Oncor Electric Sold for $9.45 Billion

Sempra Energy to acquire interest in Oncor Electric for about $9.45B in cash

Sempra Energy to acquire interest in Oncor Electric for about $9.45B in cash. See Stockwinners.com Market Radar for details

Sempra Energy (SRE) announced an agreement to acquire Energy Future Holdings Corp., the indirect owner of 80% of Oncor Electric Delivery Company, operator of the largest electric transmission and distribution system in Texas.

Under the agreement, Sempra Energy will pay approximately $9.45B in cash to acquire Energy Future and its ownership in Oncor, while taking a major step forward in resolving Energy Future’s long-running bankruptcy case.

The enterprise value of the transaction is approximately $18.8B, including the assumption of Oncor’s debt.

The transaction is expected to be accretive to Sempra Energy’s earnings beginning in 2018.

Sempra Energy expects to fund the $9.45B transaction using a combination of its own debt and equity, third-party equity, and $3B of expected investment-grade debt at the reorganized holding company.

Sempra Energy has received financing commitments from RBC Capital Markets and Morgan Stanley.

Sempra Energy expects its equity ownership after the transaction to be approximately 60% of the reorganized holding company.

At the completion of the transaction, Bob Shapard, Oncor’s CEO, will become executive chairman of the Oncor board of directors and Allen Nye, currently Oncor’s general counsel, will succeed Shapard as Oncor’s CEO.

Both are slated to serve on the Oncor board, which will consist of 13 directors, including seven independent directors from Texas, two from existing equity holders and two from the new Sempra Energy-led holding company.

Sempra Energy expects the transaction to be completed in the first half of 2018.


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Back to Nature Foods Sold for $162.5 Million

B&G Foods to acquire Back to Nature Foods

B&G Foods to acquire Back to Nature Foods. See Stockwinners.com Market Radar for details

B&G Foods (BGS) has announced that it has entered into a definitive agreement to acquire Back to Nature Foods Company from Brynwood Partners, Mondelez (MDLZ) and certain other entities and individuals for approximately $162.5M in cash, subject to customary closing and post-closing working capital adjustments.

Back to Nature Foods Company produces cookies, crackers, granolas, juices, and nuts. Its cookies include apple cinnamon oat grahams, California lemons, chocolate chunks, cranberry pecan granolas, crispy oatmeal, dark chocolate and oats granolas, fudge mints, honey graham sticks, honey nut granolas, Madagascar vanillas, mini vanilla wafers, and peanut butter creams.

B&G Foods expects the acquisition to close during Q3 of 2017, subject to customary closing conditions, including the receipt of regulatory approvals.

B&G Foods expects the acquisition to be immediately accretive to its EPS and free cash flow and projects that following the completion of a six-month integration period, the acquired business will generate on an annualized basis net sales of approximately $80M and adjusted EBITDA of approximately $17M.

B&G Foods intends to fund the acquisition and related fees and expenses with additional revolving loans under its existing credit facility.


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Songa Offshore Sold for $3.4 Billion

Transocean agrees to acquire Songa Offshore in deal valued around $3.4B

Songa Offshore Sold for $3.4 Billion. See Stockwinners.com Market Radar to read more

Transocean (RIG) has reached an agreement with Norwegian-Cypriot Songa Offshore SE whereby it will, subject to certain conditions, make a Voluntary Exchange Offer to acquire 100% of the issued and outstanding shares of Songa Offshore, including shares issued before expiry of the offer period as a result of the exercise of warrants, convertible loans and other subscription rights.

The consideration in the Offer will be based upon NOK 47.50 per share of Songa Offshore, representing a 37.0% premium to Songa Offshore’s five-day average closing price of NOK 34.68 per share.

The consideration implies an equity value of Songa Offshore on a fully diluted basis of approximately $1.2B, and an enterprise value of approximately $3.4B.

