scientific, Inc. (CORZ): Rigged Deals,” Culper Research says it is “short Core, as we think Core has wildly oversold both its mining and hosting businesses, which it cobbled together in a series of questionable transactions before dumping onto the public markets via SPAC.
Core’s acquired mining business, Blockcap, was formed in December 2020 with just $58.5 million, then flipped to Core for just 7 months later for $1.46 billion in connection with Core’s go-public.
We estimate Blockcap insiders made 20-25x their money.
On Monday, Core disclosed that its board waived the 180- day lockup on over 282 million shares, making them free to be dumped just 5 trading days from today.
We believe this shows insiders have abandoned any pretense of care for minority shareholders.”
“We think Core is no exception to what’s become a steady drumbeat of egregious projections made by many SPACs. We think both Core’s hosting business and its self-mining business have been wildly overhyped, and it’s no wonder that insiders can’t even wait 6 months to clamor for the exits,” the report reads.
“We also think Core has wildly overhyped the profitability of its self-mining business, where we estimate all-in breakeven costs of $41,723 per BTC (Bitcoin) vs. the Company’s SPAC claims of $2,700 just in power costs per BTC.
As such, we see Core as effectively using public markets to throw good money after bad while insiders set themselves up to dump billions worth of stock.”
In Thursday trading, shares of Core Scientific have dropped almost 3% to $7.50.
According to Wikipedia, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional “long” position, where the investor will profit if the value of the asset rises.
There are a number of ways of achieving a short position. The most fundamental method is “physical” selling short or short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender.
Core Scientific, Inc. (CORZ) last traded at $7.15.
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.
Republic Services to acquire US Ecology for $48.00 per share in cash
Republic Services (RSG) and US Ecology (ECOL) have entered into a definitive agreement under which Republic Services will acquire all outstanding shares of US Ecology for $48 per share in cash, representing a total value of approximately $2.2B including net debt of approximately $0.7B.
US Ecology, Inc. provides environmental services to commercial and government entities in the United States, Canada, Europe, the Middle East, Africa, Mexico, internationally. It operates through three segments: Waste Solutions, Field Services, and Energy Waste. It offers specialty waste management services, including treatment, disposal, beneficial re-use, and recycling of hazardous, non-hazardous, and other specialty waste at company-owned treatment, storage, and disposal facilities, as well as wastewater treatment services.
Republic Services, Inc. provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States.
The transaction is not subject to a financing condition.
Republic Services intends to finance the transaction using existing and new sources of debt.
Following completion of the transaction, Republic Services expects to maintain a strong balance sheet and solid investment-grade credit rating.
The company plans net debt-to-EBITDA, as defined in our credit agreement, to return back below 3x within 18 months of closing the transaction.
The transaction was unanimously approved by the boards of directors of both companies and is expected to close by the end of the second quarter, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by holders of a majority of the outstanding shares of US Ecology’s common stock.
ECOL is up $19.28 to $47.48. RSG is up 24 cents to $127.19.
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.
Frontier, Spirit to combine in deal that implies $25.83 per Spirit share
Spirit Airlines (SAVE) and Frontier Group Holdings (ULCC) announced a definitive merger agreement under which the companies will combine, creating America’s most competitive ultra-low fare airline.
Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Spirit equity holders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own.
This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on February 4, 2022, representing a premium of 19% over the February 4, 2022, closing price of Spirit, and a 26% premium based on the 30 trading-day volume-weighted average prices of Frontier and Spirit.
The transaction values Spirit at a fully diluted equity value of $2.9B, and a transaction value of $6.6B when accounting for the assumption of net debt and operating lease liabilities.
Upon closing of the transaction, existing Frontier equity holders will own approximately 51.5% and existing Spirit equity holders will own approximately 48.5% of the combined airline, on a fully diluted basis, providing both Frontier and Spirit equity holders with substantial upside potential.
Spirit Route Map
The Board of Directors for the new airline will be comprised of 12 directors (including the CEO), seven of whom will be named by Frontier and five of whom will be named by Spirit.
