Watch Shenandoah on possible wireless merger

Shenandoah would be ‘biggest winner’ in wireless merger

 

Shenandoah would be 'biggest winner' in wireless merger. See Stockwinners.com Market Radar for details

After CNBC’s David Faber reported that T-Mobile (TMUS) and Sprint (S) are in “active” talks about a possible merger, Drexel Hamilton analyst Barry Sine called Shenandoah Telecommunications (SHEN) potentially the “biggest winner” if such a deal comes to pass.

Shenandoah Telecommunications Company, also known as Shentel, provides regulated and unregulated telecommunications services to end-user customers and other telecommunications providers in Virginia, West Virginia, central Pennsylvania, western Maryland, and portions of Kentucky and Ohio. It offers a suite of voice, video, and data communications services. The company operates in three segments: Wireless, Cable, and Wireline.

If T-Mobile bought Sprint, it would have to decide whether to acquire Shenandoah at fair market value, shut down its network and retail stores in Shentel’s area within two years or to sell the T-Mobile customers and network to Shentel at a discount, which #Sine sees as the option the company would most likely choose given its integration challenges.

Note that insiders have recently been buying shares of Shenandoah. There have been multiple insider buys in recent weeks, all at or below $36.

The analyst, who foresees significant acceleration in Shenandoah’s results in coming quarters even without a Sprint merger deal, keeps a Buy rating on the shares, which are up 3.1% to $36.75  in Tuesday’s trading. The stock (SHEN) has a 52-weeks trading range of $22.05 – $37.90.


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Rite Aid to sell 1,932 stores, assets for $4.375B

Rite Aid secures clearance to sell 1,932 stores, assets for $4.375B to Walgreens Boots Alliance

 Rite Aid secures clearance to sell 1,932 stores, assets for $4.375B to Walgreens.  See Stockwinners.com Market Radar for details

Rite Aid Corporation (RAD) announced that it has secured regulatory clearance for an amended and restated asset purchase agreement with Walgreens Boots Alliance (WBA) whereby WBA will purchase 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375B on a cash-free, debt-free basis.

Rite Aid also has the option to purchase generic drugs that are sourced through an affiliate of WBA at a cost substantially equivalent to Walgreens for a period of 10 years.

The Hart-Scott-Rodino waiting period expired for the proposed transaction.

Under the amended and restated agreement, Rite Aid will retain approximately 250 additional stores as compared to the prior agreement announced between Rite Aid and WBA in June 2017, resulting in a reduction in the transaction sale price.

The decision to retain these stores follows discussions between Rite Aid and WBA, as well as the U.S. Federal Trade Commission.

The 1,932 stores included in the amended agreement are primarily located in the Northeast and Southern regions of the United States. The three distribution centers are located in Dayville, Conn., Philadelphia and Spartanburg, S.C. Under the terms of the amended agreement, Rite Aid will provide certain transition services to WBA for up to three years after the closing of the transaction.

The transaction has been approved by the Boards of Directors of Rite Aid and WBA and is still subject to other customary conditions.

Approval of the transaction does not require a shareholder vote. Rite Aid and WBA expect to transfer ownership of the stores in phases beginning in October 2017, with the goal of completing the transfer of all stores in spring of 2018.

Rite Aid expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness which will improve the company’s leverage levels.

Rite Aid also expects that the gain it will record on the sale of the assets will be largely offset by its net operating loss carryforwards, resulting in a minimal cash tax payment on this transaction.

Immediately following the completion of the transaction, Rite Aid will continue to operate approximately 2,600 stores and six distribution centers as well as EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog.

The company will leverage the capabilities of these subsidiaries to deliver a higher level of care in the communities it serves.


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Activision is in focus

Activision Blizzard says Destiny hits record day-one sales for PlayStation Store

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Bungie and Activision Publishing, a wholly owned subsidiary of Activision Blizzard (ATVI), delivered the world-renowned, first-person action game, Destiny 2, to players across the globe on September 6 on PlayStation 4 systems with additional, timed exclusive content, and Xbox One.

The original Destiny became the biggest new console video game franchise launch in history, and Destiny 2 surpassed the original’s records for engagement and digital sales in launch week.

This universe will welcome players in on a new platform next month for the first time on PC.