The transaction strengthens Transocean’s industry-leading position with the addition of Songa Offshore’s four “Cat-D” harsh environment, semisubmersible drilling rigs on long-term contracts with Statoil in Norway. Songa Offshore’s fleet also includes three additional semisubmersible drilling rigs.

The transaction is expected to be accretive on an EBITDA, Operating Cash Flow, and Net Debt / EBITDA basis, and the company anticipates annual expense synergies of approximately $40M. The combined company will operate a fleet of 51 mobile offshore drilling units with backlog of $14.3B consisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters.

Additionally, Transocean has four ultra-deepwater drillships under construction, including two contracted with Shell for ten years each. Consistent with Transocean’s strategy of recycling older less capable rigs, Transocean anticipates re-ranking the combined fleet, which may result in additional rigs being recycled.

Jeremy Thigpen, President and CEO of Transocean said: “Songa Offshore is an excellent strategic fit for Transocean. With this combination, we add four new state-of-the-art Cat-D semisubmersible rigs to our existing fleet, further enhancing our position in the harsh environment market. We also demonstrate our continued commitment to the Norwegian market and strengthen our technical and operational presence in that region.

Importantly, we add approximately $4.1B in contract backlog to our already industry-leading backlog of $10.2B, which provides us with even more visibility to future cash flows in this challenging market.” The transaction is recommended by Songa Offshore’s board of directors and certain members of the senior management team, in addition to Songa Offshore shareholders Perestroika AS, funds beneficially owned by Asia Research & Capital Management Ltd., and York Capital Management Global Advisors, LLC, which collectively beneficially own 76.6% of Songa Offshore’s outstanding shares on a fully diluted basis and have all executed irrevocable pre-acceptance agreements pursuant to which they will agree to accept the Offer.

These pre-acceptances cannot be withdrawn as a result of a superior offer from a third party. The remaining Songa Offshore shareholders have the option to accept the consideration as described below in Additional Transaction Elements. The transaction has a value of approximately $3.4B, including premium. No changes to Transocean’s executive management team or corporate structure are anticipated as a result of the combination.

The company will remain headquartered in Zug, Switzerland, with significant operating presence in Houston, Texas, Aberdeen, Scotland and Stavanger, Norway. The combined company’s board of directors following the completion of the acquisition will include Frederik Wilhelm Mohn, chairman of the board of Songa Offshore and owner of Perestroika AS, Songa Offshore’s largest shareholder.


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Fiat Chrysler Could Be Sold to Chinese

Chinese automakers weigh bids for Fiat Chrysler

Chinese automakers weigh bids for FCA. See Stockwinners.com Market Radar for details

Representatives of a Chinese automaker made a bid to purchase Fiat Chrysler Automobiles (FCAUat a small premium over its market value, which was rejected for not being high enough, Automotive News reports, citing sources.

In addition, other executives from large Chinese automakers have been conducting due diligence on a possible acquisition of FCA and FCA executives have traveled to China to meet with Great Wall Motor.

MORGAN STANLEY

After Automotive News reported that Fiat Chrysler had received and rejected a takeover offer from a Chinese company, Morgan Stanley analyst Adam #Jonas says that finding “a Chinese partner could make sense” for the company.

China is the world’s largest SUV market, while the Chinese government is encouraging investments in foreign companies, and investing in Fiat Chrysler would enable a Chinese company to quickly raise its U.S. market share, Jonas wrote.

Moreover, such a deal would enable Fiat Chrysler to avoid antitrust issues that would arise if it combined with another Detroit automaker, the analyst stated. He kept an EUR14 price target and an Overweight rating on the stock.

PRICE ACTION

Shares of Fiat Chrysler (FCAU) are up 9% to $12.65 per share. The issue has a 52-week trading range of $6.0500 – $12.68.


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Survey Shows Netflix is Fine without Disney

Analyst sees Disney loss having minimal impact on Netflix subscribers

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more

Although Netflix (NFLX) shares slipped following Disney’s (DIS) announcement that the company was ending its distribution agreement with the former, Piper Jaffray analyst Michael Olson told investors that he believes the loss will have a minimal impact on the streaming service subscribers.

