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October 21, 2020

PNM Resources sold for $4.3B

PNM Resources to be acquired by Avangrid for $50.30 per share

PNM Resources (PNM) announced with Avangrid (AGR) that they have entered into a definitive agreement under which Avangrid will acquire all the outstanding shares of PNM Resources.

The agreement, which has been unanimously approved by both companies’ boards, creates a U.S. regulated utility and renewable energy platform.

Under the terms of the agreement, PNM Resources shareholders will receive $50.30 in cash for each share of PNM Resources common stock held at closing, representing an equity value of approximately $4.3B.

The proposed transaction implies a 19.3% premium to PNM Resources 30-day volume weighted average price, or VWAP, as of October 20.

The combination creates a larger, more diversified regulated utility and renewable energy company with electric and gas utilities.

Regulated utility operations expand under the transaction and provide increased operational and regulatory diversification, serving more than 4M electric and natural gas customers of 10 regulated utilities across New York, Connecticut, Maine, Massachusetts, New Mexico, and Texas.

These combined operations are supported by $14B of rate base, including more than 104,000 miles of electric transmission and distribution lines.

PNM Resources operations will continue to be overseen locally and the current headquarters of the utilities in New Mexico and Texas will remain.

Pat Vincent-Collawn will step down as chairman, president and CEO upon closing of the transaction. Don Tarry, current CFO of PNM Resources, will oversee the continuing operations of PNM and TNMP.

Two directors from the current PNM Resources board will serve as independent directors of Avangrid. One director from the current PNM Resources board will also serve on the board of the Avangrid Networks business.

PNM remains committed to exiting coal through the approved abandonment of San Juan Generating Station in 2022 and the continued efforts to exit its 200-megawatt ownership interest in the Four Corners Power Plant earlier than originally planned.

PNM sees the potential for additional customer savings by exiting the plant sooner than the expiration of the ownership and coal supply agreements in 2031.

An earlier exit from Four Corners also opens the door for the combined company to bring additional renewable resources onto the grid in support of New Mexico’s increasing renewable energy standards and 2045 carbon-free mandate.

The transaction is subject to PNM Resources shareholder approval, regulatory approvals from the New Mexico Public Regulation Commission, Public Utility Commission of Texas, Federal Energy Regulatory Commission, Department of Justice, Nuclear Regulatory Commission, Federal Communications Commission and Committee on Foreign Investment in the United States, and other customary closing conditions.

The transaction is expected to close between October and December 2021.

PNM closed at $45.74. AGR closed at $54.06.

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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.

October 16, 2020October 15, 2020

BioMed Realty sold for $14.6 billion

Blackstone says BioMed Realty to be sold for $14.6B to investor group

Blackstone (BX) announced that Blackstone Real Estate Partners VIII L.P. and co-investors have agreed to sell BioMed Realty for $14.6B to a group led by existing BioMed investors.

This is part of a new long-term, perpetual capital, core+ return strategy managed by Blackstone.

BioMed is the largest private owner of life science office buildings in the United States with an 11.3 million square foot portfolio concentrated in the leading innovation markets including Boston/Cambridge, San Francisco, San Diego, Seattle and Cambridge U.K.

Blackstone bought BioMed Realty for about $8B in 2016

In connection with the recapitalization, existing BioMed investors were offered the option to exit for cash or reinvest their proceeds from the sale.

The investment will generate $6.5 billion of cumulative profits for BREP VIII and BioMed co-investors. BREP VIII, an opportunistic Real Estate investment fund, and co-investors acquired BioMed in January 2016.

The recapitalization is expected to close within five business days of the conclusion of the “go-shop” process.

The Blackstone Group Inc. is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity and multi-asset class strategies.

The firm typically invests in early-stage companies. It also provide capital markets services. The real estate segment specializes in opportunistic, core+ investments as well as debt investment opportunities collateralized by commercial real estate, and stabilized income-oriented commercial real estate across North America, Europe and Asia.

BX closed at $55.40.

