The London Metal Exchange, or LME, has issued a discussion paper on Russian metal, stating in a summary:
“Since Russia invaded Ukraine on 24 February 2022, specific sectoral sanctions and related measures against Russia have been introduced; however, there has been no comprehensive government-led action to prevent the widespread use of Russian metal.
In parallel, the LME has been closely monitoring the usage and throughflow of Russian metal on the LME, to ensure that LME warehouses do not see a significant inflow of unwanted Russian stocks, posing a risk of creating a disorderly or unfair market.
Through 2022, the LME’s understanding is that consumers have broadly been willing to take deliveries of Russian metal, which is supported by data as to the flow of Russian stocks both into and out of LME warehouses.
Russian aluminnum looking for a new home
However, as the current negotiation period for 2023 supply agreements progresses, the LME understands that an increasing number of consumers may be expressing an unwillingness to accept Russian metal in 2023.
As a result, and in light of the potentially changing market landscape, the LME now considers it appropriate to gather further data and views.
Alcoa is U.S.’ largest aluminum smelter
This paper considers the role of the LME in this scenario, provides background and data on the subject, and asks for market feedback on possible routes forward.”
Aluminum stocks that have previously moved in reaction (now recovering) to reports that the London Metal Exchange was launching a discussion of a potential ban on new supplies of Russian metal include Alcoa (AA), Century Aluminum (CENX), Kaiser Aluminum (KALU), Constellium (CSTM) and Arconic (ARNC).
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.
Mimecast discloses ‘non-binding expression of interest’ at $92.50 in go-shop
In a regulatory filing earlier, Mimecast (MIME) disclosed that it received, and rejected, a $92.50 per share proposal from a group identified in its proxy materials as “Portfolio Company A.”
The filing states: “On December 31, 2021, Portfolio Company A submitted to the Special Committee a non-binding expression of interest to acquire all outstanding ordinary shares of Mimecast at a price of $92.50 per share in cash, subject to completion of customary due diligence.
This expression of interest did not include the proposed quantum of debt and equity financing or copies of debt commitment letters or whether offers for debt commitments had been secured.
Portfolio Company A indicated that it was likely Portfolio Company A could pay a higher price following access to due diligence information… Immediately following the special joint meeting of the Special Committee and the Company Board held on January 6, 2022, representatives of Goodwin advised outside counsel to Portfolio Company A that the Company Board had determined that priority financial, legal and customer due diligence information would not be provided at such time and that consistent with the Special Committee’s position that had been conveyed on multiple occasions since November 2, 2021, Financial Sponsor A and Portfolio Company A needed to satisfy the Special Committee and its antitrust advisors that the antitrust risks for such a transaction would not subject Mimecast shareholders to substantial timing and execution risk due to expected scrutiny from antitrust regulators.
Counsel for Portfolio Company A did not share any additional information or analyses regarding the antitrust process for a transaction between Mimecast and Portfolio Company A or the timing and execution risk due to expected scrutiny from antitrust regulators.
Portfolio Company A also did not elect to submit any further or updated indication of interest or provide a markup of the antitrust-related provisions in the Permira Transaction Agreement (or clarify its position with respect thereto).
At 11:59 P.M. Eastern Time on January 6, 2021, the go-shop period set forth in the Transaction Agreement expired.”
Mimecast jumped 6% on December 7th after the cybersecurity company announced it was being acquired by private-equity firm Permira for $80 a share in cash or $5.8 billion.
That bidder, according to a report Bloomberg’s Ed Hammond, is Proofpoint, which was taken private last year by Thoma Bravo.
Mimecast Limited, a British company, provides cloud security and risk management services for corporate information and email.
This is how ProofPoint describes itself “Email, social media, and mobile devices are the tools of your trade—and for cyber criminals, the tools of attack. Proofpoint protects your people, data and brand against advanced threats and compliance risks.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B
Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.
Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.
Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.
Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.
The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.
The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.
The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.
I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.
We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.
Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.
After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”
The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.
The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.
Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”
ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania. In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.
Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.
The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.
ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Buffett also said in his annual shareholder letter to “never bet against America.”
Warren Buffett Berkshire Hathaway’s (BRK.A, BRK.B) fourth quarter profits rose, with its net earnings rising to $38.5B, or $23,015 a Class A share equivalent, up almost 23% from the previous year’s profit of $29.2B, or $17,909 a share.
