Baker Hughes reports U.S. rig count down 3 to 768 rigs
Baker Hughes (BKR) reports that the U.S. rig count is down 3 from last week to 768 with oil rigs down 2 to 610, gas rigs down 1 to 156 and miscellaneous rigs unchanged at 2.
The U.S. Rig Count is up 224 rigs from last year’s count of 544 with oil rigs up 166, gas rigs up 56 and miscellaneous up 2.
The U.S. Offshore Rig Count is down 1 to 14, up 1 year-over-year.
The Canada Rig Count is up 2 from last week to 212, with oil rigs up 1 to 145, gas rigs up 1 to 67.
The Canada Rig Count is up 46 rigs from last year’s count of 166, with oil rigs up 47, gas rigs down 1.
The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.
The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.
West Texas Intermediate (WTI) is down $1.18 to $87.84 per barrel (down from a high of $123.70). Brent crude is down $1.27 to $93.77 per barre (down from a high of $127.98). Gasoline last traded at $2.564 per gallon (down from a high of $4.31 per gallon).
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.
American Campus to be acquired by Blackstone for $65.47 per share in cash
American Campus Communities (ACC) announced that it has entered into a definitive agreement under which Blackstone (BX) Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, alongside Blackstone Property Partners, will acquire all outstanding shares of common stock of ACC for $65.47 per fully diluted share in an all-cash transaction valued at approximately $12.8B, including the assumption of debt.
American Campus Communities, Inc. is the largest owner, manager and developer of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management and operational management of student housing properties.
The purchase price represents a premium of 22% to the 90-calendar day volume-weighted average share price ending April 18, a premium of 30% over the closing stock price of February 16, the date immediately prior to the company disclosing receipt of an indication of willingness to offer to acquire the company, and a 14% premium to yesterday’s closing price.
The transaction has been unanimously approved by ACC’s board of directors and the independent Special Committee of ACC’s board and is expected to close in the third quarter of 2022, subject to approval by ACC’s shareholders and other customary closing conditions.
As a condition to the transaction, ACC has agreed to suspend payment of its quarterly dividend, effective immediately.
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.
Exxon Mobil announces plans to build plastic waste recycling facility
Exxon Mobil (XOM) plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022.
A smaller, temporary facility, is already operational and producing commercial volumes of certified circular polymers that will be marketed by the end of this year to meet growing demand.
The new facility follows validation of Exxon Mobil’s initial trial of its proprietary process for converting plastic waste into raw materials.
“We’ve proven our proprietary advanced recycling technology in Baytown, and we’re scaling up operations to supply certified circular polymers by year-end,” said Karen McKee, president of ExxonMobil Chemical Company. “Availability of reliable advanced recycling capacity will play an important role in helping address plastic waste in the environment, and we are evaluating wide-scale deployment in other locations around the world.”
To date, the trial has successfully recycled more than 1,000 metric tons of plastic waste, the equivalent of 200M grocery bags, and has demonstrated the capability of processing 50 metric tons per day.
Upon completion of the large-scale facility, the operation in Baytown will be among North America’s largest plastic waste recycling facilities and will have an initial planned capacity to recycle 30,000 metric tons of plastic waste per year.
Operational capacity could be expanded quickly if effective policy and regulations that recognize the lifecycle benefits of advanced recycling are implemented for residential and industrial plastic waste collection and sorting systems.
ExxonMobil is developing plans to build approximately 500,000 metric tons of advanced recycling capacity globally over the next five years.
In Europe, the company is collaborating with Plastic Energy on an advanced recycling plant in Notre Dame de Gravenchon, France, which is expected to process 25,000 metric tons of plastic waste per year when it starts up in 2023, with the potential for further expansion to 33,000 metric tons of annual capacity.
The company is also assessing sites in the Netherlands, the U.S. Gulf Coast, Canada, and Singapore.
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.
Xilinx to be acquired by AMD for $35B in all-stock transaction
AMD (AMD) and Xilinx (XLNX) announced they have entered into a definitive agreement for AMD to acquire Xilinx in an all-stock transaction valued at $35B.
Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction.
