Callidus Software sold for $2.4 billion

SAP to acquire Callidus Software for $36 per share

SAP to acquire Callidus Software for $36 per share. Stockwinners.com
SAP to acquire Callidus Software for $36 per share

SAP SE (SAP) and Callidus Software (CALD) announced that SAP America, Inc. has entered into an agreement to acquire CallidusCloud.

The CallidusCloud board of directors has unanimously approved the transaction. The per share purchase price of $36.00 represents a 21% premium over the 30-day volume weighted average price per share and a 28% premium over CallidusCloud’s 90-day volume weighted average price per share.

The per share price represents an enterprise value of approximately $2.4B. SAP has elected to fund the transaction with existing cash balances and an acquisition term loan.

The transaction is expected to close in Q2, subject to approval from CallidusCloud stockholders, clearances by the relevant regulatory authorities, and other customary closing conditions.

The transaction is expected to be essentially neutral to SAP’s non-IFRS EPS for FY18 and accretive to SAP’s non-IFRS EPS for FY19.

Upon completion of the transaction, SAP expects to consolidate all CallidusCloud product assets within SAP Hybris solutions as part of SAP’s Cloud Business Group.

The existing management team will continue to lead CallidusCloud. The SAP Cloud Platform is to be used for the technical integration of CallidusCloud solutions.


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Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

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Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

Amazon (AMZN), Berkshire Hathaway (BRK.A, BRK.B) and JPMorgan Chase & Co. (JPM) announced that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.

Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare
Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare. Stockwinners.com
Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints.

The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.

The effort announced today is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon.

The longer-term management team, headquarters location and key operational details will be communicated in due course.

Health insurance companies are lower in pre-market trading on the news.

Shares of the owners of pharmacy benefit managers, including Express Scripts (ESRX), CVS Health (CVS) and UnitedHealth (UNH), are sliding after Amazon (AMZN), Berkshire Hathaway (BRK.A, BRK.B) and JPMorgan Chase (JPM) announced that they are partnering on “ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” The three companies will pursue this objective through an independent company that is “free from profit-making incentives and constraints,” they announced earlier this morning.


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Dr Pepper Snapple to merge with Keurig

 Dr Pepper Snapple, Keurig Green Mountain announce merger agreement

Dr Pepper Snapple investors to receive special cash dividend of $103.75/share. Stockwinners.com
Dr Pepper Snapple investors to receive special cash dividend of $103.75/share.

Dr Pepper Snapple Group (DPS) and Keurig Green Mountain (MDLZ) announced that the companies have entered into a definitive merger agreement to create Keurig Dr Pepper (KDP), a new beverage company of scale with a portfolio of iconic consumer brands and unrivaled distribution capability to reach virtually every point-of-sale in North America.

Under the terms of the agreement, which has been unanimously approved by the Dr Pepper Snapple Board of Directors, Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend and retain 13% of the combined company.

KDP will have pro forma combined 2017 annual revenues of approximately $11 billion. Dirk Van de Put, CEO of Mondelez International (MDLZ), which will have a significant stake in KDP, said, “We have been very pleased with our coffee partnership with Keurig, and strongly support the strategic rationale for this transaction.

We look forward to continuing to participate in the compelling value-creation and long-term growth opportunities inherent in this powerful beverage platform.”

KDP targets realizing $600 million in synergies on an annualized basis by 2021. Dr Pepper Snapple expects to pay its first quarter ordinary course dividend of $0.58 per share.

At the close of the transaction, the company expects to deliver an annual dividend of $0.60 per share. The company will deliver strong cash flow generation and accelerate its deleveraging, with a target Net Debt/EBITDA of below 3.0x within two to three years after closing.

KDP anticipates total net debt at closing to be approximately $16.6 billion and it anticipates maintaining an investment grade rating.


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Ablynx sold for EUR 3.9 billion

Sanofi acquires Ablynx for EUR 45 per share or EUR 3.9B

 Novo Nordisk offers to acquire Ablynx. Stockwinners.com
Sanofi acquires Ablynx for EUR 45 per share

Sanofi (SNY) and Ablynx (ABLX) entered into a definitive agreement under which Sanofi will offer to acquire all of the outstanding ordinary shares, including shares represented by American Depositary Shares, warrants and convertible bonds of Ablynx at a price per Ablynx share of EUR 45 in cash, which represents an aggregate equity value of approximately EUR 3.9B.

The transaction was unanimously approved by both the boards. Under the terms of the agreement, Sanofi will launch public offers to acquire all of the outstanding ordinary shares, warrants and convertible bonds of Ablynx in cash.

The public offers are expected to be launched by the beginning of Q2.