Operating earnings, which exclude some investment results, rose to $5 billion from $4.4 billion the year before.
Buffett also said in his annual shareholder letter to “never bet against America.”
“In its brief 232 years of existence… there has been no incubator for unleashing human potential like America,” he added.
“Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.” Buffett said the conglomerate owns the biggest amount of U.S. assets by value than any other company in the country.
Berkshire Hathaway also bought back a record amount of company stock last year. During the fourth quarter, the company bought back about $9B shares for a total 2020 repurchase of $24.7B.
Buffett said in his annual shareholder letter that repurchases have continued since year-end and “is likely to further reduce its share count in the future.”
“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet,” the letter reads.
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.
J&J submits FDA application for emergency use authorization for COVID-19 vaccine
Johnson & Johnson (JNJ) announced that Janssen Biotech, Inc., has submitted an application to the U.S. Food and Drug Administration requesting Emergency Use Authorization for its investigational single-dose Janssen COVID-19 vaccine candidate.
JNJ files for approval of Covid-19 vaccine
The company’s EUA submission is based on topline efficacy and safety data from the Phase 3 ENSEMBLE clinical trial, demonstrating that the investigational single-dose vaccine met all primary and key secondary endpoints.
The Company expects to have product available to ship immediately following authorization. “Today’s submission for Emergency Use Authorization of our investigational single-shot COVID-19 vaccine is a pivotal step toward reducing the burden of disease for people globally and putting an end to the pandemic,” said Paul Stoffels, M.D., Vice Chairman of the Executive Committee and Chief Scientific Officer at Johnson & Johnson.
“Upon authorization of our investigational COVID-19 vaccine for emergency use, we are ready to begin shipping. With our submission to the FDA and our ongoing reviews with other health authorities around the world, we are working with great urgency to make our investigational vaccine available to the public as quickly as possible.”
Johnson & Johnson intends to distribute vaccine to the U.S. government immediately following authorization, and expects to supply 100 million doses to the U.S. in the first half of 2021.
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.
Lockheed Martin (LMT) announced it has entered into a definitive agreement to acquire Aerojet Rocketdyne (AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend.
Aerojet sold for $5 billion
This represents a post-dividend equity value of $4.6B and a total transaction value of $4.4B including the assumption of net cash.
As part of approving the transaction, Aerojet Rocketdyne announced a special cash dividend, revocable at its option through the payment date, of $5 per share to its holders of record of common stock and convertible senior notes as of the close of business on March 10, 2021, and payable on March 24, 2021.
Lockheed Martin brings most of it’s rocket manufacturing to in-house with this deal
The transaction is expected to close in the second half of 2021 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by Aerojet Rocketdyne’s stockholders.
Aerojet Rocketdyne designs, develops, manufactures, and sells aerospace and defense products and systems in the United States.
The Aerospace and Defense segment offers aerospace and defense products and systems for the United States government, including the Department of Defense, the National Aeronautics and Space Administration, and aerospace and defense prime contractors. This segment provides liquid and solid rocket propulsion systems, air-breathing hypersonic engines, and electric power and propulsion systems for space, defense, civil, and commercial applications; and armament systems.
Large Solid Rockets made by Aerojet
The Real Estate segment engages in the re-zoning, entitlement, sale, and leasing of the company’s excess real estate assets. It owns approximately 11,394 acres of land adjacent to the United States Highway 50 between Rancho Cordova and Folsom, California east of Sacramento.
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.
Curo Group surges after Katapult announces merger with SPAC
Shares of Curo Group Holdings (CURO) have surged in Friday trading after the company announced earlier today that it is positioned to benefit from the announcement that Katapult Holding, a company approximately 40% owned by Curo and a leading provider of e-commerce point-of-sale lease purchase options for non-prime U.S. consumers, and FinServ Acquisition Corp.
(FSRV), a publicly traded special purpose acquisition company, or “SPAC,” have entered into a definitive merger agreement.
The transaction values Katapult’s equity at $908M, which includes an earnout of up to $75M in the form of additional common shares in the new public company, Curo said.