Destiny 2 PC is available for pre-order now and is coming October 24 at retail and as the first non-Blizzard game to be offered digitally via Battle.net, Blizzard Entertainment’s online gaming service.

“With franchise pre-order records broken, and record day-one performance on PlayStation Store, it’s exciting to see engagement at the highest ever week-one concurrency for the franchise.

Destiny 2 is off to a strong start as the #1 console gaming launch week of the year to date,” said Activision CEO Eric #Hirshberg.

“With the PC version yet to ship, Destiny 2 sets the stage for being one of the biggest video game entertainment events of the year.”

#Destiny2 is rated T for Teen by the ESRB and is available at a suggested retail price of $59.99.


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Kirby Goes Shopping!

Kirby acquires Stewart & Stevenson for $756.5M

Kirby acquires Stewart & Stevenson for $756.5M. See Stockwinners.com Market Radar for details

Kirby (KEX) closed the acquisition of substantially all of the assets and businesses of Stewart & Stevenson for approximately $756.5M, before post-closing adjustments. The purchase was funded with 5.7 million shares of Kirby common stock valued at $366.6M and $377.0M in cash through Kirby’s revolving credit facility, as well as assumed debt of $12.9M.

The company expects the transaction to be 2c-4c per share accretive to Q4 EPS. The full benefit from the earnings contribution is likely to be partially offset in the quarter by one-time integration and transaction-related expenses. Kirby will include a more definitive earnings assessment of Stewart & Stevenson in its 2018 full year guidance on its Q4 earnings call in January.

Kirby Corporation operates domestic tank barges in the United States. The company’s Marine Transportation segment provides marine transportation services and towing vessels transporting bulk liquid products, as well as operates tank barges throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along three United States coasts, and in Alaska and Hawaii.

Kirby acquires Stewart & Stevenson for $756.5M. See Stockwinners.com for details

Stewart & Stevenson, founded in 1902, is a manufacturer and distributor of products and services for the oil and gas, marine, construction, power generation, transportation, mining and agricultural industries. The company serves domestic and global markets with equipment, rental solutions, parts, and service through a strategic network of sales and service centers in domestic and international locations.

HURRICANE  IMPACT

Kirby announced that Hurricanes Harvey and Irma caused little damage to Kirby vessels and minor flooding to one facility.

CEO Grzebinski stated, “Harvey has significantly dislocated normal supply and distribution routes in our inland barge business. Ports from Corpus Christi to Houston started closing on August 23rd, and began reopening on September 1st.

Irma has also significantly disrupted our offshore business. We expect lost revenues and costs associated with recovery efforts for both hurricanes to impact Q3 EPS by 6c-8c per share.

For Harvey, the lost revenues have been partially offset by an increase in our vessel utilization as the U.S. Gulf Coast petrochemical and refinery complex returns to normal operations.

As such, we believe Q3 earnings results will fall within our previously provided guidance range, although towards the low end after the negative impact from the storms.” The company had seen Q3 EPS of 40c-55c, consensus is 48c.

PRICE ACTION

KEX has a 52-weeks trading range of $55.09 – $74.50. Shares last traded at $64.33.


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Integra LifeSciences Sold for $47M

Natus Medical to acquire Integra LifeSciences for $47M in cash 

Natus Medical to acquire Integra LifeSciences for $47M in cash. See Stockwinners.com for details

Natus Medical (BABY) announced that it has entered into a definitive agreement with Integra LifeSciences (IART) under which Natus will acquire certain neurosurgery business assets from Integra LifeSciences in an all cash transaction for $47.5M.

With current annual revenue of approximately $50M, the acquisition marks Natus’ entry into the $2B global neurosurgery market.

The divestiture by Integra is contingent on the consummation of Integra’s proposed acquisition of Codman Neurosurgery.

As part of the transaction, Natus will acquire the global Camino ICP monitoring product line, including its San Diego manufacturing facility, from Integra.

The sale also includes the U.S. rights relating to Integra’s fixed pressure shunts, as well as U.S. rights to Codman’s DURAFORM dural graft implant, standard EVD catheters and CSF collection systems.

Integra is divesting these assets in connection with the review by the Federal Trade Commission of Integra’s proposed acquisition of Johnson & Johnson’s Codman Neurosurgery assets. Both the divestiture and the pending acquisition of Codman Neurosurgery remain subject to final regulatory approvals and satisfaction of other customary closing conditions.

