Envision Healthcare sold for $9.9B

Envision Healthcare to be acquired by KKR for approximately $9.9B

 

Envision Healthcare sold for $9.9B, Stockwinners
Envision Healthcare sold for $9.9B, Stockwinners

Envision Healthcare (EVHC) announced it has entered into a definitive agreement to be acquired by global investment firm KKR (KKR) in an all-cash transaction for approximately $9.9B, including the assumption or repayment of debt.

Under the terms of the agreement, which has been unanimously approved by Envision’s Board of Directors, KKR will acquire all of the outstanding shares of Envision’s common stock for $46.00 per share in cash, representing a 32% premium to Envision’s volume-weighted average share price from November 1, 2017, the day immediately following the company’s first announcement that it was reviewing strategic alternatives.

The transaction price represents a multiple of 10.9x trailing 12 months Adjusted EBITDA and 10.1x 2018 anticipated Adjusted EBITDA.

The agreement represents the culmination of the Board’s comprehensive review of strategic alternatives to enhance shareholder value.

During the last seven months, the Board, with the assistance of three independent financial advisors and legal counsel, examined a full range of options to generate shareholder value, including capital structure alternatives, potential acquisitions, portfolio optimization, a potential sale of the whole company, and continued operation as a standalone business.

The Board oversaw an extensive process that involved outreach to 25 potential buyers, including financial sponsors and strategic entities, and invited proposals for all or parts of the business.

After consideration of the opportunities, risks and uncertainties facing the company and the broader sector, as well as the alternatives available to the company, the Board determined that the KKR proposal presented the best opportunity to maximize value for shareholders.

The completion of the transaction, which is targeted for the fourth quarter of 2018, is subject to customary closing conditions and regulatory approvals. Envision intends to present the proposed transaction to its shareholders for approval at the company’s 2018 Annual Meeting, which will be scheduled as soon as practicable following the filing and review of proxy materials.

The company intends to hold its Annual Meeting no later than October 1, 2018.

Upon the completion of the transaction, Envision will become a private company, and its common stock will no longer be traded on the New York Stock Exchange. KKR will be making the investment primarily from its KKR Americas Fund XII.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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.

Rockwell Automation to make $1B investment in PTC

Rockwell Automation to make $1B equity investment in PTC

Rockwell Automation to make $1B equity investment in PTC, Stockwinners
Rockwell Automation to make $1B equity investment in PTC

PTC (PTC) and Rockwell Automation (ROK) announced that they have entered into a definitive agreement for a strategic partnership that is expected to accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology.

As part of the partnership, Rockwell Automation will make a $1B equity investment in PTC, and Rockwell Automation’s Chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.

Under the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation.

The price per share represents an 8.6% premium to PTC’s closing stock price on June 8, 2018, the last trading day prior to today’s announcement.

Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings.

Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.

As separately announced today, Rockwell Automation is increasing its share repurchase target for fiscal year 2018 to $1.5 billion.

This represents a $300 million increase to its previous plans to repurchase $1.2 billion of its stock in fiscal year 2018.

The investment transaction is subject to customary closing conditions and regulatory approvals, and is expected to close within 60 days.

PTC Inc. develops and delivers software products and solutions worldwide.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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.

Shire sold for $62 billion

Takeda reaches agreement to acquire Shire for $62B in cash and stock

Shire sold for $62 billion, Stockwinners
Shire sold for $62 billion, Stockwinners

Japan’s Takeda Pharmaceutical (TKPYY) and Shire (SHPG) announced that they have reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire.

Under the terms of the acquisition, each Shire shareholder will be entitled to receive $30.33 in cash for each Shire share and either 0.839 new Takeda shares or 1.678 Takeda ADSs. The transaction has been approved by both companies’ boards of directors, and is expected to close in the first half of calendar year 2019.

Upon the closing of the transaction, Takeda shareholders will own approximately 50% of the combined group. “With leading market positions in prioritized therapeutic areas, an attractive geographic footprint, greater scale and efficiencies, and an even more productive R&D engine, the combined group will be better positioned to deliver highly-innovative medicines and transformative care providing better health and a brighter future for patients around the world,” Takeda said.