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October 12, 2020

Acorn International sold for $21 per share

Acorn International enters merger agreement for going private transaction

Acorn International (ATV) announced that it has entered into a definitive agreement and plan of merger with First Ostia Port, a Cayman Islands exempted company and its wholly owned subsidiary Second Actium Coin, a Cayman Islands exempted company, pursuant to which, the merger sub will merge with and into the company thereby becoming a wholly-owned subsidiary of the controlling shareholder.

Acorn International, Inc. develops, promotes, and sells a portfolio of proprietary-branded products in the People’s Republic of China. The company operates through two segments, Direct Sales and Distribution Sales.

The company will be acquired in an all-cash transaction by the controlling shareholder.

Pursuant to the terms of the merger agreement, each ordinary share, par value 1c per share, of the company, including shares represented by American Depositary Shares, each representing twenty shares, issued and outstanding immediately prior to the effective time, other than the excluded shares shall be cancelled in exchange for the right to receive $1.05 in cash per share without interest.

As each ADS represents twenty shares, each ADS issued and outstanding immediately prior to the effective time, other than ADSs representing excluded shares, shall represent the right to receive $21.00 in cash without interest pursuant to the terms and conditions set forth in the merger agreement.

The per share merger consideration represents a premium of 44.1% over the company’s closing price of $14.57 per ADS as quoted on the New York Stock Exchange, or NYSE, on August 17, the last trading day prior to the day when the company received a non-binding “going private” proposal from the controlling shareholder.

The merger consideration also represents an increase of approximately 38.0% over the $15.22 per ADS offered by the controlling shareholder in its revised going-private proposal on August 18 and a premium of approximately 39.4% over the company’s closing price of $15.07 per ADS on October 9, the last trading day prior to issuance of this press release.

The controlling shareholder intends to fund a substantial portion of the consideration for the merger in the form of debt funding from a third-party lender and has delivered to the company duly executed copies of the loan and security agreement.

The board, acting upon the unanimous recommendation of a committee of independent directors established by the board, approved the merger agreement and the merger.

The special committee negotiated the terms of the merger agreement with the assistance of its independent financial and legal advisors.

The merger, which is currently expected to close during the last quarter of 2020, is subject to customary closing conditions, including the approval of the merger agreement by a requisite company vote of shares representing at least two-thirds of the voting power of the shares present and voting in person or by proxy at a meeting of the company’s shareholders which will be convened to consider the approval of the merger agreement and the merger.

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September 29, 2020

Safe Harbor Marinas sold for $2.1B

Sun Communities to acquire Safe Harbor Marinas for $2.1B

Sun Communities (SUI) announced that it has entered into a definitive merger agreement to acquire Safe Harbor Marinas. Safe Harbor’s full operating team, led by Baxter Underwood, will run Safe Harbor as a subsidiary of the Company independently from Sun’s manufactured home and recreational vehicle community business.

Safe Harbor is the largest and most diversified marina owner and operator in the United States.

It owns and operates 101 marinas, manages five marinas on behalf of third parties and has an approximate 40,000-member network of boat owners across 22 states.

Safe Harbor’s portfolio of high quality, prime coastal market marinas generates recurring rental income from annual and seasonal leases and further diversifies Sun’s geographic and demographic footprint.

Safe Harbor has a proven ability to generate organic and external growth. The acquisition, which is expected to be accretive to 2021 Core FFO per share, will comprise approximately 15% of the Company’s pro forma total annual rental revenue.

Safe Harbor marinas located throughout the Nation

Subject to closing adjustments, the aggregate purchase price for Safe Harbor is approximately $2.11B.

At the closing, the Company will assume debt in the estimated amount of approximately $808M, issue the sellers REIT operating partnership common and preferred OP units in the estimated amount of approximately $130M, and pay the balance of the purchase price in cash.

The mix of consideration will depend on the amount of common and preferred OP units the sellers elect to receive and other factors. The actual amounts of each component of the merger consideration may be materially higher or lower than the foregoing estimates.

The transaction is subject to customary closing conditions and is expected to close in the fourth quarter 2020.

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September 28, 2020

Sina is taken private for $2.59B

Sina enters $2.59B ‘Going Private’ transaction with New Wave Holdings

Sina (SINA) announced that it has entered into an agreement and plan of merger with New Wave Holdings and New Wave Merger sub, a wholly owned subsidiary of parent, pursuant to which parent will acquire all of the company’s outstanding ordinary shares not currently owned by parent and its affiliates in an all-cash transaction implying an equity value of the company of approximately $2.59B for all the ordinary shares.

