Changes to S&P MidCap 400, S&P SmallCap 600 indices
Changes to S&P MidCap 400, S&P SmallCap 600 indices
S&P Dow Jones Indices will make the following changes to the S&P MidCap 400 and S&P SmallCap 600:
S&P SmallCap 600 constituent Boyd Gaming (BYD) will replace CalAtlantic Group (CAA) in the S&P MidCap 400, and Ring Energy (REI) will replace Boyd Gaming in the S&P SmallCap 600 effective prior to the open of trading on Tuesday, February 13.
S&P 500 constituent Lennar (LEN) is acquiring CalAtlantic Group in a deal expected to be completed on or about February 12 pending final approvals.
James River Group Holdings (JRVR) will replace Barracuda Networks (CUDA) in the S&P SmallCap 600 effective prior to the open of trading on Monday, February 12.
Thoma Bravo is acquiring Barracuda Networks in a deal expected to be completed on or about that date pending final conditions.
EVERTEC (EVTC) will replace Sucampo Pharmaceuticals (SCMP) in the S&P SmallCap 600 effective prior to the open of trading on Wednesday, February 14.
S&P 500 constituent Mallinckrodt (MNK) is acquiring Sucampo Pharmaceuticals in a deal expected to be completed on or about that date pending final conditions.
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.
lululemon CEO Potdevin resigns over misconduct accusations
Lululemon CEO resigns over misconduct accusations
Shares of lululemon athletica (LULU) are in focus after the company announced the resignation of chief executive officer Laurent Potdevin for “conduct” issues.
CEO RESIGNATION
lululemon announced yesterday that Laurent Potdevin has resigned as CEO and member of the board of directors, effective immediately. Potdevin had served as CEO since January 2014.
lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Potdevin “fell short of these standards of conduct,” the company said, adding that the board has begun a search for a new CEO.
“While this was a difficult and considered decision, the Board thanks Laurent for his work in strengthening the company and positioning it for the future,” said Glenn Murphy, executive chairman.
“Culture is at the core of lululemon, and it is the responsibility of leaders to set the right tone in our organization. Protecting the organization’s culture is one of the Board’s most important duties.”
Lululemon has promoted three members of its management team — Celeste Burgoyne, Stuart Haselden and Sun Choe — to oversee more day-to-day operations, marketing, e-commerce growth, product innovation and supply chain enhancements.
According to a Bloomberg report, Potdevin’s resignation was over misconduct that spanned a range of incidents involving multiple individuals. The misconduct was not related to finances or operations, the report noted.
GUIDANCE REAFFIRMED
In the wake of Potdevin’s resignation, lululemon looked to reassure investors by backing its fourth quarter guidance of earnings per share between $1.25-$1.27 and revenue of $905M-$915M, which compares to analysts’ estimates of $1.27 and $911.67M, respectively.
In addition, the company’s growth strategies remain on track to achieve $4B in revenue in 2020.
ANALYST COMMENTARY
Following the announcement, Jefferies analyst Randal Konik said the level of management turnover at lululemon during “this critical juncture in the company’s growth trajectory gives us some pause.”
The analyst sees better opportunities elsewhere given lululemon’s “high” valuation and “less plentiful” margin opportunity. He maintained a Hold rating on lululemon with a $72 price target.
Meanwhile, Deutsche Bank analyst Paul Trussell said that while he finds the circumstances of Potdevin’s resignation unfortunate, he has confidence in the remainder of lululemon’s management team, particularly Glenn Murphy.
The analyst recommended using any pullback in the shares as a buying opportunity and reiterated a Buy rating with a $95 price target. Citi analyst Paul Lejuez said he views the resignation as more of a positive for lululemon.
It presents the company with an opportunity to bring in a seasoned executive to take lululemon “to the next level,” the analyst said.
Lejeuz kept a Neutral rating on the shares with an $88 price target.
Additionally, KeyBanc analyst Edward Yruma said he views the departure negatively, and notes it comes after creative director Lee Holman’s departed in November.
The analyst believes Potdevin has been an integral part of the company’s stabilized performance in recent quarters.
Canaccord analyst Camilo Lyon said he does not see the departure as a major setback, but notes there is a level of uncertainty until the position is filled. Lyon reiterated his Hold rating and $75 price target.
Furthermore, Morgan Stanley analyst Kimberly Greenberger said it is likely that investors will speculate the top two contenders for the job are Murphy, executive chairman and ex-CEO of The Gap (GPS), and Stefan Larsson, the ex-CEO Ralph Lauren (RL). If lululemon picks either, Greenberger would expect the stock to react positively.