Bill Franke, CEO of the Indigo Partners, will be Chairman of the Board of the combined company.
Frontier Route Map
The merger is expected to close in the second half of 2022, subject to satisfaction of customary closing conditions, including completion of the regulatory review process and approval by Spirit stockholders.
Frontier’s controlling stockholder has approved the transaction and related issuance of shares of Frontier common stock upon signing of the merger agreement.
The combined company’s management team, branding and headquarters will be determined by a committee led by Franke prior to close.
“Our fourth quarter 2021 results came in better-than-expected, despite the negative impact from Omicron-related flight disruptions, primarily due to very strong demand over the peak December holiday period. I want to thank the entire Spirit team for their professionalism and commitment to providing excellent service to our Guests,” said Ted Christie, Spirit’s president and CEO.
Ted Christie, Spirit’s president and CEO
Spirit Airlines is up 15.9%, or $3.46 to $25.20. Frontier Group is up 14 cents to $12.81.
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.
Cedar Fair jumps after Bloomberg report of SeaWorld takeover bid
SeaWorld Entertainment (SEAS) has offered to buy Cedar Fair (FUN) for around $3.4B or $60 per share, Bloomberg reports, citing people with knowledge of the matter.
Cedar Fair owns and operates amusement and water parks, and complementary resort facilities in the United States and Canada. Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott’s Berry Farm near Los Angeles, California; Canada’s Wonderland near Toronto, Ontario; Kings Island near Cincinnati, Ohio; Carowinds in Charlotte, North Carolina; Kings Dominion situated near Richmond, Virginia; California’s Great America located in Santa Clara, California; Dorney Park & Wildwater Kingdom in Allentown, Pennsylvania; Worlds of Fun located in Kansas City, Missouri; Valleyfair situated near Minneapolis/St. Paul, Minnesota; Michigan’s Adventure situated near Muskegon, Michigan; Schlitterbahn Waterpark & Resort New Braunfels in New Braunfels, Texas; and Schlitterbahn Waterpark Galveston in Galveston, Texas.
SeaWorld Entertainment operates as a theme park and entertainment company in the United States. The company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, as well as Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia.
Cedar Fair Properties
The companies are working with advisers on the proposal and deliberations are ongoing, sources told Bloomberg.
It is unclear if the approach will lead to a transaction, they added.
Shares of SeaWorld are little changed at $59.29 following the report while Cedar Fair halted for volatility after jumping 11% to $55.59.
Six Flags Entertainment (SIX), which owns amusement parks like Cedar Fair, is up 5% to $41.60 following the report.
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.
Lumentum to acquire NeoPhotonics for $16 per share in cash
Lumentum (LITE) and NeoPhotonics (NPTN) announced that they have entered into a definitive agreement under which Lumentum will acquire NeoPhotonics for $16.00 per share in cash, which represents a total equity value of approximately $918M.
NeoPhotonics Corporation develops, manufactures, and sells optoelectronic products that transmit and receive high speed digital optical signals for cloud and hyperscale data center internet content provider and telecom networks worldwide.
Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments, Optical Communications (OpComms) and Commercial Lasers (Lasers).
Laser chips made by Lumentum
The transaction has been unanimously approved by the boards of directors of both companies.
The purchase price represents a premium of approximately 39% to NeoPhotonics’ closing stock price on November 3, 2021.
Laser chips made by NeoPhotonics
Lumentum intends to finance the transaction through cash from the combined company’s balance sheet.
Related to the transaction, Lumentum will provide up to $50M in term loans to NeoPhotonics to fund anticipated growth, which may require increased working capital and manufacturing capacity.
The transaction is expected to close in the second half of calendar year 2022, subject to approval by NeoPhotonics’ stockholders, receipt of regulatory approvals, and other customary closing conditions.