Xilinx makes programmable logic devices
Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock. Post-closing, current AMD stockholders will own approximately 74% of the combined company on a fully diluted basis, while Xilinx stockholders will own approximately 26%.
The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
AMD expects to achieve operational efficiencies of approximately $300 million within 18 months of closing the transaction, primarily based on synergies in costs of goods sold, shared infrastructure and through streamlining common areas.
AMD goes shopping taking advantage of Intel’s troubles
The transaction has been unanimously approved by the AMD and Xilinx Boards of Directors.
The acquisition is subject to approval by AMD and Xilinx shareholders, certain regulatory approvals and other customary closing conditions.
The transaction is currently expected to close by the end of calendar year 2021.
Until close, the parties remain separate, independent companies. Dr. Lisa Su will lead the combined company as CEO. Xilinx President and CEO, Victor Peng, will join AMD as president responsible for the Xilinx business and strategic growth initiatives, effective upon closing of the transaction.
In addition, at least two Xilinx directors will join the AMD Board of Directors upon closing.
Xilinx, Inc. designs and develops programmable devices and associated technologies worldwide. The company offers integrated circuits (ICs) in the form of programmable logic devices (PLDs), such as programmable system on chips, and three dimensional ICs; adaptive compute acceleration platform; software design tools to program the PLDs; software development environments and embedded platforms; targeted reference designs; printed circuit boards; and intellectual property (IP) core licenses covering Ethernet, memory controllers, Interlaken, and peripheral component interconnect express interfaces, as well as domain-specific IP in the areas of embedded, digital signal processing and connectivity, and market-specific IP cores. XLNX closed at $114.55.
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.
Baker Hughes reports U.S. rig count up 5 to 287 rigs
Baker Hughes (BKR) reports that the U.S. rig count is up 5 from last week to 287 with oil rigs up 6 to 211, gas rigs down 1 to 73, and miscellaneous rigs unchanged at 3.
Baker Hughes has been reporting weekly rig counts for more than 50 years
The U.S. Rig Count is down 543 rigs from last year’s count of 830, with oil rigs down 485, gas rigs down 60 and miscellaneous rigs up 2.
The U.S. Offshore Rig Count is down 1 to 13, down 8 year-over-year.
An international offshore rig
The Canada Rig Count is up 3 from last week to 83, with oil rigs up 2 to 42, gas rigs up 1 to 41.
The Canada Rig Count is down 64 rigs from last year’s count of 147, with oil rigs down 60, gas rigs down 4.
Rig Counts Rise – See Stockwinners.com Market Radar to read more
Brent crude is down $0.84 to $41.62 per barrel. West Texas Intermediate (WTI) crude is down $0.93 to $39.70 per barrel.
Gasoline last traded at $1.13 per gallon down three cents.
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.
Chesapeake Energy slides as company considers bankruptcy, strategic alternatives
Shares of Chesapeake Energy (CHK) are tumbling after the company warned that it might not be able to stay in business amid low commodity prices caused by a global price war and depressed demand due to the COVID-19 pandemic.
Chesapeake is near bankruptcy
EVALUATING STRATEGIC ALTERNATIVES:
On Monday, Chesapeake Energy announced that it filed its Form 10-Q for the three-month period ended March 31, 2020 and, in light of the unprecedented market environment, has withdrawn the financial outlook it previously provided on February 26, 2020.
The company also reinstated a “going concern” warning. “Fluctuations in oil and natural gas prices have a material impact on our financial position, results of operations, cash flows and quantities of oil, natural gas and NGL reserves that may be economically produced.
Historically, oil and natural gas prices have been volatile; however, the volatility in the prices for these commodities has substantially increased as a result of COVID-19 and the OPEC+ decisions […]
Historical oil prices represented in 2020 dollar, Stockwinners
If the current depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant and an expected significant reduction in our borrowing base in our scheduled determination, then our liquidity and our ability to comply with our financial covenants during the next 12 months will be adversely affected,” Chesapeake said in the filing.