Sina, the Chinese social media company, is taken private

Parent is a wholly owned subsidiary of New Wave MMXV, a British Virgin Islands company controlled by Charles Chao, chairman and CEO of the company.

Pursuant to the merger agreement, at the effective time of the merger, each ordinary share issued and outstanding immediately prior to the effective time will be cancelled and cease to exist in exchange for the right to receive $43.30 in cash per ordinary share without interest, other than shares held by the chairman, New Wave and any of their respective affiliates.

The per share merger consideration represents a premium of approximately 18.1% to the closing price of the company’s ordinary shares on July 2, the last trading day prior to the company’s announcement of its receipt of the preliminary non-binding “going-private” proposal from New Wave on July 6, and premiums of approximately 23.6% and 28.6% to the volume-weighted average traded price of the company’s ordinary shares during the last one month and three months, respectively, prior to and including July 2.

The per share merger consideration also represents an increase of approximately 5.6% over the $41 per ordinary share initially offered in the “going-private” proposal from New Wave.

The merger consideration will be funded through a combination of certain committed term loan facilities obtained by New Wave from China Minsheng Banking and cash contribution by the chairman and New Wave.

The company’s board of directors, acting upon the unanimous recommendation of a committee of independent directors established by the board, approved the merger agreement and the merger and resolved to recommend that the company’s shareholders vote to authorize and approve the merger agreement and the merger.

The merger is currently expected to close during the Q1 of 2021 and is subject to customary closing conditions, including the approval of the merger agreement by the affirmative vote of shareholders representing at least two-thirds of the voting power of the outstanding shares of the company present and voting in person or by proxy at a meeting of the company’s shareholders.

If completed, the merger will result in the company becoming a privately held company and its ordinary shares will no longer be listed on Nasdaq.

SINA is up $2.46 to $42.65

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September 28, 2020

ArcelorMittal USA sold for $1.4B

Cleveland-Cliffs to acquire ArcelorMittal USA for $1.4B in cash, stock

Cleveland-Cliffs (CLF) announced that it has entered into a definitive agreement with ArcelorMittal (MT), pursuant to which Cleveland-Cliffs will acquire substantially all of the operations of ArcelorMittal USA and its subsidiaries for approximately $1.4B.

Upon closure of the transaction, Cleveland-Cliffs will be the largest flat-rolled steel producer in North America, with combined shipments of approximately 17M net tons in 2019.

The company will also be the largest iron ore pellet producer in North America, with 28M long tons of annual capacity.

ArcelorMittal USA will be acquired by Cleveland-Cliffs on a cash-free and debt-free basis, with a combination of 78.2M shares of Cleveland-Cliffs common stock, non-voting preferred stock with an approximate aggregate value of $373M and $505M in cash.

The enterprise value of the transaction is approximately $3.3B, which takes into consideration the assumption by Cleveland-Cliffs of pension/OPEB liabilities and working capital.

In 2018 and 2019, ArcelorMittal USA averaged annual revenues of approximately $10.4B and annual adjusted EBITDA of approximately $700M.

The assets acquired include s steelmaking facilities, eight finishing facilities, two iron ore mining and pelletizing operations, and three coal and coke making operations.

The transaction is anticipated to be EPS accretive, and Cleveland-Cliffs expects the acquisition to reduce the company’s leverage from 4.3x to 3.6x on a pro-forma 2019 adjusted EBITDA basis, including the expectation of approximately $150M in estimated annual cost savings.

The acquisition is also expected to increase the company’s liquidity substantially due to an increased ABL borrowing base.

The facilities included in the transaction are: Steelmaking: Indiana Harbor, Burns Harbor, Cleveland Coatesville, Steelton, Riverdale. Finishing: Columbus , Conshohocken, Double G. Coatings JV, Gary Plate, I/N Tek JV with Nippon Steel, I/N Kote JV with Nippon Steel and Weirton. Mining and Pelletizing: Hibbing JV and Minorca. Met Coal / Cokemaking: Monessen, Princeton and Warren.

