Bristol-Myers comments on Celgene’s purchase

Bristol-Myers sees ‘meaningful financial benefits’ from Celgene transaction.

Bristol-Myers treatment for colorectal cancer approved, Stockwinners

Bristol Meyers Comments on Celgene purchase, Stockwinners

Bristol-Myers Squibb (BMY) said an updated its investor presentation about the Celgene (CELG) transaction.

The company said, “The Celgene transaction is the natural next step in Bristol-Myers Squibb’s proven strategy that has consistently delivered results for over a decade.

Through a disciplined approach to driving innovation, focusing on high-value opportunities and sourcing innovation externally to complement its internal portfolio and pipeline, Bristol-Myers Squibb has generated consistently strong growth and increased its dividend for 10 consecutive years.

The combination with Celgene will create a leading biopharma with increased scale, while maintaining the same agility and a focus on delivering for patients in core disease areas of high-unmet medical need.

The pipeline of the combined company provides significant near-, medium- and long-term opportunities for value creation. Bristol-Myers Squibb is acquiring Celgene’s robust and complementary pipeline at an attractive price.

In addition to six expected near-term product launches representing more than $15B in revenue potential, the combination will greatly increase Bristol-Myers Squibb’s Phase I and II assets, which will provide the next set of registrational opportunities in core therapeutic areas.

With an expanded set of scientific platforms and research capabilities, Bristol-Myers Squibb will be well positioned to discover and develop highly innovative medicines and accelerate these new options to patients through one of the highest-performing commercial organizations in the industry.

Bristol-Myers Squibb is well positioned for 2025 and beyond with continued leadership across Oncology and a diversified portfolio of assets.

The combined company will have a broad, balanced and earlier life-cycle marketed portfolio with a significantly higher number of opportunities across multiple diseases to drive the growth of Bristol-Myers Squibb in the second half of the decade. These opportunities will support financial strength for continued investment and innovation.

The Celgene transaction is expected to generate meaningful financial benefits for all stockholders.

With more than $45B of expected free cash flow generation over the first three full years post-closing, the combination will enable rapid debt reduction to de-lever the balance sheet and strengthen Bristol-Myers Squibb’s credit profile.

Bristol-Myers Squibb expects to realize run-rate cost synergies of approximately $2.5B by 2022 from the combination, and the combined company is expected to grow revenue and EPS every year through 2025.”

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.

Merck reports positive results of its renal cell carcinoma drug

Merck presents results from Phase 3 KEYNOTE-426 study

Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners
Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners

Merck (MRK) announced presentation of the full results from the pivotal Phase 3 KEYNOTE-426 trial investigating KEYTRUDA, Merck’s anti-PD-1 therapy, in combination with Pfizer’s (PFE) Inlyta, a tyrosine kinase inhibitor, for the first-line treatment of advanced renal cell carcinoma at the 2019 Genitourinary Cancers Symposium.

Merck's anti-PD-1 therapy works in combination with Pfizer's (PFE) Inlyta, Stockwinners

Merck’s anti-PD-1 therapy works in combination with Pfizer’s (PFE) Inlyta

This is the first combination regimen to significantly improve overall survival, progression-free survival and objective response rate compared to sunitinib.

Results were consistent across all IMDC subgroups, including favorable, intermediate and poor risk groups, and regardless of PD-L1 expression.

As previously announced, the U.S. Food and Drug Administration has granted priority review for a supplemental Biologics License Application for #KEYTRUDA in combination with axitinib for the first-line treatment of patients with advanced RCC based on the results of KEYNOTE-426, and has set a Prescription Drug User Fee Act, or target action, date of June 20, 2019.

Findings from the first interim analysis showed KEYTRUDA in combination with axitinib reduced the risk of death by 47% – significantly improving OS compared to sunitinib.

For the dual primary endpoint of PFS, the KEYTRUDA combination showed a reduction in the risk of progression of disease or death of 31% compared to sunitinib.

In the study, the ORR was 59.3% for patients who received KEYTRUDA in combination with axitinib and 35.7% for those who received sunitinib, with a complete response rate of 5.8% and 1.9% and a partial response rate of 53.5% and 33.8%, for patients receiving the KEYTRUDA combination or sunitinib, respectively.

Median duration of response was not reached in the KEYTRUDA combination arm and was 15.2 months in the sunitinib arm. The results for OS, PFS and ORR were consistent across all IMDC risk groups and seen regardless of PD-L1 expression.

The observed adverse event profile was as expected based on the known profiles of KEYTRUDA and axitinib.

There was a higher incidence of grade 3 or 4 liver enzyme elevation with KEYTRUDA plus axitinib than previously observed with each agent as monotherapy.

Merck has filed these data with regulatory authorities worldwide.