“Based on Curo’s ownership in Katapult, the transaction announced today will provide consideration consisting of a combination of cash and stock in the new company to CURO of $365M, which includes an earnout of up to $30M in the form of additional common shares in the new public company.
To date, Curo has made a total cash investment in Katapult of $27.5M,” the company noted.
Upon the closing of the transaction, Curo anticipates receiving cash of up to $125 million and maintaining an ownership stake of at least 21% of the fully-diluted shares of the new public company, CURO added. In afternoon trading, Curo shares have risen $7.09, or 81%, to $15.88. Shares hit a high of $20.81.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Eli Lilly to acquire Prevail Therapeutics for up to $26.50 per share in cash
Eli Lilly (LLY) and Prevail Therapeutics (PRVL) announced a definitive agreement for Lilly to acquire Prevail for $22.50 per share in cash payable at closing plus one non-tradable contingent value right, or CVR, worth up to $4.00 per share in cash, for a total consideration of up to $26.50 per share in cash, or or an aggregate of approximately $1.04B.
Prevail sold for more than $1 billion
The CVR is payable upon the first regulatory approval of a product from Prevail’s pipeline as set forth in more detail below.
Prevail is a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases.
The acquisition will establish a new modality for drug discovery and development at Lilly, extending Lilly’s research efforts through the creation of a gene therapy program that will be anchored by Prevail’s portfolio of clinical-stage and preclinical neuroscience assets.
Eli Lilly bets on Prevail’s Parkinson’s treatment
Prevail’s lead gene therapies in clinical development are PR001 for patients with Parkinson’s disease with GBA1 mutations and neuronopathic Gaucher disease and PR006 for patients with frontotemporal dementia with GRN mutations.
Prevail’s preclinical pipeline includes PR004 for patients with specific synucleinopathies, as well as potential gene therapies for Alzheimer’s disease, Parkinson’s disease, amyotrophic lateral sclerosis and other neurodegenerative disorders.
PROO1 is a promising drug for Parkinson’s
Under the terms of the agreement, Lilly will commence a tender offer to acquire all outstanding shares of Prevail Therapeutics Inc. for a purchase price of $22.50 per share in cash payable at closing plus one non-tradeable CVR.
The CVR entitles Prevail stockholders to up to an additional $4.00 per share in cash payable upon the first regulatory approval for commercial sale of a Prevail product in one of the following countries: United States, Japan, United Kingdom, Germany, France, Italy or Spain.
To achieve the full value of the CVR, such regulatory approval must occur by December 31, 2024.
If such regulatory approval occurs after December 31, 2024, the value of the CVR will be reduced by approximately 8.3c per month until December 1, 2028.
There can be no assurance any payments will be made with respect to the CVR. The transaction is not subject to any financing condition and is expected to close in Q1 of 2021, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of Prevail’s common stock.
Following the successful closing of the tender offer, Lilly will acquire any shares of Prevail that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer.
The purchase price payable at closing represents a premium of approximately 117% to the 60-day volume-weighted average trading price of Prevail’s common stock ended on December 14, the last trading day before the announcement of the transaction.
Prevail’s board of directors unanimously recommends that Prevail’s stockholders tender their shares in the tender offer.
Additionally, certain Prevail stockholders, beneficially owning approximately 51% of Prevail’s outstanding common stock, have agreed to tender their shares in the tender offer.
Upon closing, the impact of this transaction will be reflected in Lilly’s 2021 financial results according to Generally Accepted Accounting Principles.
There will be no change required to Lilly’s 2021 financial guidance being issued for research and development expense or non-GAAP earnings per share as a result of this transaction.
Prevail Therapeutics (PRVL) last traded at $22.67, up 81%.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Pluralsight to be acquired by Vista for $20.26 per share in cash
Pluralsight (PS) announced that it has entered into a definitive agreement to be acquired by Vista Equity Partners.
Pluralsight sold for $3.5 billion
Pluralsight, Inc. operates a cloud-based technology skills platform in the United States, Europe, the Middle East, Africa, and internationally. Its platform products include Pluralsight Skills for individuals and teams to acquire technology skills through skill development experiences, such as skill assessments, a curated library of expert-authored courses, directed learning paths, interactive content, and business analytics; and Pluralsight Flow, which gives technology leaders objective data and visibility into workflow patterns to measure the productivity of their software developers.