The transaction has been approved by the board of directors of both companies and is expected to close in Q4, subject to the receipt of regulatory approval and the satisfaction of other customary closing conditions.

The cash consideration from Cleveland-Cliffs is expected to be financed using available cash on hand and liquidity. Cleveland-Cliffs has received commitments to increase its existing asset based lending facility.

MT last traded at $13.36, CLF last changed hands at $6.47.

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September 25, 2020

Rig Counts Rise!

Baker Hughes reports U.S. rig count up 6 to 261 rigs

Baker Hughes (BKR) reports that the U.S rig count is up 6 from last week to 261 with oil rigs up 4 to 183, gas rigs up 2 to 75, and miscellaneous rigs unchanged at 3.

The U.S. Rig Count is down 599 rigs from last year’s count of 860, with oil rigs down 530, gas rigs down 71, and miscellaneous rigs up 2.

The U.S. Offshore Rig Count is unchanged at 14 down 10 year-over-year. The Canada Rig Count is up 7 from last week to 71, with oil rigs up 3 to 33, gas rigs up 4 to 38.

https://stockwinners.com — Rig Counts Rise – See Stockwinners.com Market Radar to read more

The Canada Rig Count is down 56 rigs from last year’s count of 127, with oil rigs down 55, gas rigs down 1.

Brent crude is down 15 cents to $41.81 per barrel. West Texas Intermediate (WTI) crude is down 14 cents to $40.16 per barrel.

Gasoline last traded at $1.21 per gallon down a penny.

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September 16, 2020

FOMC leaves rates unchanged near zero

Fed members project Federal funds rate near zero until end 2023

There were some important shifts in the statement versus July’s, however, that further support the ZIRP posture.

Indeed, the Fed will “aim” for an inflation rate “moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%.

The Fed reiterated from June that it will in coming months increase its holdings of Treasuries and MBS “to sustain smooth market functioning and help foster accommodative financial conditions.” There were two dissents. Kaplan approved of the current target range, but wanted to retain a “greater policy flexibility.” Kashkari wanted the statement to indicate the current target range on rates will be maintained until core inflation has reached 2% on a sustained basis. The Fed’s SEP reflected an improved outlook on 2020 growth, as expected.

The Federal Reserve said in today’s statement,

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.

The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.”

The Fed released the economic projections of Federal Reserve Board members and Federal Reserve Bank presidents under their individual assessments of projected appropriate monetary policy, which shows that the median projection for Federal funds rate is 0.1% for the end of 2020, the end of 2021, and the end of 2022. The group’s projections in June were also for a Federal funds rate of 0.1% at the end of 2020, the end of 2021 and the end of 2022. The Fed group has extended its projection out to 2023, and still sees a Federal funds rate of 0.1% at the end of 2023.

FOMC will continue to pump money into economy

FOMC Forecast revisions, released with the FOMC statement, show the huge boosts in the official 2020 GDP forecasts that analysts had assumed, followed by a more restrained 2021-23 bounce.

The jobless rate estimates were lowered by much more than expected across the forecast horizon, and inflation was boosted as expected.

The median Fed funds rates sit at 0.1% through 2023, though the range of estimates show expectations of hikes by some starting in 2022.

The 2020 GDP central tendency was boosted sharply to the -4.0% to -3.0% from the prior central tendency of -7.6% to -5.5%, versus our own -2.4% forecast.

Analysts saw a huge trimming the jobless rate central tendency to 7.0%-8.0% from 9.0%-10.0%, versus our own higher 8.2% figure. Analysts saw boosts in the PCE chain price central tendencies to 1.1%-1.3% from 0.6%-1.0% for the headline and to 1.3%-1.5% from 0.9%-1.1% for the core, versus our respective estimates of 1.2% and 1.6%.

The central tendency for the Fed funds rate rises to 0.1%-0.4% in 2023 after unanimous 0.1% figures in 2020 and 2021. The range rises to 0.1%-0.6% in 2022, and to 0.1%-1.4% in 2023. page for a table of assumptions for the Fed’s revised forecasts.