Both transactions are expected to close in October 2017 after securing regulatory clearance. Natus will use cash on hand and available from its credit facility to fund the acquisition.


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Richmont Mines Sold for $770 Million

Alamos Gold to acquire Richmont Mines in deal with equity value of $770M

Alamos Gold to acquire Richmont Mines in deal with equity value of $770M. See Stockwinners.com for details

Alamos Gold (AGI) and Richmont Mines (RIC) are announced that they have entered into a definitive agreement whereby Alamos will acquire all of the issued and outstanding shares of Richmont pursuant to a plan of arrangement, further enhancing Alamos’ position as a leading intermediate gold producer.

Under the terms of the Agreement, all of the Richmont issued and outstanding common shares will be exchanged on the basis of 1.385 Alamos common shares for each Richmont common share.

The Exchange Ratio implies consideration of C$14.20 per Richmont common share, based on the closing price of Alamos common shares on the Toronto Stock Exchange on September 8.

This represents a 22% premium to Richmont’s closing price and a 32% premium based on both companies’ 20-day volume-weighted average prices, both as at September 8 on the TSX.

This implies a total equity value of approximately $770M on a fully diluted in-the-money basis and an enterprise value of $683M.

Upon completion of the Transaction, existing Alamos and Richmont shareholders will own approximately 77% and 23% of the pro forma company, respectively.

Concurrent with the announcement of the Transaction, Richmont announced the sale of the Beaufor Mine, the Camflo Mill and the Wasamac development project located in Quebec. Further details regarding the sale of the Quebec Assets can be found in the Richmont press release dated September 11.

The sale of the Quebec Assets is the culmination of a strategic review process that Richmont publicly disclosed in Q1. The sale is expected to close on, or about, September 29 and is not a condition to the Transaction.

The Agreement has been unanimously approved by the boards of Alamos and Richmont, and each board recommends that their respective shareholders vote in favor of the Transaction.


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Multi-Shot Sold for $215 Million

Patterson-UTI to acquire Multi-Shot in cash and stock deal

Patterson-UTI to acquire Multi-Shot in cash and stock deal. See Stockwinners.com for details

Patterson-UTI  (PTEN) announced that it has entered into an agreement to acquire Multi-Shot, LLC d/b/a MS Energy Services, on a debt-free basis for total consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash.

Based in Conroe, Texas, MS Energy is a leading directional drilling services company in the United States. The pending transaction, which is expected to close early in the fourth quarter, is subject to customary closing conditions and receipt of required third party consents, and is subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Act.

Under the terms of the transaction, Patterson-UTI will acquire all of the issued and outstanding limited liability company interests of MS Energy for consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash. In connection with this transaction, Patterson-UTI expects to acquire approximately $30M of non-cash working capital.

The transaction values MS Energy at approximately $215M, based on the most recent closing price of Patterson-UTI common stock of $15.94. Patterson-UTI will fund the $75M cash consideration using cash on hand and the Company’s revolving line of credit.

The cash consideration paid to the sellers will be used to cover transaction expenses and repay the outstanding debt at MS Energy, and as such, Patterson-UTI will not assume any debt of MS Energy.


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Rockwell Collins Sold for $30 billion

United Technologies Corp. to buy Rockwell Collins for $140 a share

Rockwell Collins Could Be Sold for $145 a share. See Stockwinners.com Market Radar

The Dow Jones Industrial Average component, United Technologies Corp. (UTX) to buy Rockwell Collins Inc.  (COL) for about $23 billion, to create an aerospace behemoth that can outfit warplanes and jetliners from tip to tail.

The transaction creates an aircraft-parts giant better positioned to withstand the squeeze from planemakers Boeing Co. and Airbus SE for pricing discounts and higher output.

Under the terms of the agreement, each Rockwell Collins share owner will receive $93.33 per share in cash and $46.67 in shares of United Technologies common stock, subject to a 7.5% collar centered on United Technologies’ August 22, 2017 closing share price of $115.69.

United Technologies expects to fund the cash portion of the transaction consideration through debt issuances and cash on hand, and the company is committed to taking actions to maintain strong investment grade credit ratings.