Under the terms of the agreement, Vista, in partnership with its institutional co-investors including Partners Group, will acquire all outstanding shares of Pluralsight common stock for $20.26 per share in an all-cash transaction valued at approximately $3.5B.
Company has benefited from “stay home”
The purchase price represents a premium of approximately 25% to the company’s volume weighted average closing stock price for the 30 trading days prior to today’s announcement.
The deal has been unanimously approved and recommended by an independent Transaction Committee and then unanimously approved by the Pluralsight board.
Vista gambles $3.5 billion on cloud based learning
Pluralsight has also entered into a voting agreement with certain of its shareholders, under which such shareholders have agreed to vote all of their Pluralsight shares in favor of the transaction.
The Pluralsight shares subject to the voting agreement represent a majority of the current outstanding voting power of Pluralsight shares. “In response to receipt of unsolicited acquisition interest, Pluralsight engaged in a robust process, including evaluating transaction alternatives against Pluralsight’s standalone plan and other strategic alternatives,” the company said.
The transaction is expected to close in the first half of 2021. PS closed at $18.98.
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.
Aytu, Neos Therapeutics enter all-stock merger agreement
Aytu BioScience (AYTU) and Neos Therapeutics (NEOS) announced that they have entered into a definitive merger agreement pursuant to which Neos will merge with a wholly owned subsidiary of Aytu in an all-stock transaction.
Upon the effectiveness of the merger, Neos stockholders will be entitled to receive 0.1088 shares of common stock of Aytu for each share of Neos common stock held, after taking into account the one-for-ten reverse split of Aytu’s common stock that was effected on December 8.
The transaction will result in Neos stockholders owning approximately 30% of the fully diluted common shares of Aytu.
The all-stock transaction is valued, on a fully diluted basis, at approximately $44.9M based on the 10-day volume weighted average price of Aytu stock for the period ended December 9.
The combined entity will have an increased footprint in the prescription pediatric market, an established multi-brand ADHD portfolio addressing the $8.5B ADHD market and combined revenue scale.
For the 12-month period ending September 30, Neos generated $57M in revenues. On a combined pro-forma basis for this same period, Aytu and Neos’ aggregate net revenue is over $100M.
In addition, this merger facilitates operational and commercial synergies that can be harnessed to accelerate the path to profitability for the combined entity, with estimated annualized cost synergies of approximately $15M beginning FY22.
The combined company will be led by Josh Disbrow, CEO of Aytu and will be headquartered in Englewood, Colorado.
The board of the combined company will consist of six members designated by Aytu and two members designated by Neos, including Neos CEO and director Jerry McLaughlin and Neos director Beth Hecht.
The merger is currently expected to close by Q2 of 2021, subject to certain approvals by both Aytu and Neos stockholders and the satisfaction of other customary closing conditions.
As part of the transaction, Aytu has agreed to provide Neos with access to up to $5M cash for working capital needs for the period prior to the closing of the merger.
In addition, upon closing of the merger, $15M in principal of Neos’s existing senior secured debt facility with affiliates of Deerfield Management will be repaid, and Deerfield has agreed to allow the remaining debt under the facility to remain outstanding with the combined company following the merger.
Indebtedness under Neos’s existing ABL agreement with Encina Business Credit will also remain outstanding.
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.
Macquarie to acquire Waddell & Reed for $25 per share
Waddell & Reed (WDR) announced it has entered into a merger agreement with Macquarie Asset Management, the asset management division of Macquarie Group (MQBKY), under which Macquarie would acquire all of the outstanding shares of Waddell & Reed for $25.00 per share in cash representing total consideration of $1.7B.
The transaction represents a premium of approximately 48% to the closing price of Waddell & Reed common stock on December 1, 2020, the last trading day prior to the transaction announcement, and a premium of approximately 57% to Waddell & Reed’s volume-weighted average price for the last 90 trading days.
On completion of the transaction, Macquarie has agreed to sell Waddell & Reed Financial, Inc.’s wealth management platform to LPL Financial Holdings Inc. (LPLA), a U.S. retail investment advisory firm, independent broker-dealer, and registered investment advisor custodian, and also enter into a long-term partnership with Macquarie becoming one of LPL’s top tier strategic asset management partners.