The analyst kept an Equal Weight rating and $73 price target on lululemon.
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.
Midstates Petroleum proposes all-stock combination with SandRidge Energy
Midstates Petroleum calls for merger with SandRidge Energy
Midstates Petroleum Company (MPO) announced that it has proposed to combine with SandRidge Energy (SD) in an all-stock merger that would create the leading exploration and production company in the Mississippian Lime play.
Earlier today, Midstates sent a letter to the Board of Directors of SandRidge detailing the merger proposal and its strong desire to negotiate a friendly transaction.
Given the highly complementary nature of the businesses, significant shareholder overlap, and the substantial operational synergies, Midstates believes that the proposed combination is attractive strategically and financially for the shareholders of both companies.
Under the terms of the proposal, SandRidge shareholders would own approximately 60% of the combined company and Midstates shareholders would own 40%.
David J. Sambrooks, Midstates President and Chief Executive Officer, stated, “We are ready to move forward immediately to negotiate a merger agreement to form a stronger, more formidable company.
The combined company will have zero net debt, strong liquidity, and forecasted free cash flow generation of up to $480 million over the next five years.”
Sambrooks continued, “Combining these two businesses in an at-market merger would bring undeniable benefits to shareholders of both companies.
The strategic fit and geographic overlap of both companies’ assets in the Miss Lime and NW STACK builds critical mass, creates significant synergies, and generates superior, risk-adjusted returns.”
Midstates is making this proposal public to inform both Midstates and SandRidge shareholders of the compelling value creation potential of the combination and to encourage SandRidge’s board to move towards a negotiated transaction.
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.
Corcept sinks after Teva submits application to sell Korlym in U.S.
Corcept sinks after Teva submits application to sell Korlym
Corcept Therapeutics (CORT) announced in a regulatory filing that it received a Paragraph IV Notice Letter advising that Teva Pharmaceuticals (TEVA) submitted an Abbreviated New Drug Application to the FDA seeking authorization to manufacture, use or sell a generic version of Korlym in the United States.
KORLYM is a prescription medicine used to treat high blood sugar (hyperglycemia) caused by high cortisol levels in the blood (hypercortisolism) in adults with endogenous Cushing’s syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or cannot have surgery.
Korlym is a glucocorticoid receptor antagonist that is indicated to control hyperglycemia associated with Cushing’s syndrome, a rare, debilitating endocrine disorder. Cushing’s syndrome is caused by prolonged exposure to elevated levels of glucocorticoids (hypercortisolism). The potent metabolic effects of excess cortisol influence many tissues and body systems, and patients often have many problems, including diabetes, obesity, muscle wasting, depression, cognitive difficulties, and psychosis.
The Notice Letter contains Paragraph IV certifications against certain of Corcept’s patents related to Korlym, the company points out. The Notice Letter also alleges that the Korlym patents, the ‘348 patent with an expiration date in August 2028 and the ‘495 patent with an expiration date in August 2036, will not be infringed by Teva’s proposed product, are invalid and/or are unenforceable.
“The Company intends to vigorously defend its extensive intellectual property rights related to Korlym,” Corcept stated.
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.
MediciNova’s MN-166 shows positive risk reduction in progressive MS
MediciNova reports positive MS data
MediciNova (MNOV) announced the presentation of additional positive clinical data from the SPRINT-MS Phase 2b Trial of MN-166 – ibudilast – in progressive multiple sclerosis, conducted through the National Institutes of Health-sponsored NeuroNEXT network.
MN-166 demonstrated a 26% reduction in the risk of confirmed disability progression compared to placebo.
Confirmed disability progression was a secondary endpoint in this Phase 2b trial but would be considered a primary endpoint in Phase 3.
MediciNova’s power analysis has determined that a Phase 3 trial of MN-166 that enrolls approximately 700 subjects will be sufficiently powered to achieve statistical significance for confirmed disability progression.
As reported in October 2017, the SPRINT-MS Phase 2b Trial of MN-166 in progressive MS achieved both primary endpoints. MN-166 (ibudilast) demonstrated a statistically significant 48% reduction in the rate of progression of whole brain atrophy compared to placebo, and demonstrated a favorable safety and tolerability profile.
The most common treatment-emergent adverse events during the study were gastrointestinal adverse events, which occurred with a higher frequency in the MN-166 group, and upper respiratory tract infections, which occurred with a higher frequency in the placebo group.