Boom to bust for CHK
“Based on our current forecast, we do not expect to be in compliance with our financial covenants beginning in the fourth quarter of 2020. Failure to comply with these covenants, if not waived, would result in an event of default under our revolving credit facility, the potential acceleration of outstanding debt thereunder and the potential foreclosure on the collateral securing such debt, and could cause a cross-default under our other outstanding indebtedness.
As a result of the impacts to the company’s financial position resulting from declining industry conditions and in consideration of the substantial amount of long-term debt outstanding, the company has engaged advisors to assist with the evaluation of strategic alternatives, which may include, but not be limited to, seeking a restructuring, amendment or refinancing of existing debt through a private restructuring or reorganization under Chapter 11 of the Bankruptcy Code.
However, there can be no assurances that the company will be able to successfully restructure its indebtedness, improve its financial position or complete any strategic transactions. As a result of these uncertainties and the likelihood of a restructuring or reorganization, management has concluded that there is substantial doubt about the company’s ability to continue as a going concern.”
REVERSE STOCK SPLITs NEVER WORK:
Chesapeake stock has lost about 50% of it’s value since a 1-for-200 reverse stock split took effect after the close of trading on April 14, 2020.
The company had implemented the reverse split to raise its share price enough to regain compliance with listing standards, but it was viewed as validation of investor concerns as the company struggled with falling commodities prices, high debt levels and the effects of the COVID-19 pandemic, the author added.
The company lost its way after Aubrey McClendon, a founder and former chief executive of Chesapeake Energy, died in a fiery car crash in 2016, a day after he was charged with conspiring to rig bids for oil and natural gas leases. Many believe he committed suicide.
Aubrey McClendon
McClendon — a key player in the U.S. shale boom — co-founded Chesapeake in 1989 and stepped down from the company in 2013. Chesapeake used to be the second-largest natural gas producer in the United States.
PRICE ACTION: In afternoon trading on Tuesday, shares of Chesapeake have dropped almost 22% to $10.13.
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.
US Ecology, NRC Group to merge in all-stock transaction
US Ecology and NRC Group to merge, Stockwinners
US Ecology (ECOL) announced that it has entered into a definitive merger agreement with NRC Group Holdings (NRCG) in an all-stock transaction with an enterprise value of $966M.
U.S. Ecology and NRC Group to merge, Stockwinners
The transaction is expected to close in the fourth quarter and is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, respective stockholder approvals and other customary closing conditions.
The transaction will create a nationwide leader in industrial and hazardous waste management services and is projected to be mid-single digit accretive to US Ecology’s 2020 adjusted earnings per share, before synergies.
The transaction has been approved by both companies’ Boards of Directors.
Upon completion of the transaction, US Ecology stockholders will own approximately 70% of the combined company, and NRCG stockholders will own approximately 30% on a fully diluted basis.
The combined company will use the US Ecology name, and its shares will continue to be listed on the Nasdaq Global Select Market under the ticker ECOL.
Jeffrey Feeler will continue to serve as President, CEO and Chairman of the Board of Directors.
The company will maintain its headquarters in Boise, Idaho with regional support centers in Boise, Detroit, New York and Houston.
Under the terms of the merger agreement, US Ecology will form a new holding company which will take the name of US Ecology, Inc. immediately upon the closing of the transaction and will own both US Ecology and NRCG.
US Ecology stockholders will receive 1 share of common stock of the new holding company for each share of US Ecology common stock they own upon closing of the transaction.
NRCG common stockholders will receive 0.196 shares of common stock of the new holding company for each share of NRCG common stock they own upon closing of the transaction.
The exchange ratio represents a price of $12.00 per share of NRCG stock, based on the US Ecology average share price over the last 15-trading days.
The $12.00 price per share represents a premium of approximately 36% to NRCG’s June 21 closing price of $8.83.
Each share of NRCG’s 7.00% Series A Convertible Cumulative Preferred Stock is expected to be converted in the merger into approximately 1.8 common shares of the new holding company.
NRCG’s 19.249M outstanding Warrants to purchase NRCG common stock will be converted to 3.773M Warrants to purchase common stock of the new holding company, with a strike price of $58.67 each.
