#SoftBank $SFTBF is prepared to enter talks on potential mergers and acquisitions for wireless unit #Sprint $S , particularly keen on a potential deal with #T-Mobile $TMUS , Reuters reports, citing comments made by CEO Masayoshi Son at a news conference.
The company previously tried to acquire T-Mobile for Sprint but dropped talks following opposition from U.S. antitrust regulators. “Of all potential partners, T-Mobile is the one that would yield the most synergies, the most orthodox choice and we’d sincerely love to begin talks,” Son said, adding that the current U.S. administration is more open to the possibility of a deal.
The company is also open to other possible deals if there were better offers.
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Noting that #Pandora $P announced it had raised $150M by selling a 5-year, 8% convertible preferred security to KKR $KKR , #Needham analyst Laura Martin calculates that adding KKR to the Pandora story adds $5 per share to the latter’s value, implying that it should trade up to $15 per share on the news over time.
The analyst believes #KKR provides a financial safety net, and expects KKR’s exit time frame to be 5 years, giving public shareholders a clearer exit path.
She reiterates a Buy rating and $16 price target on Pandora’s shares.
Shares of Straight Path Communications $STRP re rallying again after the company announced earlier that its board of directors determined that a revised offer from an unnamed “multi-national telecommunications company” to acquire 100% of the issued and outstanding shares of Straight Path for $184.00 per share, reflecting an enterprise value of approximately $3.1B, which will be paid in bidder stock in an all-stock transaction constitutes a “superior proposal” as defined in Straight Path’s previously announced definitive agreement and plan of merger with #AT&T $T , dated as of April 9.
The unnamed bidder previously submitted an unsolicited offer on May 1 to acquire 100% of the issued and outstanding shares of Straight Path for $135.96 per share, reflecting an enterprise value of $2.3B, which has been superseded by the revised offer announced today, the company noted.
Prior reports from The Wall Street Journal and Reuters have indicated that #Verizon $VZ has submitted an offer to acquire Straight Path, thought the companies have not confirmed that. Straight Path has notified AT&T of the Straight Path board’s determination and, pursuant to the AT&T Merger Agreement, AT&T has the option for the next three business days to negotiate a possible amendment of that agreement to match or exceed the bidder’s offer, the company noted.
In pre-market trading, Straight Path shares have jumped $42.71, or 26.5%, to trade near $204 per share, well above the all-stock sweetened bid made by its unnamed suitor.
#Belden $BDC announced that it has rescinded its proposal to acquire 100% of #Digi International $DGII in light of the fiscal second quarter 2017 results and full-year 2017 outlook reported by Digi on May 4, 2017.
Belden’s offer of $13.82 per share in cash, initially disclosed on November 11, 2016, was based on a 10x EBITDA multiple on #EBITDA of $24M implied by the high end of guidance provided by Digi to its shareholders on October 27, 2016.
Earnings before interest, tax, depreciation and amortization (EBITDA).
$DIGI tumbled 13% on the news to close at $10.70. Shares were trading around $10 when the buyout was announced.
With over 90% of #Apple’s $AAPL nearly $250B of cash sitting overseas, a one-time 10% repatriation tax would give the company $220B for acquisitions or buybacks, Citi analyst Jim Suva tells investors in a research note titled “Addressing the Problem of Too Much Cash.”
The analyst identified seven potential takeover targets for the iPhone market using five filters: strategic fit, global scale, transaction size, few non-strategic assets and the likely impact on Apple’s share price.
The analyst’s potential targets for Apple are #Netflix $NFLX , #Disney $DIS , #Hulu, #Activision Blizzard $ATVI , #Electronic Arts $EA , #Take-Two Interactive $TTWO and #Tesla $TSLA .
Each of these names bring some strategic benefit to Apple, Suva argues. The analyst gave Netflix the highest likelihood of being acquired with a 40% probability.
Disney is next at 25%, with the rest at 10% or below. Suva believes a hybrid approach to the large cash position may be Apple’s best path. The iPhone maker, for example, could acquire Netflix with one-third of the cash and use the remaining two-thirds for buybacks, Suva contends.
#JPMorgan tell investors #Apple $AAPL will integrate #Broadcom’s $BRCM wireless charging chip into its upcoming iPhone launch in the second half of 2017.
In February, the bank was unclear whether or not Apple would be integrating wireless charging into this year’s iPhone launch. The February report sent shares of #Energous $WATT lower.
Since that report, Broadcom is getting set to commence manufacturing production of the wireless charging chip with its foundry partners in May.
The broker believes Apple will also use Broadcom’s next generation WiFi/Bluetooth combo chip and maybe two ASIC chips instead of one. There is at least a $2-$3 step-up in dollar content per phone from the new wireless charging chip, new touch controller chips and upgraded wireless connectivity content in the upcoming iPhones, which is “significantly” higher than what the market is anticipating.
#JPMorgan reiterates an Overweight rating on Broadcom with a $260 price target.