In accordance with the Belgian requirement of certainty of funds, Sanofi has entered into a bank credit facility, BNP Paribas Fortis acting as the sole credit facility arranger.

Subject to the satisfaction or waiver of customary closing conditions, the transaction is expected to close by the end of Q2. Sanofi added, “The addition of Ablynx is anticipated to drive meaningful long-term value for Sanofi’s shareholders by enhancing its pipeline and research capabilities. Including R&D expenses, the acquisition is expected to be neutral to Business EPS in 2018 and 2019.”


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PTC Therapeutics reports positive Spinal Muscular Atrophy data

PTC Therapeutics reports preliminary data from FIREFISH trial in Type 1 SMA

PTC Therapeutics reports positive Spinal muscular atrophy data

PTC Therapeutics (PTCT) announced the presentation of early interim data from Part 1, the dose-finding portion of the FIREFISH study.

#FIREFISH is a two-part seamless, open-label, multi-center study to investigate the safety and efficacy of RG7916 in infants and babies with Type 1 SMA.

RG7916 has been safe and well tolerated at all doses and there have been no drug-related safety findings leading to withdrawal.

Spinal muscular atrophy (SMA) is a genetic disease affecting the part of the nervous system that controls voluntary muscle movement.

Most of the nerve cells that control muscles are located in the spinal cord, which accounts for the word spinal in the name of the disease. SMA is muscular because its primary effect is on muscles, which don’t receive signals from these nerve cells. Atrophy is the medical term for getting smaller, which is what generally happens to muscles when they’re not active.

SMA involves the loss of nerve cells called motor neurons in the spinal cord and is classified as a motor neuron disease.

In addition, data on the ability to swallow and requirements for tracheostomy or permanent ventilation, together with overall survival were also presented.

Previously published natural history data indicate that in a comparable historic cohort the median age of event-free survival for SMA Type 1 infants to be between 8 and 10.5 months.

In addition to the oral presentation, three posters were on display during the Congress: updated pharmacodynamic and safety data from SUNFISH Part 1, preliminary evidence for pharmacodynamic effects of RG7916 in JEWELFISH, and preclinical data demonstrating the relationship between central and peripheral SMN protein increase upon treatment with RG7916.

The data presented demonstrate systemic and dose-dependent increase of SMN protein levels.

The data from mice and other species suggest that SMN protein level increases seen in the blood of patients following RG7916 treatment reflect SMN protein level increases in the CNS, muscle and other key issues affected in SMA.

In addition, RG7916 has been safe and well tolerated at all doses and there have been no drug-related safety findings leading to withdrawal.

The U.S. Food and Drug Administration granted orphan drug designation to RG7916 for the treatment of patients with SMA.


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Bed Bath & Beyond tumbles on competition

Bed Bath & Beyond sinks after analyst says sell with competition rising

Bed Bath & Beyond tumbles on competition. Stockwinners.com
Bed Bath & Beyond tumbles on competition

Shares of Bed Bath & Beyond (BBBY) dropped in Friday morning trading after an analyst downgraded the stock to his firm’s equivalent of a Sell rating, citing concerns over the growth and margin outlook relative to peers.

ANALYST TURNS BEARISH

JPMorgan analyst Christopher #Horvers downgraded Bed Bath & Beyond to Underweight, his firm’s equivalent of a Sell rating, and cut his price target for the shares to $18 from $21.

In a note to clients titled “If you can’t comp positively now…”, Horvers noted that the stock has run up 16% since the House passed the tax bill in November, and recent estimate revisions suggest the Street is assuming 50% flow through of tax savings.

He believes this could prove “aggressive” considering the increased competition in the home furnishings space and Bed Bath & Beyond’s need to invest in advertising, price and infrastructure.

Horvers doesn’t see a turn “in sight” for the company’s comps given that the retailer was unable to post positive same-store sales during the critical holiday season despite a “robust” consumer backdrop.

Bed Bath & Beyond posted a 0.3% decline in SSS last quarter despite including November, “which was arguably the best month of the year for retailers.”

Additionally, the analyst noted that his work indicates that trends have slowed sequentially quarter-to-date, in contrast to a string of positive pre-announcements from retailers. He sees margin pressure getting worse before getting better and believes that sales may take longer to rebound.

COMPETITORS

Bed Bath & Beyond competes with offerings from Amazon (AMZN) and Target (TGT), as well as companies including Kohl’s (KSS), Overstock (OSTK) and Wayfair (W).

Earlier this month, Loop Capital said Amazon has become “more aggressive” in its pricing strategy, and that in a study across a basket of 50 items for both companies, Bed Bath & Beyond prices were on average 19.8% more expensive than Amazon.