Takeda has entered into a bridge facility agreement of $30.85B with, among others, J.P. Morgan Chase Bank, Sumitomo Mitsui Banking and MUFG Bank, part of the proceeds of which will be used to fund the cash consideration payable to Shire shareholders in connection with the acquisition.

It is currently contemplated that, prior to completion, the commitments under the bridge facility agreement will be reduced or refinanced with a combination of long-term debt, hybrid capital and available cash resources.

Shire plc, an Irish biotechnology company, researches, develops, licenses, manufactures, markets, distributes, and sells medicines for rare diseases and other specialized conditions worldwide.

Takeda Pharmaceutical Company Limited engages in the research and development, manufacture, marketing, and sale of pharmaceutical products worldwide. The company operates in three segments: Prescription Drug, Consumer Healthcare, and Other.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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.

International rig count rises in April

Baker Hughes reports April international rig count 978, up 6 rigs from March

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

Baker Hughes (BHGE)  announced that the Baker Hughes international rig count for April 2018 was 978, up 6 from the 972 counted in March 2018, and up 22 from the 956 counted in April 2017.

The international offshore rig count for April 2018 was 194 up 6 from the 185 counted in March 2018, and down 7 from the 201 counted in April 2017.

The average U.S. rig count for April 2018 was 1,011, up 22 from the 989 counted in March 2018, and up 158 from the 853 counted in April 2017.

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

The average Canadian rig count for April 2018 was 98, down 120 from the 218 counted in March 2018, and down 10 from the 108 counted in April 2017.

The worldwide rig count for April 2018 was 2,087, down 92 from the 2,279 counted in March 2018, and up 170 from the 1,917 counted in April 2017.

Baker Hughes, a GE company provides integrated oilfield products, services, and digital solutions worldwide. Its Oilfield Services segment offers drilling, wireline, evaluation, completion, production, and intervention services; and drilling and completions fluids, completions tools and systems, wellbore intervention tools and services, artificial lift systems, pressure pumping systems, and oilfield and industrial chemicals for integrated oil and natural gas, and oilfield service companies for onshore and offshore operations.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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.

Gramercy Property Trust sold for $7.6 billion

Gramercy Property Trust to be acquired by Blackstone for $27.50 per share 

Gramercy Property Trust sold for $7.6 billion. Stockwinners
Gramercy Property Trust sold for $7.6 billion.

Gramercy Property Trust (GPT) announced that it has entered into a definitive agreement with affiliates of Blackstone Real Estate Partners VIII, under which Blackstone (BX) will acquire all outstanding common shares of Gramercy for $27.50 per share in an all-cash transaction valued at $7.6B.

The transaction has been unanimously approved by Gramercy’s Board of Trustees and represents a premium of 23% over the 30-day volume-weighted average share price ending May 4, 2018 and a premium of 15% over the closing stock price on May 4, 2018.

Completion of the transaction, which is currently expected to occur in the second half of 2018, is contingent upon customary closing conditions, including the approval of Gramercy’s shareholders, who will vote on the transaction at a special meeting on a date to be announced.

The transaction is not contingent on receipt of financing by Blackstone.

Gramercy shareholders will be entitled to receive the previously announced second quarter dividend of $0.375 per share payable on July 16, 2018, and if the transaction is completed after October 15, 2018 Gramercy shareholders will receive a per diem amount of approximately $0.004 per share for each day from October 15, 2018 until the closing date.

Gramercy Property Trust is a leading global investor and asset manager of commercial real estate. The Company specializes in acquiring and managing high quality, income producing commercial real estate leased to high quality tenants in major markets in the United States and Europe.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Newell Brands sells its Waddington Group for $2.3B

Newell Brands to sell The Waddington Group to Novolex for about $2.3B

Newell Brands tumbles on outlook, Stockwinners.com
Newell Brands sells its Waddington Group for $2.3B

Newell Brands (NWL) announced that it has signed a definitive agreement to sell The Waddington Group, its global consumer and commercial package manufacturing business, to Novolex Holdings, a leading provider of paper and plastic packaging products backed by The Carlyle Group (CG).