The transaction will provide NRCG stockholders with continued participation in the future prospects expected to result from the combination through their ownership of approximately 30% of the stock of the new holding company, on a fully diluted basis.
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.
Walmart (WMT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 19, with a conference call scheduled for 8:00 am EDT.
Wal-Mart reports next week. See Stockwinners.com for the report
What to watch for:
1. OUTLOOK: Walmart previously raised its fiscal 2019 EPS view to $4.90-$5.05 and narrowed its net sales view to up about 2%, but cut its EPS outlook at its investor meeting in October to $4.65-$4.80.
In its November earnings report, Walmart again raised its FY19 EPS outlook to $4.75-$4.85. The current Street forecast for FY19 EPS stands at $4.84 on revenue of $514.33B.
The company previously said it was moving to an annual guidance framework with its quarterly updates, and that while there may be fluctuations within the quarters, “we believe EPS growth will be relatively consistent across the year.”
Baird analyst Peter Benedict said he expects Walmart’s Q4 earnings to be solid, and expects guidance to remain intact, although he recognizes the uncertainty with Flipkart as the result of new regulations in India.
2. HOLIDAY SEASON:
Jet.com’s holiday weekend was “truly horrible,” with sales down 6% on Thanksgiving and Black Friday and a 39% plunge on Cyber Monday vs. last year, BuzzFeed News reported, citing data from market research firm Edison Trends.
According to the data, Target.com (TGT) sales increased 48% on Thanksgiving and Black Friday and 19% on Cyber Monday, Amazon (AMZN) increased by 25% on Black Friday and Thanksgiving and 17% on Cyber Monday, and Jet.com parent Walmart.com increased sales revenue by 23% on Thanksgiving and Black Friday and 32% on Cyber Monday.
In late December, Amazon said that it had a “record-breaking” holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said.
3. COMPETITION:
Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon rather than at brick-and-mortar stores. Walmart is seeking to create a big ad business to rival that of Amazon, Bloomberg reported, adding that it has hired executives from NBC (CMCSA) and CBS (CBS) to help bolster its advertising business.
Walmart has also launched a private-label furniture brand, called MoDRN, which is “a direct hit to big furniture retailers” such as Wayfair (W) and Ikea and a challenge to rival Amazon, Erica Pandey wrote for Axios.
4. FLIPKART:
Bernstein analyst Brandon Fletcher said that India has been bandying about restrictive e-commerce regulations this past year, and finally pulled the trigger despite protestations from both Walmart and Amazon.
Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners
The new rules put a damper on 1P selling models, pricing discounts, supplier exclusives, and supplier shares of sales above 25%, all of which are important to both companies’ planned models.
While not significant to Walmart’s total revenues, the analyst believes it does put a damper on its long-term growth potential in the market through Flipkart and raises the question of where Walmart will make up that growth.
Morgan Stanley analyst Simeon Gutman said Flipkart’s losses will likely rise due to new e-commerce regulations in India and Walmart investors “can’t ignore Flipkart” as it once again becomes a bigger part of the retailer’s investment narrative.
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.
Toyota, SoftBank agree to form JV for self-driving car services
Toyota enters self-driving car services, Stockwinners
Shares of Toyota (TM) are in focus on Thursday after the company announced plans to team up with SoftBank (SFTBF) to develop self-driving car services.
The news follows an announcement from General Motors (GM) on Wednesday that Honda (HMC) will invest $2.75B and take a 5.7% stake in its Cruise self-driving vehicle unit, in which SoftBank is also an investor.
TOYOTA, SOFTBANK TO FORM JV
Toyota announced in a statement that it and SoftBank will form a joint venture called MONET, short for mobility network, to develop businesses that will use driverless-car technology to offer new services, such as mobile convenience stores and delivery vehicles in which food is prepared en route.
MONET will provide coordination between Toyota’s Mobility Services Platform, Toyota’s information infrastructure for connected vehicles, and SoftBank’s Internet of Things Platform, which was built to create new value from the collection and analysis of data acquired from smartphones and sensor devices, the companies said.