Target recently said that its comparable sales in the combined November/December period grew 3.4%, which was better than the company previously said that it expected, and Target raised its FY17 earnings view.

Kohl’s, meanwhile, said that its total and comparable sales for the November and December combined period were up 6.9% over last year.

Kohl’s Chief Executive Officer Kevin Mansell noted that “All lines of business and all regions reported positive comp sales” for the critical holiday period.

In December, Bed Bath & Beyond beat analysts’ estimates on the top and bottom line and backed its FY17 adjusted EPS view.

The company forecast FY17 revenue flat to slightly positive and SSS down in the low single-digit percentage range.

PRICE ACTION

Bed Bath & Beyond is down about 6% in morning trading to $21.70.


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JAKKS Pacific receives $2.95 per share offer

JAKKS Pacific receives interest from Meisheng to acquire 51% stake

JAKKS Pacific receives interest from Meisheng to acquire 51% stake. Stockwinners.com
JAKKS Pacific receives interest from Meisheng to acquire 51% stake

JAKKS Pacific (JAKK) announced today that the company had received a letter dated January 25, 2018 from Hong Kong Meisheng Cultural Company, a wholly owned subsidiary of Meisheng Cultural and Creative Corp., containing a non-binding proposal expressing Meisheng’s interest in acquiring additional shares of JAKKS common stock for $2.95 per share.

Upon completion of the transaction, Meisheng’s shareholdings and voting rights would increase to 51%.

The Proposal states that it is subject to due diligence, and that Meisheng intends to fund the transaction through a combination of existing cash on hand and/or other financing sources to the extent required for the restructuring or refinancing of JAKKS’ outstanding senior convertible senior notes.

The Expression of Interest also states that the transaction is subject to approval by Meisheng’s Board of Directors, shareholders and Chinese regulatory authorities.

Hong Kong Meisheng currently owns 5,239,538 shares of JAKKS common stock constituting 18% of JAKKS issued and outstanding shares of common stock.

The board of JAKKS Pacific has authorized a Special Committee comprised solely of independent directors to evaluate the Expression of Interest.

The Special Committee intends to engage independent legal counsel and an independent financial advisor to assist in its evaluation of the Expression of Interest.

JAKKS Pacific, Inc. develops, produces, and markets consumer products worldwide. It operates through three segments: U.S. and Canada, International, and Halloween.

JAKK closed at $2.60.


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Newell Brands tumbles on outlook

Newell Brands announces resignation of three directors from board

Newell Brands exploring portfolio reconfiguration to simplify operations

Newell Brands tumbles on outlook, Stockwinners.com
Newell Brands tumbles on outlook

Newell Brands (NWL) announced preliminary estimated results for 2017.

The company currently anticipates core sales growth of approximately 0.8%, down from previous guidance 1.5% to 2.0%, and normalized EPS in the range of $2.72-$2.76, down from previous guidance $2.80-$2.85.

Sees approximately $1B of operating cash flow generated in the fourth quarter of 2017, resulting in full year operating cash flow of approximately $930M, versus previous guidance of $700M-$800M.

The company’s core sales results were impacted by an acceleration of the gap between sell-in and sell-through results due to a continuation of retailer inventory rebalancing in the U.S. and the bankruptcy of a leading baby retailer.

Margins were impacted by the negative mix effect of lower Writing sales and a reduction of fixed cost absorption due to shorter cycle runs on self-manufactured products, designed to reduce inventories and maximize operating cash flow.

Newell Brands CEO says majority of brands performing well despite difficult 2H17

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” said Michael Polk, Newell Brands CEO.

“Despite a very difficult commercial outcome in the second half of 2017, the vast majority of our brands are performing well in the marketplace.

Our e-commerce business grew at a strong double-digit pace, our market shares have continued to increase and sell-through growth has accelerated with Q4 2017 growth rates ahead of Q3 2017 in the U.S., which strengthens our confidence in our brand, design and innovation-led strategy.

Importantly, our early efforts to improve working capital metrics look to have yielded good results with operating cash flow of nearly $1 billion dollars in Q4, despite the increased margin pressure from planned downtime in our factories and input cost inflation. We are committed to achieving our transformation objectives and are taking decisive action with speed to adapt our agenda to the unprecedented volatility in our retailer landscape,” Polk added.

PORTFOLIO CHANGES

Newell Brands announced that it will explore a series of strategic initiatives to accelerate its transformation plan, improve operational performance and enhance shareholder value.