The Waddington Group, based in Covington, KY, comprises a global brand portfolio including Eco-Products, the leader in the green packaging space; POLAR PAK containers, serving ware, drink-ware and cutlery; WNA upscale disposable plastic products; and other industry-leading brands.

The sale is part of Newell Brands’ previously announced Accelerated Transformation strategy, designed to create a simpler, faster, stronger consumer-focused portfolio of leading brands.

Gross proceeds from the divestiture are expected to be approximately $2.3B, subject to customary working capital and transaction adjustments. Waddington’s 2017 net sales were $907M.

The company expects the transaction to result in after-tax proceeds of approximately $2.2N, which will be applied to deleveraging and share repurchase.

The transaction is expected to close within approximately 60 days, subject to customary closing conditions, including regulatory approval. J.P. Morgan Securities acted as financial advisor to Newell Brands on the transaction.

NWL closed at $26.69


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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 $100B buyback program, boosts dividend by 16%

Apple announces new $100B buyback program, boosts dividend by 16%

Stocks to Buy, Stocks to Buy on Margin, Stocks to invest in, stocks to own
Apple announces new $100B buyback program, boosts dividend by 16%

Apple (AAPL) said it will complete the execution of the previous $210B share repurchase authorization during fiscal Q3 and announced a new $100B buyback program.

Its board has declared a cash dividend of 73c per share of Apple’s common stock payable on May 17, to shareholders of record as of the close of business on May 14.

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO.

“With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure.

Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Separately, Apple reported Q2 EPS $2.73, consensus $2.69 – Reported Q2 revenue $61.1B, consensus $60.98B.

Apple reported Q2 iPhone units 52.22M vs. 50.76M last year – Reported Q2 iPad units 9.11M vs. 8.92M last year. Reported Q2 Mac units 4.08M vs. 4.2M last year.

AAPL closed at $169.10.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

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.

Ionis Pharmaceuticals is in focus

Biogen, Ionis Pharmaceuticals expand drug development collaboration

Biogen will pay Ionis $1B in cash

Biogen (BIIB) and Ionis Pharmaceuticals (IONS) announced they have expanded their strategic collaboration through a new ten-year collaboration agreement to develop novel antisense drug candidates for a broad range of neurological diseases.

This collaboration capitalizes on Biogen’s expertise in neuroscience research and drug development and Ionis’ leadership in RNA targeted therapies with the goal of developing a broad pipeline of investigational therapies.

Biogen says BAN2401 did not meet primary endpoint. Stockwinners.com
Biogen will pay Ionis $1B in cash

It builds upon a productive collaboration that produced SPINRAZA, the first and only approved treatment for patients with spinal muscular atrophy.

Under the terms of the collaboration, Biogen will pay Ionis $1B in cash, which will include $625M to purchase 11,501,153 shares of Ionis common stock at a price of $54.34 per share, at an approximately 25% cash premium, and a $375M upfront payment.

Biogen will have the option to license therapies arising out of this collaboration and will be responsible for their development and commercialization.

In addition, Biogen may pay milestone payments, license fees and royalties on net sales.

The companies plan to advance programs for a broad range of neurological diseases for which few treatment options exist today.

Disease areas include dementia, neuromuscular diseases, movement disorders, ophthalmology, diseases of the inner ear, and neuropsychiatry.

Biogen will have the first choice of neurology targets on which to exclusively collaborate with Ionis.

In this collaboration, Ionis will be responsible for the identification of antisense drug candidates based on selected targets, while Biogen will be responsible for and pay for non-clinical studies, clinical development, manufacturing, and commercialization. Biogen and Ionis expect the deal to close in the second quarter of 2018.