The transaction is projected to close by Q3 of 2018, subject to approval by Rockwell Collins’ share owners, as well as other customary closing conditions, including the receipt of required regulatory approvals. The purchase price implies a total equity value of $23B and a total transaction value of $30B, including Rockwell Collins’ net debt.

The combined company will boast a broad suite of products for commercial aircraft, from Rockwell Collins’s touchscreen cockpit displays to jet engines made by the Pratt & Whitney division of United Technologies.

United Technologies said it will combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems. Rockwell Collins Chief Executive Officer Kelly Ortberg will head the division, while Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.

United Technologies is increasing its bet on aerospace, where it has stumbled recently with the rocky rollout of a new jet engine that cost $10 billion to develop. The market accounts for about half of sales at the company, with the rest coming from elevators, air conditioners and other building systems.

Rockwell Collins is already absorbing the largest acquisition in its history. The company earlier this year closed the acquisition of B/E Aerospace, adding deluxe jetliner seats, lavatories and galley equipment to a lineup of high-technology avionics products.

COL closed at $130.61.

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T-Cell Stocks in Focus after FDA Approves First Gene Therapy

FDA gives Novartis first gene therapy in U.S. with Kymriah approval

nvs

The FDA said it issued a “historic action today making the first gene therapy available in the United States, ushering in a new approach to the treatment of cancer and other serious and life-threatening diseases.”

The FDA approved #Kymriah for certain pediatric and young adult patients with a form of acute lymphoblastic leukemia (ALL).

Kymriah, a cell-based gene therapy, is approved in the United States for the treatment of patients up to 25 years of age with B-cell precursor ALL. ALL is a cancer of the bone marrow and blood, in which the body makes abnormal lymphocytes. The disease progresses quickly and is the most common childhood cancer in the U.S.

Kymriah is a genetically-modified autologous T-cell immunotherapy. Each dose of Kymriah is a customized treatment created using an individual patient’s own T-cells, a type of white blood cell known as a lymphocyte. The patient’s T-cells are collected and sent to a manufacturing center where they are genetically modified to include a new gene that contains a specific protein (a chimeric antigen receptor or CAR) that directs the T-cells to target and kill #leukemia cells that have a specific antigen (CD19) on the surface. Once the cells are modified, they are infused back into the patient to kill the cancer cells.

[youtube https://www.youtube.com/watch?v=7nCvItKbEns?rel=0&controls=0&w=560&h=315]

The agency added, “Treatment with Kymriah has the potential to cause severe side effects. It carries a boxed warning for cytokine release syndrome (CRS), which is a systemic response to the activation and proliferation of CAR T-cells causing high fever and flu-like symptoms, and for neurological events.”

The FDA granted approval of Kymriah to Novartis (NVS).

WHAT TO NOTE

On Monday, Gilead Sciences (GILD) and Kite Pharma (KITE) announced that the companies have entered into a definitive agreement pursuant to which Gilead will acquire Kite for $180.00 per share in cash.

Kite Pharma’s lead product candidate is KTE-C19, a chimeric antigen receptor (CAR)-based therapy that is in Phase 2 clinical trials for patients with relapsed or refractory aggressive diffuse large B cell lymphoma, primary mediastinal B cell lymphoma, and transformed follicular lymphoma. This is similar to what Novartis received approval for but for adults.

[youtube https://www.youtube.com/watch?v=qOusvjjc_Q0?rel=0&controls=0&w=560&h=315]

Other stocks in this space include Juno Therapeutics (JUNO), Novartis, and Gilead (GILD) since it now owns Kite Pharma (KITE).

NOVARTIS   STATEMENT

Kymriah will be manufactured for each individual patient using their own cells at the Novartis Morris Plains, New Jersey facility.

Novartis also announced what it calls “a novel collaboration” with the United States Centers for Medicare and Medicaid Services “focused on improving efficiencies in current regulatory requirements in order to deliver value-based care and ensure access for this specific patient population.”

This approach is intended to include indication-based pricing for medicines and supports payments for a medicine, such as Kymriah for its initial indication, based on the clinical outcomes achieved, which would eliminate inefficiencies from the healthcare system. Other value-based approaches related to future indications for Kymriah and CAR-T cell therapies are under discussion. Furthermore, Novartis is collaborating with CMS to make an outcomes-based approach available to allow for payment only when pediatric and young adult ALL patients respond to Kymriah by the end of the first month.