As a result of the transaction, Macquarie Asset Management’s assets under management are expected to increase to over $465B, with the combined business becoming a top 25 actively managed, long-term, open-ended U.S. mutual fund manager by assets under management, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners.
The transaction has been approved by the Boards of Directors of Waddell & Reed Financial, Inc., Macquarie Group and LPL and is expected to close in the middle of 2021, subject to regulatory approvals, Waddell & Reed Financial, Inc. stockholder approval and other customary closing conditions.
Waddell & Reed Financial, Inc. provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Salesforce acquires Slack in cash and stock deal worth $27.7B
Salesforce (CRM) and Slack Technologies (WORK) have entered into a definitive agreement under which Salesforce will acquire Slack.
Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30.
The boards of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement.
The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022.
Salesforce goes shopping
Salesforce has also entered into a voting agreement with certain stockholders of Slack common stock, under which each such stockholder has agreed to vote all of their Slack shares in favor of the transaction at the special meeting of Slack stockholders to be held in connection with the transaction, subject to certain terms and conditions.
The Slack shares subject to the agreement represent approximately 55% of the current outstanding voting power of the Slack common stock.
Salesforce expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on Salesforce’s balance sheet.
One year chart of Slack Tech. stock price
Salesforce has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10B senior unsecured 364-day bridge loan facility.
Salesforce said, “Slack will be deeply integrated into every Salesforce Cloud.
Five year chart of Salesforce stock price
As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.”
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.
S&P Global (SPGI) and IHS Markit (INFO) announced they have entered into a definitive merger agreement to combine in an all-stock transaction which values IHS Markit at an enterprise value of $44B, including $4.8B of net debt.
Under the terms of the merger agreement, which has been unanimously approved by the boards of both companies, each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock.
Upon completion of the transaction, current S&P Global shareholders will own approximately 67.75% of the combined company on a fully diluted basis, while IHS Markit shareholders will own approximately 32.25%.
Serving a global customer base across financial information and services, ratings, indices, commodities and energy, and transportation and engineering, the pro forma company will provide differentiated solutions to the workflows of many companies.
Combined, the two companies will provide solutions across data, platforms, benchmarks and analytics in ESG, climate and energy transition.
The pro forma company will have 76% recurring revenue and expects to realize 6.5%-8% annual organic revenue growth in 2022 and 2023, balanced across major industry segments.
The combined company will target 200 basis points of annual EBITA margin expansion.
The transaction is expected to be accretive to earnings by the end of the second full year post-closing.
The combined company expects to deliver annual run-rate cost synergies of approximately $480M, with approximately $390M of those expected by the end of the second year post-closing, and $350M in run-rate revenue synergies for an expected total run-rate EBITA impact of approximately $680M by the end of the fifth full year after closing.
The combined company expects to generate annual free cash flow exceeding $5B by 2023, with a targeted dividend payout ratio of 20%-30% of adjusted diluted EPS and a targeted total capital return of at least 85% of free cash flow between dividends and share repurchases.
Both companies expect to maintain their current dividend policies until the close of the transaction.
Following closing, the company will be headquartered in New York with a presence in key global markets across North America, Latin America, EMEA and Asia Pacific.
The leadership team will comprise senior leaders from both organizations.
Ewout Steenbergen, executive VP and CFO of S&P Global, will serve as CFO of the combined company.
Ewout Steenbergen will serve as CFO of the new company
The transaction is expected to close in the second half of 2021, subject to, among other things, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, other antitrust and regulatory approvals, and other customary closing conditions.
The transaction requires the approval of shareholders of both S&P Global and IHS Markit and is not subject to any financing 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.
Collectors Universe to be acquired by investor group for approx. $700M
Collectors Universe (CLCT) announced that it has entered into a definitive agreement under which an investor group led by entrepreneur and sports card collector Nat Turner, D1 Capital Partners L.P., and Cohen Private Ventures will acquire all of the Company’s outstanding shares of common stock for $75.25 per share in cash.
Collectors Universe, Inc. provides authentication, grading, and related services to dealers, collectors, and retail buyers and sellers of coins, trading cards, event tickets, autographs, and historical and sports memorabilia in the United States. The company operates in three segments: Coins, Trading Cards and Autographs, and Other Collectibles. It also publishes magazines that provide market prices and information for various collectibles and high-value assets that are accessible on its websites.