IONS closed at $45.85. BIIB closed at $266.02.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

Goldman says sell Pepsi, buy Coca Cola

Goldman swaps sell call on Coca-Cola to PepsiCo on growth outlook

Goldman says sell Pepsi, buy Coca Cola, Stockwinners
Goldman says sell Pepsi, buy Coca Cola

In a research note to investors on the beverage space, Goldman Sachs analyst Judy #Hong upgraded Coca-Cola (KO) to Neutral and downgraded PepsiCo (PEP) to Sell.

While the analyst sees an improving organic sales growth outlook for Coca-Cola, Hong sees potential for continued softer North American Beverage volumes to weigh on PepsiCo’s organic sales growth.

BEVERAGE SPACE

Within the Staples sector, beverage valuations look most elevated, while food stocks appear oversold on consensus estimates, Goldman Sachs’ Hong told investors in a research note.

The analyst sees the beverage group’s premium valuation as mostly justified given industry characteristics that are more attractive versus secularly challenged U.S. center store food companies.

Goldman says sell Pepsi, buy Coca Cola, Stockwinners.com
Goldman says sell Pepsi, buy Coca Cola,

Beverages have more channel diversification and are less reliant on food grocers, beverage categories tend to have low level of private label penetration and a greater level of market/brand concentration also allows for higher pricing power, she contended.

Hong believes all these dynamics should drive higher top-line growth and more insulated margin structure for beverage companies compared to food companies in the U.S. over the next 12 months.

Additionally, the analyst pointed out that she sees “a few relevant trends” across the beverage theme playing out thus far in 2018, namely relative convenience store underperformance, comparative alcohol slowdown, and improvement in emerging markets benefiting multinationals, particularly in Latin America.

SWAPPING COCA-COLA, PEPSICO

Goldman Sachs’ Judy Hong upgraded Coca-Cola to Neutral from Sell, while trimming her price target on the shares to $46 from $47.

The analyst told investors that she sees an improving organic sales growth outlook, a “cleaner base” post-refranchising, and better visibility on its margin and earnings targets.

Hong believes Coca-Cola is “one of the rare” over 4% organic growth mega-cap stories, and now has increased confidence in its organic sales growth outlook.

Additionally, Hong noted that she now views fundamentals as warranting a relative premium given Coca-Cola’s positioning as a beneficiary of moderating foreign exchange impact, improving emerging markets growth, and higher margins post-refranchising.

Meanwhile, the analyst downgraded PepsiCo to Sell from Neutral and lowered her price target on the shares to $110 from $118, citing the potential for continued softer North American Beverage volumes to weigh on organic sales growth and present modest downside risk to gross margins.

While the analyst does not expect Pepsi shares to be “a material absolute underperformer,” she does see scope for it to underperform other beverage names over the next 12 months given muted fundamentals and lack of clear catalysts. Both top-line and margin gains are likely to be harder to come by for PepsiCo’s North America beverage business as multi-year tailwinds to volume are no longer driving growth while c-store underperformance is creating a drag, she contended.

OTHERS TO WATCH

Goldman’s Hong also upgraded Coca-Cola European Partners (CCE) to Buy, as she believes muted sentiment in the context of sugar tax implementation in the UK and France provides a compelling opportunity, and downgraded Molson Coors (TAP) to Neutral, predicting that weaker than expected beer volumes will drive cuts to consensus estimates. The analyst reiterated a Buy rating on Monster Beverage (MNST).

PRICE ACTION

In Tuesday’s trading, shares of Coca-Cola are fractionally up to $44.79, while PepsiCo’s stock dropped over 1% to $108.41.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

Zillow enters house flipping, shares decline

Zillow falls after announces house flipping plans, competitor Redfin declines

Zillow tumble on Amazon news. See Stockwinners.com Market Radar
Zillow enters house flipping, shares decline

Shares of Zillow (Z,ZG) dropped in Friday’s trading after the company announced plans to enter the home-flipping business just in time for the Spring selling season.

Zillow, which has focused on just the listing part of the real estate business, announced last night along with quarterly and yearly revenue, that it will expand Zillow Instant Offers to Phoenix this month.