MONET will roll out an autonomous driving service using e-Palette, Toyota’s dedicated battery electric vehicle for mobility services, by the second half of the 2020s, Toyota and SoftBank added.
The venture will have initial capital of Y2B, and SoftBank will own just over half of the business, which will initially focus on Japan and eventually go global, according to a Reuters report.
Junichi Miyakawa, chief technology officer at SoftBank who will be CEO of the new company, commented that “SoftBank alone and automakers alone can’t do everything… We want to work to help people with limited access to transportation.”
WHAT’S NOTABLE
Earlier this year, Toyota set up a new company dedicated to the research and development of self-driving vehicles, with plans to invest $2.8 billion to develop a commercially viable autonomous car.
RECENT PARTNERSHIPS IN AUTONOMOUS VEHICLES
On Wednesday, Cruise and GM announced that they partnered with Honda to work towards large-scale deployment of autonomous vehicle technology.
Honda will work jointly with Cruise and General Motors to fund and develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of use cases and be manufactured at high volume for global deployment.
Honda will contribute approximately $2B over 12 years to these initiatives, which, together with a $750M equity investment in Cruise, brings its total commitment to the project to $2.75B.
SoftBank’s Vision Fund committed $2.3B to Cruise earlier this year.
Additionally, Renault (RNSDF)-Nissan (NSANY) and Daimler (DDAIF) are considering expanding their collaboration to battery and autonomous vehicle technology as well as mobility services, Reuters reported on Wednesday, citing comments made by the CEOs of both companies.
“The industry being in transformation in the area of connectivity, autonomous cars and connected services, there are plenty of areas of cooperation for our entities,” Renault Nissan CEO Carlos Ghosn said.
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.
Veritex Holdings (VBTX) and Green Bancorp (GNBC) jointly announced the entry into a definitive agreement pursuant to which Green and Green Bank, N.A. will merge with and into Veritex and Veritex Community Bank, respectively.
Veritex, Green Bancorp to merge, Stockwinners
The transaction will create a leading Texas community bank, with 43 branches across Texas, ranking as the tenth largest Texas-based banking institution by deposit market share.
The combined franchise would have approximately $7.5B in assets, $5.6B in loans and $5.9B in deposits, based on the companies’ balance sheets as of June 30, 2018.
Under the terms of the merger agreement, upon completion of the merger, shareholders of Green will receive 0.79 shares of Veritex common stock for each share of Green common stock, valuing the transaction at approximately $1B, or $25.89 per Green share, based on the closing share price of Veritex of $32.77 on July 23, 2018.
Legacy Veritex and Green shareholders will collectively own approximately 45% and 55% of the combined company, respectively.
Upon completion of the merger, C. Malcolm Holland, current Chairman and Chief Executive Officer of Veritex, will continue to serve as Chairman and Chief Executive Officer of the combined company.
Terry Earley, current Chief Financial Officer of Green, will serve as Chief Financial Officer of the combined company, and Geoffrey Greenwade, current President of Green, will serve as the Houston President of the combined company.
The board of directors of the combined company will consist of nine members, six from Veritex’s current board of directors and three from Green’s current board of directors.
Veritex expects this acquisition to be approximately 25% accretive to earnings per common share, excluding one-time charges.
The transaction is expected to produce approximately 12.0% tangible book value per share dilution at closing with an earnback period of approximately 2.8 years.
The merger agreement has been unanimously approved by the board of directors of both Veritex and Green.
The merger agreement contains customary representations and warranties and covenants by Veritex and Green. Closing is subject to customary approvals by regulatory authorities and the shareholders of both Veritex and Green, and is expected to occur in the first quarter of 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.
General Mills acquires Blue Buffalo Pet Products for $40.00 a share in cash
Blue Buffalo sold for $8 billion
General Mills (GIS) and Blue Buffalo Pet Products (BUFF) announced that they have entered into a definitive agreement under which General Mills will acquire Blue Buffalo for $40.00 per share in cash, representing an enterprise value of approximately $8B.
The transaction establishes General Mills as the leader in the U.S. Wholesome Natural pet food category, the fastest growing portion of the overall pet food market, and accelerates its portfolio reshaping strategy.