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Following #Panera Bread’s $PNRA recent announcement that Europe’s #JAB Holding has agreed to acquire the company in a transaction valued at approximately $7.5B, market chatter has it that #Dunkin’ Brands $DNKN could be next. Maxim says “one of the strongest candidates” for a potential acquisition in the Quick Service restaurant space.
This comes a few days after #Longbow told investors the do not expect the company to be acquired anytime soon. Meanwhile, #RBC Capital upgraded Dunkin’ Donuts’ parent to Outperform, as the bank anticipates a “more profitable system.”
STRONG BUYOUT CANDIDATE: In a research note to investors this morning, Maxim’s Anderson said he still views Dunkin’ Brands as “one of the strongest candidates” for a potential acquisition in the Quick Service restaurant space, even after JAB Holdings’ deal for Panera takes it out of the running for now. Moreover, the analyst argued that he sees comp growth and geographic expansion opportunities for Dunkin’ Donuts and Baskin-Robbins in both the U.S. and overseas and sees a potentially lucrative licensing business for the company as an “increasingly important attribute.” Dunkin’ Brands’ best likelihood for M&A will come from a multinational, multi-concept franchise operator, such as #Yum! Brands $YUM , Anderson contended, adding that he believes the latter is seeking franchise-driven growth concepts to complement its existing brand portfolio. The analyst estimates a range of $70-$75 for a potential takeout, and assigns a 25% likelihood of a possible acquisition in the next 12 months. Anderson acknowledged that #McDonald’s $MCD has recently gained market share through beverage discounting, but noted that Dunkin’ Brands held its own during the quarter with limited menu price increases. He reiterated a Buy rating on the stock ahead of quarterly results and raised his price target on Dunkin’ to $64 from $61.
ACQUISITION ‘HIGHLY UNLIKELY’: Conversely, Longbow analyst Alton Stump told investors in a research on his own on Friday that he believes a takeout of Dunkin’ Brands is “highly unlikely” to happen anytime soon. While an acquisition of the company by either JAB or Restaurant Brands $QSR may make sense on the surface, Dunkin’ Brands’ all-franchised operating model is “not a good fit” for JAB and its leveraged balance sheet would likely steer Restaurant Brands away, the analyst argued. Furthermore, he noted that Dunkin’ Brands’ decelerating same-store sales and net unit growth fundamentals are likely hard for any potential acquirer, including private equity players, to ignore. In the absence of a takeout, the analyst believes the shares of Dunkin’ Brands contain substantial downside risk based on the company’s weakening core fundamentals and, therefore, reiterates an Underperform rating and $35 price target on the shares.
WHAT’S NOTABLE: This morning, RBC Capital’s Palmer upgraded Dunkin’ Brands to Outperform from Neutral and increased his price target on the shares to $64 from $54 based on his outlook for improving franchisee profitability and improved long-term unit and earnings per share growth. Additionally, the analyst told investors that he sees upside from potential cash back to shareholders, either through accelerated buybacks or a higher dividend payout. A “dramatic reduction” in menu items and heightened focus on core coffee could bolster franchisee profitability by as much as hundreds of basis points over the next year, he argued, adding that improving margins could enable a better commitment to national value platforms and deter menu price inflation.
Shares of #Dish $DISH are higher today after Barclays upgraded the stock to Overweight from Equal Weight, saying that the company “could emerge as a preferred partner” for “most” of the wireless carriers.
DEAL POSSIBILITIES: #Sprint $S could combine with #T-Mobile $TMUS , and the combined entity could be forced to make a mobile virtual network available to a competitor, said Barclays.
Given the spectrum owned by Dish, the company could obtain a network from Sprint/T-Mobile and enter the wireless business, either on a wholesale or retail basis, Venkateshwar. believes. Dish could also combine with AT&T’s $T #DirecTV, the analyst stated. Such a transaction has been blocked by regulators in the past, but the competitive environment for video distribution has been altered significantly since then, according to the broker. #AT&T could use synergies to completely fund the deal, and the transaction would give the telecom giant “unprecedented scale in video,” wrote Venkateshwar. The analyst believes that #Verizon $VZ already faces tough competition and the pressure on it could intensify if Dish pursues one of the alternatives outlined above. Consequently, it may decide to try to buy Dish, according to Barclay.
VALUE HIGHLIGHTED: As carriers pursue Dish, the “strategic value” of its satellite business, which is under-appreciated by investors, will be “highlighted,” according to the analyst. The analyst raised his price target on Dish to $74 from $62.
WHAT’S NOTABLE: On April 25, The Wall Street Journal reported that Verizon had submitted a $104.64 per share offer for spectrum owner Straight Path $STRP , which has previously agreed to be acquired by AT&T for $95.63 per share. Straight Path has confirmed that its board determined that an “unsolicited offer from a multi-national telecommunications company” of $104.64 per share, reflecting an enterprise value of $1.8B, constitutes a “Superior Proposal” to the one accepted from AT&T, but did not name the rival bidder.