The MN-166 (ibudilast) portfolio, which includes the Phase 2-staged lead drug compound and proprietary analogs, represents novel, first-in-class, non-opioid drugs for the treatment of drug addiction, progressive multiple sclerosis and pain.
MN-166 is a first-in-class, orally bioavailable, small molecule glial attenuator that suppresses pro-inflammatory cytokines IL-1ß, TNF-a, and IL-6, and may upregulate the anti-inflammatory cytokine IL-10.
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.
Ply Gem to be acquired by Clayton, Dubilier & Rice in deal valued at $2.4B
Ply Gem sold for $2.4B
Ply Gem Holdings (PGEM) and Clayton, Dubilier & Rice announced a definitive agreement under which CD&R funds will acquire all of the outstanding shares of Ply Gem common stock in a go-private transaction valued at approximately $2.4B.
Ply Gem’s board of directors unanimously approved the agreement, which provides for the payment of $21.64 per share in cash to all holders of Ply Gem common stock.
The cash purchase price represents a premium of approximately 20% over Ply Gem’s closing stock price on January 30, 2018.
Promptly following entry into the agreement, stockholders holding greater than 50% of the outstanding shares of Ply Gem common stock executed a written consent to approve the transaction, thereby providing the required stockholder approval.
CD&R has also entered into a definitive agreement to acquire Atrium Windows & Doors and combine the company with Ply Gem to create an exterior building products company with total revenue of more than $2.4B in 2017.
The transactions are expected to close simultaneously in the second quarter of 2018 and are subject to the receipt of customary closing conditions, including regulatory approvals.
Closing of the acquisition of Ply Gem is not subject to the closing of the acquisition of Atrium.
However, assuming both transactions close simultaneously, CD&R funds will own approximately 70% of the new privately-held company, and Atrium shareholders, which include funds managed by Golden Gate Capital, will hold approximately 30%.
The new Ply Gem will continue to be headquartered in Cary, NC, and Gary E. Robinette, currently Chairman and CEO of Ply Gem, will continue as Chairman and CEO. John Krenicki, a CD&R Operating Partner and former Vice Chairman of General Electric Company, will become Lead Director of the Board.
Ply Gem Holdings, Inc. manufactures and sells residential and commercial building products primarily in the United States and Canada.
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.
Seattle Genetics to acquire Cascadian Therapeutics for $10.00 per share in cash
Cascadian Therapeutics sold for $10 per share
Seattle Genetics (SGEN) and Cascadian Therapeutics (CASC) announced the signing of a definitive merger agreement under which Seattle Genetics has agreed to acquire Cascadian Therapeutics.
Under the terms of the agreement, Seattle Genetics will pay $10.00 per share in cash, or approximately $614M.
The transaction was unanimously approved by the Boards of Directors of both companies.
Under the terms of the definitive merger agreement, Seattle Genetics will commence a tender offer on or about February 8, 2018 to acquire all of the outstanding shares of common stock of Cascadian Therapeutics for $10 per share in cash.
This represents a 69 percent premium to the closing price of Cascadian Therapeutics’ common stock on Tuesday, January 30, 2018, and a 139 percent premium to its 30-day volume weighted average stock price.
The tender offer is subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Cascadian Therapeutics common stock and the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Following the closing of the tender offer, a wholly-owned subsidiary of Seattle Genetics will merge with and into Cascadian Therapeutics, with each share of Cascadian Therapeutics common stock that has not been tendered being converted into the right to receive the same $10 per share in cash offered in the tender offer.
The transaction is anticipated to close in the first quarter of 2018. In connection with the transaction, Seattle Genetics has secured a financing commitment in the amount of $400 million from Barclays and JPMorgan-Chase Bank.
The balance of the consideration will be provided from cash on hand.
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.
SAP to acquire Callidus Software for $36 per share
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.
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.
Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare
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 healthcareAmazon, 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.
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.
Dr Pepper Snapple, Keurig Green Mountain announce merger agreement
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.
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.
Sanofi acquires Ablynx for EUR 45 per share or EUR 3.9B
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.”
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.
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.
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.
Bed Bath & Beyond sinks after analyst says sell with competition rising
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.
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.
JAKKS Pacific receives interest from Meisheng to acquire 51% stake
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.
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.
Newell Brands announces resignation of three directors from board
Newell Brands exploring portfolio reconfiguration to simplify operations
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
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.
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.