“With NeoPhotonics, we’re making another important investment in better serving our customers and expanding our photonics capabilities at a time when photonics are at the forefront of favorable long-term market trends. At the center of our strategy is a relentless focus on developing a differentiated portfolio with the most innovative products and technology in our industry so that we can help our customers compete and win in their respective markets.
Adding NeoPhotonics’ differentiated products and technology and innovative R&D team is consistent with this strategy and together, we will better meet the growing need for next generation optical networking solutions. We are confident this transaction will make us an even better partner to our customers, while enabling our team to deliver significant, long-term value to our stockholders. We look forward to welcoming NeoPhotonics’ talented team of employees to Lumentum,” said Alan Lowe, Lumentum President and CEO.
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.
Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B
Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.
Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.
Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.
Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.
The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.
The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.
The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.
I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.
We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.
Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.
After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”
The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.
The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.
Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”
ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania. In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.
Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.
The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.
ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.
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.
FDA approves Biogen Alzheimer’s drug, says benefits outweigh risks
The FDA approved Biogen’s (BIIB) Aduhelm to treat patients with Alzheimer’s disease.
“This approval is significant in many ways. Aduhelm is the first novel therapy approved for Alzheimer’s disease since 2003.
Perhaps more significantly, Aduhelm is the first treatment directed at the underlying pathophysiology of Alzheimer’s disease, the presence of amyloid beta plaques in the brain.
The clinical trials for Aduhelm were the first to show that a reduction in these plaques – a hallmark finding in the brain of patients with Alzheimer’s – is expected to lead to a reduction in the clinical decline of this devastating form of dementia,” the FDA said in a statement.
Eli Lilly is a partner with Biogen
It added, “We ultimately decided to use the Accelerated Approval pathway – a pathway intended to provide earlier access to potentially valuable therapies for patients with serious diseases where there is an unmet need, and where there is an expectation of clinical benefit despite some residual uncertainty regarding that benefit.
Brain of an Alzheimer patient
In determining that the application met the requirements for Accelerated Approval, the Agency concluded that the benefits of Aduhelm for patients with Alzheimer’s disease outweighed the risks of the therapy.”
The FDA said in its approval statement: “Additionally, FDA is requiring Biogen to conduct a post-approval clinical trial to verify the drug’s clinical benefit. If the drug does not work as intended, we can take steps to remove it from the market. But hopefully, we will see further evidence of benefit in the clinical trial and as greater numbers of people receive Aduhelm. As an agency, we will also continue to work to foster drug development for this catastrophic disease.”
STIFEL
Stifel analyst Paul Matteis reiterates his Buy rating on Biogen shares following the FDA granting accelerated approval of aducanumab, now to be called “Aduhelm,” for the treatment of Alzheimer’s disease.
Approval based on amyloid plaque as a “surrogate” is “definitely unexpected” and appears to be a way for FDA to work around the contentious advisory committee meeting, argues Matteis, who adds that the approval “is a big win.” How investors will risk-adjust revenues that are modeled after completion of a Phase 4 trial and how insurers will treat access for a drug approved based on a biomarker are “highly interesting” questions that will now “be debated at a materially higher stock valuation,” added Matteis. Biogen shares remain halted for trading at midday following news of the FDA approval.
JEFFRIES
Jefferies analyst Andrew Tsai said news of Biogen (BIIB) being granted FDA approval for aducanumab is likely to spark investor enthusiasm across all Alzheimer’s names and he believes the longer-term setup for Athira Pharma (ATHA) looks more attractive now. Given what he views as “the FDA tailwind,” he would buy on strength as he believes the FDA’s aducanumab decision “clearly has a positive readthrough” to Athira, whose Phase I data suggests ATHA-1017 could produce “a profound cognitive benefit” in Phase 2/3 studies expected to read out in 2022, Tsai tells investors.
In that context, he thinks a 25%-50% short-term move for Athira shares “seems reasonable” relative to the company’s current market cap.
Shares of Biogen (BIIB) remain halted while Eli Lilly (LLY), who has an Alzheimer’s disease drug in its pipeline, is up 4% to $210.78 following the news.
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.