Future potential indications would be reviewed for the most relevant outcomes-based approach.

STICKER  SHOCK

Bloomberg reports that Novartis sets price of Kymriah at $475,000 per treatment.


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IXYS Sold for $750 Million

Littelfuse to acquire IXYS in cash and stock transaction

IXYS Sold for $750 Million. See Stockwinners.com Market Radar for details

Littelfuse (LFUS) and IXYS (IXYS) announced that they have entered into a definitive agreement under which Littelfuse will acquire all of the outstanding shares of IXYS in a cash and stock transaction.

The transaction represents an equity value of approximately $750M and enterprise value of $655M. Under the terms of the agreement, each IXYS stockholder will be entitled to elect to receive, per IXYS share, either $23.00 in cash or 0.1265 of a share of Littelfuse common stock, subject to proration.

In total, 50% of IXYS stock will be converted into the cash election option and 50% into the stock election option.

IXYS is a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power control semiconductors across the industrial, communications, consumer and medical markets.

IXYS has a broad customer base, serving more than 3,500 customers through its direct salesforce and global distribution partners.

IXYS reported revenues of $322M in its fiscal 2017 with an adjusted EBITDA margin of approximately 13.5%.

The transaction is expected to be immediately accretive to Littelfuse’s adjusted earnings per share and free cash flow in the first full year post transaction close, excluding any acquisition and integration related costs.

Littelfuse expects to achieve more than $30 million of annualized cost savings within the first two years after closing the transaction.

Longer term, the combination is also expected to create significant revenue synergy opportunities given the companies’ complementary offerings, as well as benefits from future tax rate reduction.

In conjunction with the definitive agreement, Dr. Nathan Zommer, IXYS founder and currently the company’s largest stockholder with approximately 21% ownership, has entered into a voting and support agreement.

Subject to the agreement’s terms and conditions, he has agreed to vote his shares in favor of the transaction.

After close of the transaction, Dr. Zommer is expected to join Littelfuse’s Board of Directors, subject to the board’s governance and approval process. His technical skills and extensive experience across the semiconductor industry will benefit the combined company with its integration efforts, innovation roadmap and revenue expansion.

The transaction is expected to close in the first calendar quarter of 2018 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by IXYS stockholders.

Littelfuse expects to finance the cash portion of the transaction consideration through a combination of existing cash and additional debt.


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Ironwood Receives FDA Approval of Duzallo

Ironwood receives FDA approval of DUZALLO

Ironwood Receives FDA Approval of Duzallo. See Stockwinners.com Market Radar for more

Ironwood Pharmaceuticals (IRWD) announced DUZALLO was approved by the U.S. Food and Drug Administration as a once-daily oral treatment for hyperuricemia associated with gout in patients who have not achieved target serum uric acid levels with a medically appropriate daily dose of allopurinol alone.

DUZALLO is not recommended for the treatment of asymptomatic hyperuricemia.

Ironwood expects DUZALLO to be commercially available early in Q4.

DUZALLO is the first drug that combines the current standard of care for the treatment of hyperuricemia associated with gout, allopurinol, with the most recent FDA-approved treatment for this condition, lesinurad.

This fixed-dose combination provides a dual mechanism of action in a single tablet that can address both underlying causes of hyperuricemia – overproduction and underexcretion of serum uric acid.

The FDA approval of DUZALLO was based on the clinical program supporting the ZURAMPIC new drug application and a pharmacokinetic study that evaluated the bioequivalence of the fixed-dose combination of lesinurad and allopurinol compared to co-administration of separate lesinurad and allopurinol tablets.

The efficacy and safety of lesinurad plus allopurinol were demonstrated in two pivotal Phase III clinical trials, CLEAR 1 and CLEAR 2, which supported the ZURAMPIC NDA. In clinical trials of adult patients with gout who failed to achieve target sUA levels on allopurinol alone, lesinurad in combination with allopurinol nearly doubled the number of patients who achieved sUA target of less than6 mg/dL at month 6, reduced the mean sUA level to less than6 mg/dL by month 1 and maintained that level through month 12.

The most common adverse reactions in clinical trials were headache, influenza, higher levels of blood creatinine, and heartburn. DUZALLO has a boxed warning regarding the risk of acute renal failure.


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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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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.