With this expansion, Zillow said it plans to participate in the marketplace, buying and selling homes with Premier Agent partners in the Phoenix and Las Vegas markets.

Zillow began testing Instant Offers in May 2017 with Premier Agent partners in Las Vegas and Orlando, and will add Phoenix this month.

According to Zillow, the program “gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home.

Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

“Even in today’s hot market, many sellers are stressed and searching for a more seamless way to sell their homes,” Zillow Chief Marketing Officer Jeremy Wacksman said in a statement.

“They want help, and while most prefer to sell their home on the open market with an agent, some value convenience and time over price. This expansion of Instant Offers, and Zillow’s entrance into the marketplace, will help us better serve both types of consumers as well as provide an opportunity for Premier Agents to connect with sellers.

A “WASH” FOR SHAREHOLDERS

Craig-Hallum analyst Brad Berning downgraded Zillow to Hold from Buy after the company announced the expansion of the Instant Offers program to Phoenix in addition to Las Vegas and Orlando.

The program will require what he estimates to be about $3B of capital, which Zillow intends to fund using its balance sheet, while only creating what he estimates will be about $3B in incremental shareholder value, Berning told investors.

Thus, he sees the expansion as “a wash” for shareholder value, but one that comes at the price of potential added risk. Berning lowered his price target on Zillow to $50 from $58.

COMPETITION FOR REDFIN

Redfin (RDFN), an online real-estate brokerage, “began experimenting with buying homes a little more than a year ago,” said The Wall Street Journal, citing Redfin CEO Glenn Kelman.

Redfin falls after Zillow enters house flipping; Stockwinners
Redfin falls after Zillow enters house flipping;

PRICE ACTION

Shares of Zillow are down over 10% to $48.19 per share, while Redfin is lower by 2.5% to $22.15 in Friday’s trading.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

Polycom sold for $2 billion

Plantronics to acquire Polycom for $2B in cash, stock deal

 Plantronics to acquire Polycom for $2B. Stockwinners.com
Plantronics to acquire Polycom for $2B.

Plantronics (PLT)  and Polycom announced that they have entered into a definitive agreement under which Plantronics will acquire Polycom in a cash and stock transaction valued at $2B enterprise value.

The transaction has been unanimously approved by the boards of directors of both companies, is subject to regulatory approvals and other customary closing conditions, and is expected to close by the end of the third calendar quarter of 2018. With the acquisition of Polycom, Plantronics will become the partner of choice for the communications and collaboration ecosystem.

Polycom, a privately held company, brings a global leadership position in voice and video collaboration, accelerating Plantronics vision of delivering new communications and collaboration experiences.

With the addition of Polycom, Plantronics will have the broadest portfolio of complementary products and services across the global communications and collaboration ecosystem, and the ability to create exceptional user experiences.

The combination positions Plantronics to capture additional opportunities across the $39.9B Unified Communications and Collaboration industry driven by innovation in video and the ubiquity of audio, building growth opportunities through data analytics and insight services.

Polycom significantly expands Plantronics services offering, providing a meaningful presence in management and analytics services.

The transaction is expected to be immediately accretive to Non-GAAP EPS. Plantronics targets achieving annual run-rate cost synergies of $75M within 12 months of transaction close.

Under terms of the definitive agreement, Plantronics will acquire Polycom for $2B enterprise value consisting of an estimated $690M of net debt and an estimated $948M in cash and 6.352M Plantronics shares, valued at $362M based on the 20 trading day average closing price of Plantronics stock prior to signing, resulting in Polycom shareholders owning approximately 16.0% of the combined company.

Estimated amounts are subject to customary post-closing adjustments per the definitive agreement. Frank Baker, Founder and Managing Partner, Siris Capital, and Daniel Moloney, Executive Partner, Siris Capital, will join Plantronics Board of Directors.