Merck has an extensive clinical development program in RCC and is advancing multiple potential registration-enabling studies with KEYTRUDA, as monotherapy and in combination with other treatments, including KEYNOTE-564 and KEYNOTE-581.

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.

Levi’s coming to NYSE

Levi Strauss & Co. said in a regulatory filing that it intends to seek listing on the New York Stock Exchange under the symbol “LEVI” via an initial public offering.

Levis coming to NYSE – Stockwinners.com

“Today we design, market and sell products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under our Levi’s, Dockers, Signature by Levi Strauss & Co. and Denizen brands.

With $5.6 billion in net revenues and sales in more than 110 countries in fiscal year 2018, we are one of the world’s leading apparel companies, with the Levi’s brand having the highest brand awareness in the denim bottoms category globally,” the company disclosed.

The underwriters on the deal include Goldman Sachs, J.P. Morgan, Morgan Stanley, Evercore, BNP Paribas, Citigroup, Guggenheim, HSBC, Drexel Hamilton, Telsey Advisory and The Williams Capital Group.


Levi Strauss was founded in May 1853  when German immigrant Levi Strauss came from Bavaria, to San Francisco, California to open a west coast branch of his brothers’ New York dry goods business. 

Levi Strauss & Co. introduces its first bicycle pants in 1895. It took another 116 years for the company to come out with Levi’s® Commuter, a multi-functional performance product designed for the modern cyclist. When Levi Strauss passes away in September, his four nephews take over the business and carry out his numerous bequests to Bay Area charities serving children and the poor. On April 18, The San Francisco earthquake and fire destroy the headquarters and two factories of Levi Strauss & Co.

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.

Tribune Media sold for $6.4 billion

Nexstar to acquire Tribune Media for $46.50 per share

Nexstar agrees to acquire Tribune Media, Stockwinners
Nexstar agrees to acquire Tribune Media, Stockwinners

Nexstar Media Group (NXST) and Tribune Media (TRCO) announced that they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4B including the assumption of Tribune Media’s outstanding debt.
The transaction reflects a 15.5% premium for Tribune Media shareholders based on its closing price on November 30, 2018, and a 45% premium to Tribune Media’s closing price on July 16, 2018, the day the FCC Chairman issued a public statement regarding his intention to circulate a Hearing Designation Order for Tribune Media’s previously announced transaction with a third party.
Tribune Media shareholders will be entitled to additional cash consideration of approximately 30c per month if the transaction has not closed by August 31, 2019, pro-rated for partial months and less an adjustment for any dividends declared on or after September 1, 2019.
The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.
Upon closing, the transaction is expected to be immediately accretive to Nexstar’s operating results inclusive of expected operating synergies of approximately $160M in the first year following the completion of the transaction and planned divestitures.
The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank. Completion of the transaction is subject to approval by Tribune’s shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions.

Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.


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.

 

 


EQGP Holdings sold for $20.00 per share

Equitrans Midstream to acquire EQGP Holdings for $20.00 per unit in cash

Equitrans Midstream Corporation (ETRN) announced that it has entered into definitive purchase agreements with certain unitholders of EQGP Holdings (EQGP) to acquire limited partner interests in EQGP for $20.00 per unit in cash, which is a 17.5% premium to the EQGP closing market price as of November 29, 2018.

The Private Purchases are expected to close on or about December 31, 2018, after which ETRN and its affiliates will own more than 95% of the outstanding EQGP Common Units. Upon closing of the Private Purchases, ETRN intends to exercise the Limited Call Right under EQGP’s partnership agreement to acquire all remaining EQGP Common Units not then owned by ETRN and its affiliates.

If the Limited Call Right is exercised, the remaining holders of EQGP Common Units will receive at least the same cash price per unit that will be paid in the Private Purchases.

The Limited Call Right is expected to close in January 2019 and will be a taxable transaction for EQGP unitholders.

ETRN intends to use the cash proceeds from a newly issued Term Loan B to finance the Private Purchases and the purchases pursuant to the Limited Call Right.

ETRN has secured committed financing in support of these purchases. ETRN also announced that it has made a proposal to EQM Midstream Partners (EQM) for the exchange of its incentive distribution rights and the economic general partner interest in EQM for 95 million units in EQM and a non-economic general partner interest in EQM, subject to the closing of the Private Purchases and completion of the Limited Call Right.

ETRN expects that a portion of the units received will be in the form of Payment-In-Kind Units.

The PIK Units would receive distributions in the form of additional PIK Units and would convert on a one-to-one basis into common units representing limited partner interests in EQM at a date to be determined.

Final terms of the Proposed IDR Transaction are subject to negotiation with the board of directors of EQM’s general partner or its conflicts committee, and assuming an agreement is reached, ETRN expects that the Proposed IDR Transaction would close in the first quarter of 2019.