SURVEY SAYS

In a research note to investors this morning, #Piper #Jaffray’s Olson says Disney ending its agreement for distribution of certain content is a negative headline, but it will have “minimal impact” on Netflix.

This follows his firm survey of over 500 U.S. Netflix subscribers, asking what percent of their Netflix time is spent on Disney.

The analyst pointed out that Piper found that “only” around 20% of subscribers spend greater than 10% of their Netflix time viewing Disney content.

Further, he expects “almost none” of the remaining 80% of subscribers to cancel due to the loss of Disney.

The 20% of heavier Disney viewers are unlikely to cancel unless Disney accounts for a larger portion, greater than 40%, of their Netflix viewing time, Olson contended.

While #Olson recognized the strength of Disney’s content, particularly for younger children, the analyst noted that he believes Netflix can license similar genre content from other sources and/or use the cost savings for original programming.

Netflix is likely already in the process of determining how to effectively reallocate funds previously earmarked for Disney, he said, adding that the company has nearly 18 months to plan for this change. The analyst reiterated an Overweight rating and $215 price target on Netflix’s shares.

ENDING AGREEMENT

Last week when Disney reported third quarter earnings, the company announced that it will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019. Additionally, Disney said it will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar year film slate.

PRICE ACTION

In Monday morning trading, shares of Netflix have dipped 0.66% to $170.27, while Disney’s stock is fractionally up to $102.20.


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RingCentral is For Sale

RingCentral could be acquired for mid $50s per share, says SunTrust 

RingCentral could be acquired for mid $50s per share. See Stockwinners.com Market Radar to read more

After Bloomberg reported that RingCentral (RNG) had hired an adviser after drawing buyout interest, SunTrust analyst Terry #Tillman says the company could be acquired for a price in the mid $50s per share range ” if the company’s value proposition is viewed as a knowledge worker/business productivity platform versus simply business phone systems.”

The analyst recommends that investors focused on the company’s fundamentals own the stock. “based on strong top-line growth and expanding margins and cash flow.”

RingCentral could attract interest from technology-focused private equity firms and other cloud-based software providers, two of the people said. RingCentral may choose not to proceed with a deal, the people said, asking not to be identified as the details aren’t public.

RingCentral last week reported second-quarter revenue of $119.4 million, up 30 percent from the same period a year ago.

The company, which went public in 2013, runs a platform that connects devices for corporate clients, allowing them to link employees’ smartphones, tablets, desktop computers and landline telephones to communicate via voice, text and fax.

It generates most of its revenue from subscriptions, including those sold through resellers including AT&T Inc.

Note that Stockwinners featured RNG at $36.50 and closed the position at $42 yesterday.

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Altice is Interested in Charter

If a deal goes through, Charter could fetch over $470 a share

Altice is Interested in Charter. See Stockwinners.com Market Radar for details

Altice (ATUS), the cable and telecoms group controlled by Franco-Israeli billionaire Patrick Drahi, is lining up a potential $185 billion bid for Charter Communications (CHTR), the second-largest US cable company, according to the FT.com.

The move highlights an expected wave of consolidation in the industry as cable companies enter the wireless business and also look for additional ways to cut costs and grow as more U.S. consumers are cutting their cords.

Altice USA’s initial public offering in June was viewed as a means for Altice to expand into U.S. cable empire by giving the company public stock it can use as currency for new acquisitions.

In May, #Drahi told reporters that he considered cable expansion a priority, followed by mobile and content.

Altice is working with banks to finance the deal through cash and equity, a source said.

Buying another cable company would give Altice USA, currently the fourth-biggest U.S. cable provider, the opportunity to build more scale and cut costs in the United States. Altice completed its $17.7 billion acquisition of Cablevision last June, after buying Suddenlink for $9.1 billion in 2015.

CHTR last traded at $398.45. ATUS  last traded at $30.95.

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