Plantronics intends to fund the cash portion of the consideration with cash on hand and approximately $1.375B in new, fully-committed debt financing. Wells Fargo Bank and affiliates have committed to provide the debt financing for the transaction, subject to customary conditions. P

lantronics expects to pay down a significant portion of the debt within the next several years with cash on the balance sheet and through cash generation.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

TPG Pace Energy to acquire oil and gas assets from EnerVest fo $2.66B

TPG Pace Energy to acquire oil and gas assets from EnerVest fo $2.66B

TPG Pace Energy to acquire oil and gas assets from EnerVest fo $2.66B. Stockwinners.com
TPG Pace Energy to acquire oil and gas assets from EnerVest fo $2.66B

TPG Pace Energy (TPGE) announced it has entered into definitive agreements with certain funds managed by EnerVest to acquire the oil and gas assets within EnerVest’s South Texas Division for approximately $2.66B in cash and stock.

As part of the transaction, TPGE and EnerVest are partnering to create Magnolia Oil & Gas Corporation, a new company led by Steve Chazen who will serve as Magnolia’s full-time chairman, president and CEO.

EnerVest will retain a significant ownership stake in Magnolia.

The transaction is subject to approval by the TPGE shareholders and other customary closing conditions, and the new company will trade on the NYSE under a new ticker upon closing, which is expected to occur late in the second quarter of 2018.

The formation of Magnolia creates a large-scale, pure-play South Texas operator with top-tier Eagle Ford and Austin Chalk asset positions with more than 40,000 boe per day of production.

Magnolia will acquire EnerVest’s approximately 360,000 total net acres in South Texas, which consists of approximately 14,000 net acres in one of the most prolific sections of Karnes County and 345,000 net acres in the emerging, high-growth potential Giddings Field.

The acreage position is almost entirely held by production, and the production from the combined asset base is heavily weighted toward oil.

TPGE closed at $9.73.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

KLA-Tencor to acquire Orbotech for $69.02 per share

KLA-Tencor to acquire Orbotech for $69.02 per share

KLA-Tencor to acquire Orbotech for $69.02 per share, Stockwinners.com
KLA-Tencor to acquire Orbotech for $69.02 per share

KLA-Tencor (KLAC) and Orbotech (ORBK) announced they have entered into a definitive agreement pursuant to which KLA-Tencor will acquire Orbotech for $38.86 in cash and 0.25 of a share of KLA-Tencor common stock in exchange for each ordinary share of Orbotech, implying a total consideration of approximately $69.02 per share.

The transaction values Orbotech at an equity value of approximately $3.4B and an enterprise value of $3.2B. In addition, KLA-Tencor announced a $2B share repurchase authorization. The share repurchase program is targeted to be completed within 12 to 18 months following the close of this transaction.

Total cost synergies are expected to be approximately $50M on an annualized basis within 12 to 24 months following the closing of the transaction, and the transaction is expected to be immediately accretive to KLA-Tencor’s revenue growth model, non-GAAP earnings and free cash flow per share.

The transaction has been approved by the Board of Directors of each company and is expected to close before the end of calendar year 2018, subject to approval by Orbotech’s shareholders, required regulatory approvals and the satisfaction of the other customary closing conditions.

No approval by KLA-Tencor stockholders is required. The transaction is not subject to any financing conditionality. KLA-Tencor intends to fund the cash portion of the purchase price with cash from the combined company’s balance sheet.
In addition, KLA-Tencor intends to raise approximately $1B in new long-term debt financing to complete the share repurchase.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

 

Stitch Fix shares could unravel at the seam

Stitch Fix drops after earnings,  analyst sees lock-up bringing pressure

Stitch Fix drops after earnings. Stockwinners.com
Stitch Fix drops after earnings

Shares of Stitch Fix (SFIX) dropped in Tuesday morning trading following the company’s quarterly earnings report.

The personal shopping and clothing provider saw revenue come in above the Wall Street consensus and posted a 31% year-over-year increase in active clients.

Following the earnings report, an analyst at JPMorgan estimated that about 31M shares will be released from lock-up on Wednesday, which could create near-term weakness.