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September 14, 2020

Merck invests $1B in Seattle Genetics

Merck to acquire $1B equity stake in Seattle Genetics as part of collaborations

Seattle Genetics (SGEN) and Merck (MRK) announced two new strategic oncology collaborations.

The companies will globally develop and commercialize Seattle Genetics’ ladiratuzumab vedotin, an investigational antibody-drug conjugate, or ADC, targeting LIV-1, which is currently in phase 2 clinical trials for breast cancer and other solid tumors.

Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners — Merck bets heavily on Seattle Genetics, Stockwinners

The collaboration will pursue a broad joint development program evaluating ladiratuzumab vedotin as monotherapy and in combination with Merck’s anti-PD-1 therapy Keytruda in triple-negative breast cancer, hormone receptor-positive breast cancer and other LIV-1-expressing solid tumors.

Under the terms of the agreement, Seattle Genetics will receive a $600M upfront payment and Merck will make a $1B equity investment in 5M shares of Seattle Genetics common stock at a price of $200 per share.

In addition, Seattle Genetics is eligible for progress-dependent milestone payments of up to $2.6B.

Separately, Seattle Genetics has granted Merck an exclusive license to commercialize Tukysa, a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers, in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.

Seattle Genetics will receive $125M from Merck as an upfront payment and is eligible for progress-dependent milestones of up to $65M.

Under the terms of the agreement, Seattle Genetics and Merck will collaborate and equally share costs on the global development of ladiratuzumab vedotin and other LIV-1-targeting ADCs.

Breast cancer drug Liv-1 is expected to do well

The companies have agreed to jointly develop and share future costs and profits for ladiratuzumab vedotin on a 50:50 basis worldwide. Merck will pay Seattle Genetics $600M upfront and make a $1B equity investment in 5M shares of Seattle Genetics common stock at a price of $200 per share.

In addition, Seattle Genetics will be eligible to receive up to $2.6B in milestone payments, including $850M in development milestones and $1.75B in sales milestones.

The companies will jointly develop and commercialize ladiratuzumab vedotin and equally share profits worldwide.

The companies will co-commercialize in the U.S. and Europe. Seattle Genetics will be responsible for marketing applications for approval in the U.S. and Canada, and will record sales in the U.S., Canada and Europe.

Merck will be responsible for marketing applications for approval in Europe and in countries outside the U.S. and Canada, and will record sales in countries outside the U.S., Europe and Canada. Including the upfront payment, equity investment proceeds and potential milestone payments, Seattle Genetics is eligible to receive up to $4.2B.

Under the terms of the agreement, Merck has been granted exclusive rights to commercialize Tukysa in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe. Seattle Genetics retains commercial rights and will record sales in the U.S., Canada and Europe.

Merck will be responsible for marketing applications for approval in its territory, supported by the positive results from the HER2CLIMB clinical trial.

Merck will also co-fund a portion of the Tukysa global development plan, which encompasses several ongoing and planned trials across HER2-positive cancers, including breast, colorectal, gastric and other cancers set forth in a global product development plan.

Seattle Genetics will continue to lead ongoing Tukysa global development planning and operational execution.

Merck will solely fund and conduct country-specific clinical trials necessary to support anticipated regulatory applications in its territory.

Seattle Genetics will receive from Merck $125M as an upfront payment and is eligible to receive progress-dependent milestones of up to $65M. Seattle Genetics will also receive $85M in prepaid research and development payments to be applied to Merck’s global development funding obligations. In addition, Seattle Genetics would receive tiered royalties on sales of Tukysa in Merck’s territory.

SGEN is up 14.8% to $172.40. MRK is up 1.4% to $85.00.

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September 14, 2020

Arm Holdings sold for $40 billion

Nvidia to buy Arm Holdings from Softbank

Nvidia (NVDA) confirmed that it intends to buy chip design giant Arm Holdings for a total of up to $40 billion from existing owner SoftBank (SFTBY), which bought the company for $32 billion in 2016.

SoftBank will immediately receive $2 billion in cash for signing the deal. Then, it will receive another $10 billion in cash and $21.5 billion of stock in Nvidia at closing. That stake will be likely just a bit shy of 10% of the company.