The $30 billion U.S. pet food market is generating consistent 3-4% growth and is highly attractive for retailers based on continued market growth, premiumization and subscription-like purchase patterns that drive traffic and repeat purchases.
Blue Buffalo is the leader in the fastest-growing Wholesome Natural category with double-digit growth over each of the last three years. The Wholesome Natural market represents approximately 10% of the pet food market in volume and approximately 20% in value.
Based on the strong consumer tailwinds, the Wholesome Natural market is poised to continue to grow, propelling BLUE’s growth.
General Mills’ scale and decades of experience will support greater effectiveness and efficiency for Blue Buffalo across key business areas, including: sales, marketing, advertising, supply chain, R&D, innovation, and environmental stewardship.
These capabilities are expected to contribute to meaningful revenue synergies over time, in addition to $50 million in anticipated cost savings opportunities.
The transaction will be immediately accretive to General Mills (GIS) net sales growth and operating margin profile, and is expected to be neutral to cash EPS in fiscal 2019 and accretive in fiscal 2020.
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.
Shareholder calls on Avon Products to consider a sale of the company
Shareholder calls on Avon Products to consider a sale
A group of shareholders of Avon Products (AVP) led by Shah Capital, Barington Capital Group, L.P., and NuOrion Partners that collectively beneficially owns approximately 3.5% of the outstanding common stock announced that it has sent a letter to the board of Avon calling on the board to promptly retain a financial advisor to explore all strategic alternatives to maximize shareholder value, including a sale of the company in whole or in parts.
The Shareholder Group is extremely disappointed with the deteriorating operating and share price performance that has occurred under the stewardship of the current board.
The Shareholder Group is also dismayed by the Board’s failure to act quickly and decisively on the past recommendations its members have made to improve the long-term performance of the company, including promptly hiring a new chief executive officer – a step that has been long overdue and members of the Shareholder Group recommended over two years ago.
As a result, the Shareholder Group has lost confidence in the ability of Avon’s current Board to create meaningful long-term value for its public shareholders, and sees no reason why shareholders should continue to wait for a turnaround from a Board that has overseen a tremendous destruction of shareholder value.
The Shareholder Group therefore believes that the best course of action is for the Board to retain a financial advisor to explore the sale of the company.
The Shareholder Group believes that Avon would be highly attractive to a range of buyers due to its many positive attributes, including its well-known 130-year old brand; its vast product offering generating over $5.7 billion in sales; its strong market positions in developing countries such as Brazil, Russia and Mexico; its owned manufacturing operations; and its six million direct sales representatives.
In addition, a multinational acquirer would immediately benefit from its ability to improve Avon’s capital structure and the tax efficiency of its operations.
The Shareholder Group is convinced that a better capitalized strategic buyer would do a much better job of unlocking Avon’s tremendous value potential than the company’s current Board.
AVP closed at $2.43. The stock has a 52 weeks trading range of $1.85 – $6.03.
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.
Apple announces new U.S. investments, sees $38B of repatriation taxes
Apple has too much cash
Apple (AAPL) announced a new set of investments “to build on its commitment to support the American economy and its workforce,” concentrated in three areas: direct employment by Apple, spending and investment with Apple’s domestic suppliers and manufacturers, and fueling the app economy.
Apple said in a statement that it is already responsible for creating and supporting over 2M jobs across the United States.
It expects “to generate even more jobs as a result of the initiatives being announced today.”
Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers, an estimated $55B for 2018, Apple’s direct contribution to the U.S. economy will be more than $350B over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products.
Planned capital expenditures in the U.S., investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75B of Apple’s direct contribution, the iPhone maker said.
Apple anticipates repatriation tax payments of approximately $38B as required by recent changes to the tax law.
The company expects to invest over $30B in capital expenditures in the U.S. over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one. Apple already employs 84,000 people in all 50 states.
The company plans to establish an Apple campus in a new location, which will initially house technical support for customers. The location of this new facility will be announced later in the year.
Today, Apple is breaking ground on a new facility in downtown Reno, which will support its existing Nevada facilities.
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