EARNINGS AND GUIDANCE

After the market close on Monday, Stitch Fix reported second quarter adjusted earnings per share of 7c, slightly exceeding analysts’ 6c consensus, though its EPS including items was 2c. Revenue for the quarter of $295.5M beat the $291.24M consensus and Stitch Fix said it grew active clients to 2.5M, an increase of 588,000 and 31% year-over-year.

Looking ahead, Stitch Fix forecast third quarter revenue of $300M-$310M, at the high end of analysts’ $300.29M consensus, and fiscal 2018 revenue of $1.19B-$1.22B, against the Street consensus of $1.2B.

On its quarterly earnings conference call, Stitch Fix said its net revenue per active client for the 12 months ended January 27 was $437, a decrease of 3.9% vs. last year.

The company commented, “This decline was primarily driven by our continued and growing strategic expansion into Men’s and lower price point merchandise. Although our male clients on average have a lower purchase frequency, which dilutes our overall net revenue per active client, we continue to be pleased with the revenue contribution and profitable unit economics of the Men’s category.

Similarly, we’ve been encouraged by our ability to serve lower price point clients effectively and plan to further penetrate this market.”

WHAT’S NOTABLE

Stitch Fix’s quarterly earnings report was its second as a public company.

The company’s IPO in November was overshadowed by the disappointing IPO of another subscription service, Blue Apron (APRN), as well as a threat from Amazon’s (AMZN) Prime Wardrobe and Nordstrom’s (JWN) Trunk Club.

Stitch Fix, which debuted at $15 per share, has seen its shares gain over 50% since November.

ANALYST COMMENTARY

In a research note to investors, JPMorgan analyst Doug Anmuth estimated that about 31M Stitch Fix shares will be released from lock-up before the market open on Wednesday, March 14, which could create near-term weakness.

#Anmuth explained that Stitch Fix’s IPO held a price-triggered lock-up agreement where 35% of the locked-up shares become eligible for release beginning 90 days after the IPO if certain criteria are met, including shares closing 25% or more above the IPO price on 10 out of 15 consecutive trading days and if the company is not in its trading black-out period.

The analyst noted that Stitch Fix qualified for the price and reporting threshold last month, but since this occurred during its black-out period, shares do not qualify for release until one day post-earnings.

While Anmuth remains confident in Stitch Fix’s market opportunity and ability to stabilize growth, he thinks growth will become more challenging as the company has passed the period of heavy viral growth and margin compression is likely through fiscal 2019.

The analyst has a Neutral rating and $26 price target.

PRICE ACTION

Shares of Stitch Fix are down 2% to $24 in Tuesday’s trading.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.

Clorox to acquire Nutranext for $700M

Clorox agrees to acquire Nutranext

Clorox agrees to acquire Nutranext. Stockwinners.com
Clorox agrees to acquire Nutranext. 

Clorox (CLX) announced that it has entered into a definitive agreement to acquire Nutranext, a health and wellness company based in Sunrise, Florida, which manufactures and markets leading dietary supplement brands in the retail and e-commerce channels as well as in its direct-to-consumer business.

The Nutranext acquisition brings significant scale and breadth to Clorox’s dietary supplements business.

It follows the company’s May 2016 acquisition of the RenewLife brand, a leader in digestive health. Clorox’s brand-building capabilities and retail execution behind the RenewLife brand have led to strong growth in the e-commerce channel and expanded distribution in the retail channel. In calendar year 2017, Nutranext generated sales of about $200M.

Clorox will pay $700M to acquire Nutranext, with the purchase price representing about 3.5 times calendar year 2017 sales.

The company expects to fund the transaction through a combination of available cash and debt financing, while maintaining a Debt/EBITDA ratio within its target range of 2.0x to 2.5x.

The transaction is subject to certain closing conditions, including customary regulatory approvals, and is expected to close in the company’s fiscal fourth quarter, which ends June 30, 2018.

Clorox’s preliminary estimates indicate the acquisition will dilute earnings per share by 7-11c in the fourth quarter of its current fiscal year, ending June 30, 2018, and by 8c-12c in fiscal year 2019 and be accretive to earnings per share in fiscal year 2020.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

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.