Nat Turner pushed for this transaction
The transaction represents a premium of approximately 30% over the Company’s 60-day volume-weighted average price ended on November 25, 2020, the last full trading day before today’s announcement.
The transaction, which was approved by the Collectors Universe Board of Directors, represents fully diluted equity value of approximately $700M, and is not subject to any financing contingency.
Joseph J. Orlando, President and CEO of Collectors Universe, will continue to lead Collectors Universe, which will retain its headquarters in Santa Ana, California.
Joseph J. Orlando, President and CEO of Collectors Universe
The transaction will be completed through a cash tender offer for all of the outstanding common shares of Collectors Universe for $75.25 per share in cash, to be commenced as promptly as reasonably practicable, followed by a merger in which any remaining outstanding shares of Collectors Universe will be converted into the right to receive the same cash price per share paid in the tender offer.
The closing of the tender offer is subject to certain limited and customary conditions, including the tender by Collectors Universe shareholders of at least one share more than 50% of Collectors Universe’s issued and outstanding shares and expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The Collectors Universe Board of Directors recommends that all shareholders tender their shares in the offer.
The transaction is expected to close in the first calendar quarter of 2021.
Upon completion of the transaction, Collectors Universe will become a privately held company and its shares will no longer be listed on any public market.
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.
Spotify (SPOT) is scheduled to report third quarter results before market open on Thursday, October 29, with a conference call scheduled for 8:00 am ET. What to watch:
Spotify reports results on October 29th
1. USER METRICS: Spotify’s monthly active users, or MAUs, are a measure of its popularity and growth potential. In the second quarter, Spotify reported 299M MAUs, up 29% year-over-year and 5% quarter-over-quarter.
The company also reported 170M ad-supported MAUs, up 31% year-over-year and 4% quarter-over-quarter. In addition, the company reported that Premium Subscribers grew to 138M, up 27% year-over-year and 6% quarter-over-quarter.
Along with the report, the company said, “Early in the quarter, we observed some COVID related softness in several countries across our emerging regions. Parts of Latin America and Rest of World saw slower than expected growth in April and May as we saw lower intake, an increase in churn, and increases in payment failures from our Premium users.
Spotify is now available in Russia and most of Eastern Europe
Encouragingly, things rebounded significantly in June as we saw increased reactivations and a step down in churn. While we finished below forecast in aggregate across these regions, our strength in North America and other areas more than offset the slow start to the quarter.”
2. GUIDANCE: With its last report, Spotify guided to Q3 revenue of EUR1.85B-EUR2.05B. The company also forecast Q3 total MAUs of 312M-317M and total Premium Subscribers of 140M-144M.
3. INITIATIVES, PARTNERSHIPS: In July, Spotify launched in 13 new markets across Europe, including Russia and the Ukraine. The company also announced in July a podcast with former first lady Michelle Obama and the launch of video podcasts with select creators.
Special Podcasts have helped Spotify
Additionally in July, Spotify signed a multi-year global license agreement with Universal Music Group, a Vivendi (VIVHY) company. In August, the company announced a multi-year deal with Riot Games, a subsidiary of Tencent (TCEHY), as its exclusive audio streaming partner for League of Legends events.
Spotify uses partnerships to expand its footprint
In September, the company launched virtual event listings on artist profiles and in the Concerts hub and also announced it was testing a new Polls feature for podcasts. Additionally in September, Spotify announced a multi-year first look partnership with Chernin Entertainment.
4. ANALYST VIEW: On Tuesday, Deutsche Bank analyst Lloyd Walmsley raised the firm’s price target on Spotify to $250 from $240 and kept a Hold rating on the shares. The analyst said he expects “solid” Q3 results for Spotify with strong monthly active user growth driven by new markets and podcast launches as well as improving churn.
Meanwhile, Morgan Stanley analyst Benjamin Swinburne raised the firm’s price target on Spotify to $300 from $275 and kept an Overweight rating on the shares.
Results from U.S. digital audio competitor Pandora last week were “encouraging” and suggest his current 5%-6% growth estimate for Spotify’s ad revenue could be conservative, Swinburne said. He also pointed to recent data that suggest Spotify is taking market share and evaluating price increases.
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