Softbank bought Arm in 2016 for $32 billion

In addition, SoftBank is slated to earn $5 billion in a mix of cash and stock as a performance-based earn-out. Conditions or timing for that earn-out were not disclosed.

Nvidia buys Arm Holdings for $40 billion

Analysts’ Comments

Should Nvidia’s (NVDA) acquisition of SoftBank’s (SFTBY) ARM be allowed to proceed, it would create a “landscape-changing entity” that would combine two leading GPU and CPU architectures into a “single powerful ecosystem,” Deutsche Bank analyst Ross Seymore tells investors in a research note.

However, it this point that is likely to create the pushback from competitors and customers, says the analyst. Seymore questions whether ARM licensees would support an Nvidia acquisition saying “there could be a myriad of conflict of interest issues” whereby Nvidia could have access to competitor strategies and technologies in a variety of Nvidia-targeted markets. Seymore keeps a Hold rating on Nvidia shares.

Jefferies analyst Mark Lipacis raised the firm’s price target on Nvidia (NVDA) to $680 from $570 and keeps a Buy rating on the shares after the company announced an agreement to acquire ARM Holdings, subject to regulatory approvals. He views the deal as one that is “transformative” as it should position Nvidia to capture 80% of the ecosystem value in the data center and also unify the compute ecosystem between the edge and data center, Lipacis tells investors. Assuming the deal with Softbank (SFTBY) goes through, he thinks the merged company has a five-year EPS power of $50, said Lipacis, who also raised his “bull-case” target on Nvidia shares to $1,000.

RBC Capital analyst Mitch Steves keeps his Outperform rating on Nvidia (NVDA) after the company confirmed its acquisition of ARM Holdings last night, saying the transaction would be a positive if it can close amid the likely regulatory challenges to its completion. Steves adds that if the transaction closes, it would also be a “notable negative” for Intel (INTC), stating that Nvidia’s research and development funding would compete against Intel’s currently dominant x86 market share.

Wedbush analyst Matt Bryson made no change to his Outperform rating or $525 price target for Nvidia (NVDA) after the company and SoftBank (SFTBY) finalized an agreement whereby Nvidia will purchase ARM Holdings. While Bryson views the deal terms and expected synergies as favorable for Nvidia, the analyst believes it most likely will never be consummated unless the U.S./China relationship dynamic shifts considerably.

NVDA is up 5.8% to $514 while SFTBY is up 8.7% to $29.87.

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September 11, 2020

Walden University sold for $1.48B

Adtalem to acquire Walden University from Laureate Education for $1.48B in cash

Adtalem (ATGE) announced it has entered into a definitive agreement to acquire Walden University, an online healthcare education provider, from Laureate Education (LAUR), Inc. for $1.48B in cash.

With the addition of Walden, Adtalem will become a national healthcare educator, providing workforce solutions to employers through learning modalities with academic outcomes.

By adding Walden to its existing healthcare portfolio, Adtalem said it is better positioned to increase the talent supply to address the rapidly growing and unmet demand for healthcare professionals in the U.S. and globally.

The combined companies will have 90,000 students

The combined organization will have 26 campuses across 15 states and four countries, 6,100 faculty members, and more than 90,000 students with 34% African American enrollees.

The company said, “The acquisition is expected to provide significant potential for growth and margin expansion through new and expanded offerings as well as revenue and cost synergies.

These financial benefits are expected to lead to substantial gross margin and EBITDA margin expansion, and robust cash flow generation to invest in its offerings while paying down debt.”

Adtalem expects to generate upside to revenue by providing new and complementary educational offerings, increased student acquisition and retention capabilities as well as enhanced scale and coverage that will allow for new partnerships with large-sized employer partners in the healthcare sector.

The company noted, “The purchase price represents a compelling, pre-synergy adjusted EBITDA multiple of 8.4x, and the transaction is expected to contribute significantly to Adtalem’s free cash flow and earnings per share, generating $60 million in incremental free cash flow excluding special items in year one and adding $0.75 in earnings per share from continuing operations excluding special items in year two as synergies begin to offset the dilutive effect of purchase price accounting.”