Key components include: Focusing Newell’s portfolio on nine core consumer divisions with approximately $11B in net sales and $2B of EBITDA;

Exploring strategic options for industrial and commercial product assets, including Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa;

Exploring strategic options for the smaller consumer businesses, including Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and U.S. Playing Cards;

Newell Brands exploring portfolio reconfiguration to simplify operations. Stockwinners.com
Newell Brands exploring portfolio reconfiguration

 

Execution of these strategic options would result in a significant reduction in operational complexity through a 50% reduction in the company’s global factory and warehouse footprint, a 50% reduction in its customer base and the consolidation of 80% of global sales on two ERP platforms by end of 2019.

If fully actioned, Newell Brands would expect to be an approximately $11B focused portfolio of leading consumer-facing brands with attractive margins and growth potential in global categories. These brands would leverage the company’s advantaged capabilities in brands, innovation, design and e-commerce.

The company expects proceeds after tax to be greater than that required to achieve a leverage ratio below the lower end of its current leverage ratio target range.

Newell Brands intends to begin the evaluation process immediately and expects any resulting transactions to be completed by the end of 2019.

DOWNGRADES

Barclays analyst Lauren #Lieberman downgraded Newell Brands to Equal Weight from Overweight and cut her price target for the shares to $26 from $35.

“Put simply, we’ve lost confidence,” the analyst says following this morning’s preannounced Q4, announced strategic overhaul and departure of certain board members.

Lieberman has concerns given the scale of Newell’s transformation expected in 2018. She also sees a lack of visibility around cash flow.

SunTrust said Newell reset the bar with a number of announcements today announcing Q4 results, below consensus 2018 guidance, a new strategic initiative to simplify its portfolio, and BOD changes.

The firm’s analyst actually views today’s announcements as a positive and said the news makes shares even more investable for 2018.

NWL is down 22% to $24.20.


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Dick’s Sporting shares may have topped

Dick’s Sporting dips despite fifth upgrade this month

Dick's Sporting dips, Stockwinners.com
Dick’s Sporting dips

This morning, Telsey Advisory analyst Joseph Feldman upgraded Dick’s Sporting Goods (DKS) to Outperform as he expects industry pressures will stabilize. Since the beginning of the month, four other Wall Street analysts have upgraded the stock to buy-equivalent ratings, citing better sector trends and benefits from new U.S. tax reforms.

BUY DICK’S SPORTING

In a research note to investors, Telsey Advisory‘s Feldman upgraded Dick’s Sporting Goods to Outperform from Neutral and raised his price target on the shares to $42 from $25 as he adjusted his earnings per share estimates for the benefit from tax reform.

While the analyst acknowledged that the company is currently in a period of earnings pressure due to price competition on athletic apparel and footwear, driven by increased distribution to new channels such as department stores and online and too much inventory, he expects industry trends to stabilize in the second quarter of 2018, leading to better results for Dick’s Sporting in the second half of the year.

BETTER INDUSTRY TRENDS

Earlier this week, Susquehanna analyst Sam Poser also upgraded Dick’s Sporting to Positive from Neutral, saying the company’s results should surprise to the upside given a low bar and “less worse” weather driven sales trends.

The analyst said he continues to believe Dick’s needs to proactively take control of its business and focus on customer engagement rather than succumb to the promotional environment.

Overall, #Poser contended that better than expected earnings, starting with the fourth quarter of 2017 results and continuing with 2018, will drive shares higher.

The analyst also raised his price target on the sock to $41 from $25. Last week, his peer at Buckingham had upgraded Dick’s Sporting to Buy from Neutral, with a $39 price target, citing tax reform benefits and recent strength across retail.

Back on January 12, Deutsche Bank analyst Mike #Baker also upgraded Dick’s Sporting Goods to Buy, while raising his price target on the shares to $39 from $33.

The analyst told investors he sees industry trends bottoming, inventory levels coming back into balance with demand and therefore lessen the impact on gross margins, and reduced risk to margin forecasts as models already reflect increased investment spending.

Wells Fargo analyst Ike #Boruchow was the first to upgrade the stock this month to Outperform back on January 3, saying the outlook for Dick’s is improving.

The analyst noted that high-level industry trends appear to be stabilizing, and the company has already re-based 2018 numbers in a “prudently conservative manner.”

Further, with the consolidation occurring in the sporting goods industry, Dick’s Sporting can continue to take market share from struggling brick-and-mortar competitors and be the “survivor” of the industry’s consolidation, he contended.

Additionally, the analyst pointed out that as a 100% domestic retailer with a high tax rate, the company is a key potential beneficiary of U.S. tax reform. Boruchow raised his price target on the shares to $35 from $26.

PRICE ACTION

In Thursday morning’s trading, shares of Dick’s Sporting (DKS) have dropped over 1% to $33.36. However, over the last month Dick’s shares are up nearly 13%.


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