Adtalem expects to generate annual cost savings of approximately $60M driven by increased efficiencies in marketing spend and back office operations. Approximately $30M of these cost savings are anticipated within 12 months of closing and the remainder within 24 months of closing.

Additionally, Adtalem expects that this acquisition will generate between 10% and 12% ROIC beginning in year one, significantly exceeding the company’s current WACC of approximately 8%.

Adtalem expects to fund the cash consideration through a combination of cash from its balance sheet and committed debt financing.

Adtalem expects to realize the full potential of the transaction while maintaining a strong balance sheet.

The transaction is expected to close in Q1 of FY22, subject to regulatory approvals and other customary closing conditions.

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September 10, 2020

Virtusa sold for $2 billion

Virtusa to be acquired by BPEA for $51.35 per share in cash deal valued at $2B

Baring Private Equity Asia, or BPEA, and Virtusa (VRTU) announced the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for $51.35 per share in an all-cash transaction valued at approximately $2B.

Virtusa Corporation provides digital engineering and information technology (IT) outsourcing services primarily in North America, Europe, and Asia.

The companies said in a release, “The price per share to be paid in the transaction, which was unanimously approved by the Virtusa Board of Directors, represents a premium of approximately 27 percent to the closing price of Virtusa common stock on September 9, 2020, the last trading day prior to the transaction announcement, and premiums of approximately 29 percent and 46 percent to Virtusa’s volume-weighted average prices, or VWAP, for the last 30 and 60 trading days, respectively.

In addition, the price paid implies a valuation of 16.2x Firm Value / Last Twelve Months EBITDA as of June 30, 2020. On July 20, 2020, the Virtusa Board of Directors received an unsolicited proposal from an interested party to acquire Virtusa.

Following receipt of the offer, consistent with the Board’s fiduciary duties to maximize shareholder value, the Board authorized the Company and its financial advisors to engage with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.

As part of this process, the Company signed non-disclosure agreements with five parties and engaged with two others.

After an independent review of the alternatives available, including the value creation opportunity through continued execution of the Company’s strategic plan, the Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $51.35 per share in cash maximizes value for Virtusa’s shareholders.

The transaction, which is expected to close in the first half of 2021, is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States, or CFIUS, and customary closing conditions.

The transaction is not subject to a financing condition.

The Orogen Group, which holds 108,000 shares of Virtusa Convertible Preferred Stock and whose CEO is Vikram Pandit, an independent member of the Board, has entered into a voting agreement under which it has agreed to vote all of Orogen’s Convertible Preferred Stock in favor of the transaction.

Orogen Group is a major shareholder of Virtusa

Orogen’s shares of preferred stock are convertible into 3,000,000 shares of Virtusa common stock and represent approximately 10 percent of the voting power in the Company.

The directors and executive officers of Virtusa have also entered into this voting agreement, and hold an additional approximate 5.7% of the voting power of the Company.”

VRTU closed at $40.50, last traded at $50.45.

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September 2, 2020

Altice USA to acquire Cogeco for $7.8B

Altice USA to acquire Cogeco, to sell Cogeco Canadian assets to Rogers

Altice USA (ATUS) announced that it has presented an offer to Cogeco, or CGO, and Cogeco Communications, or CCA, (CGEAF) to acquire 100% of the issued and outstanding shares of Cogeco.

Cogeco Inc. is a Canadian telecommunications and media company. The company operates Cogeco Communications Inc. which is structured into three strategic business units; Cogeco Connexion, Atlantic Broadband, and Cogeco Media.

Altice USA buys Cogeco and sells parts to Roger Comm.

Altice USA has also entered into an arrangement to sell all the Canadian assets of Cogeco to the largest long-term shareholder of Cogeco, Rogers Communications (RCI), if its transaction with Cogeco is completed.

Upon completion of the overall transaction, Altice USA would own all the U.S. assets of Cogeco, namely Atlantic Broadband.

The aggregate all-cash consideration offered for all of the outstanding shares of CGO and CCA, including those owned by Rogers, is approximately $7.8B.

This includes approximately $3.6B to be paid by Altice USA for the U.S. assets: All the multiple voting shares of CGO are held in a company controlled by Mr. Louis Audet, the Executive Chairman of Cogeco, and members of the Audet family.

Given the position of the controlling shareholder, its support is necessary to complete a transaction, and as such the Altice USA offer includes a sizeable premium on those shares.

Altice USA ends up with Atlantic Broadband

Specifically, the offer includes $612M to the Audet family for their ownership interests, which include 100% of the multiple voting shares of CGO, or CGO MVS, and approximately 0.9% of total outstanding CGO subordinate voting shares, or CGO SVS.

The offer also includes C$106.53 per share for the remaining CGO SVS and C$134.22 per share for each CCA subordinate voting share, or CCA SVS.

These offer prices represent a significant premium of 30% to each stock’s 1-month volume weighted average price, or VWAP, on the Toronto Stock Exchange (the offer prices also represent a 36% premium for CGO SVS and 37% premium for CCA SVS to the August 31 closing prices).

This offer is in line with Altice USA’s previously stated objective to opportunistically grow through value-accretive acquisitions.

The acquisition of Atlantic Broadband, if consummated, would allow Altice USA to build on its success with prior cable acquisitions in the United States and expand its operations across 11 states on the east coast of the United States, adjacent to its existing Optimum and Suddenlink footprints.

Altice USA’s share repurchase and net leverage targets for 2020 remain unchanged from this transaction.”

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August 28, 2020

Rig counts unchanged last week!

Baker Hughes reports U.S. rig count unchanged at 254 rigs

Baker Hughes (BKR) reports that the U.S. rig count is unchanged from last week at 254 with oil rigs down 3 to 180, gas rigs up 3 to 72, and miscellaneous rigs unchanged at 2.

The U.S. Rig Count is down 650 rigs from last year’s count of 904, with oil rigs down 562, gas rigs down 90, and miscellaneous rigs unchanged at 2.

The U.S. Offshore Rig Count is unchanged at 13 and down 13 year-over-year.

The Canada Rig Count is down 2 rigs from last week to 54, with oil rigs down 1 to 19, gas rigs down 1 to 35, and miscellaneous rigs unchanged at 0.

The international offshore rig count for April 2018 was 194. Stockwinners

The Canada Rig Count is down 96 rigs from last year’s count of 150, with oil rigs down 86, gas rigs down 10 and miscellaneous rigs unchanged at 0.

Brent crude is up 17 cents to $45.77 per barrel. West Texas Intermediate (WTI) crude is down 5 cents to $42.97 per barrel.

Gasoline last traded at $1.31 per gallon up three cents on the day.

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August 24, 2020

TikTok suing Trump Administration

TikTok suing Trump Administration over efforts to ban TikTok in U.S.

TikTok stated in a post to its corporate website:

“Today we are filing a complaint in federal court challenging the Administration’s efforts to ban TikTok in the US…

Today, 100 million Americans turn to TikTok for entertainment, inspiration, and connection; countless creators rely on our platform to express their creativity, reach broad audiences, and generate income; our more than 1,500 employees across the US pour their hearts into building this platform every day, with 10,000 more jobs planned in California, Texas, New York, Tennessee, Florida, Michigan, Illinois, and Washington State; and

On August 6th, Trump issued an executive order giving TikTok 90 days to sell

many of the country’s leading brands are on TikTok to connect with consumers more authentically and directly than they can elsewhere.

Put simply, we have a thriving community and we are grateful – and responsible – to them.

The Executive Order issued by the Administration on August 6, 2020 has the potential to strip the rights of that community without any evidence to justify such an extreme action, and without any due process.

We strongly disagree with the Administration’s position that TikTok is a national security threat and we have articulated these objections previously.”

ByteDance has reportedly been making progress in talks with potential acquirers of the U.S. operations of the short video app, including Microsoft (MSFT) and Oracle (ORCL), media reports have indicated. Reports have also indicated that Twitter (TWTR) is exploring a bid for TikTok.

Other publicly traded companies in the social media space include Facebook (FB) and Snap (SNAP).

TikTok/Douyin is a Chinese video-sharing social networking service owned by ByteDance, a Beijing-based Internet technology company founded in 2012 by Zhang Yiming.

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