Upon completion of the Private Purchases, the Limited Call Right, and the Proposed IDR Transaction, ETRN will have accomplished a full simplification of EQGP and EQM, resulting in a projected 61% ownership of EQM.

Additionally, EQM will be the only publicly traded partnership under ETRN and is expected to benefit from the elimination of the IDR burden, as well as stronger coverage and balance sheet metrics.

Highlights: The proposed transactions would not result in a distribution cut for EQM unitholders; Targeting 6% – 8% annual distribution growth beginning in 2019; 2019 distribution coverage in excess of 1.0x; Long-term distribution coverage target in excess of 1.2x beginning in 2020; Long-term debt to EBITDA target of 3.5x – 4.0x beginning in 2020; PIK Units will provide balance sheet and coverage support; Improves cost of capital; No equity issuance is required to fund capital projects for the next several years; Reduces corporate overhead associated with the elimination of a publicly traded entity.

ETRN expects that the EQM Conflicts Committee will review the Proposed IDR Transaction. Unitholder voting is not required in connection with the Private Purchases, the exercise of the Limited Call Right, or the Proposed IDR Transaction.


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.

Altria to buy stake in Juul Labs

Altria, under pressure from FDA, said in talks to buy stake in Juul Labs

 

Altria to buy stake in Juul Labs, Stockwinners
Altria to buy stake in Juul Labs, Stockwinners

Following a report that Altria Group (MO) is in talks to take a “significant” stake in Juul Labs, an analyst said that an agreement could make strategic sense for the tobacco giant to gain exposure to a fast-growing product that poses a threat to its cigarette business.

The Wall Street Journal said Altria is in talks to take a “significant” minority interest in Juul Labs, a controversial e-cigarette startup.

According to people familiar with the matter, any deal is likely several weeks away. Juul was last valued at $16B in a private fundraising round this summer.

Altria has an agreement with Philip Morris (PM) to market IQOS, subject to regulatory approval. Philip Morris is already selling it in 43 countries and has said it could get approved for the U.S. by the end of the year.

Juul has drawn criticism over its products’ popularity with teens.

Juul, whose products are sold online and in convenience stores, gas stations and vape shops, accounted for about three-quarters of the U.S. e-cigarette market in the four-week period ended November 17, according to the Wells Fargo analysis of Nielsen data.

Earlier this month, the U.S. Food and Drug Administration announced plans to place restrictions on sales of flavored e-cigarettes.

Juul also said it would restrict sales of nearly all its flavored pods to the internet, and stop most social media promotion to combat youth vaping.

“More than 99% of all social media content related to JUUL Labs is generated through third-party users and accounts with no affiliation to our company. Nevertheless, we understand that many young people get their information from social media. To remove ourselves entirely from participation in the social conversation, we have decided to shut down our U.S.-based social media accounts on Facebook (FB) and Instagram. We have never used Snapchat (SNAP),” the company stated.

WHAT’S NOTABLE

Following the FDA statement on the agency’s proposed steps against underage smoking, Altria General Counsel Murray Garnick said it “welcomed” the FDA’s efforts to address the underage use of e-vapor products and said it believes Congress should raise the legal age of purchase for all tobacco products to 21.

Last month, Altria said it would pull its pod-based e-vapor products from the market until approved by FDA.

The company said Nu Mark will remove MarkTen Elite and Apex by MarkTen pod-based products from the market “until these products receive a market order from the FDA or the youth issue is otherwise addressed,” and that for the remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties.

Nu Mark will discontinue the sale of all other flavor variants of our cig-a-like products until these products receive a market order from the FDA.

The FDA is also pursuing a ban on menthol cigarettes, which could remove nearly a third of the roughly 250B cigarettes sold annually in the U.S., The Wall Street Journal said.

A rule could take a year or more to finalize, the FDA said. The FDA concluded in 2013 that menthols are harder to quit and likely pose a greater health risk than regular cigarettes.

ANALYST COMMENTARY

Morgan Stanley analyst Pamela Kaufman said she has no knowledge of a potential deal between Altria and Juul but that taking such a stake could make strategic sense for Altria to gain exposure to a fast growing product that poses a threat to its cigarette business.

Altria does not have a robust reduced risk product portfolio and Juul’s e-cigs could significantly enhance its competitive position, stated Kaufman, who also believes Altria would likely be buying in at a lower valuation than the previously reported $15B given the FDA recently prohibited flavored pods sales in convenience stores.

 OTHERS TO WATCH

Publicly traded companies in the tobacco products space also include Philip Morris and British American Tobacco (BTI).


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.

Finisar sold for $3.2 billion

II-VI to acquire Finisar for $26 per share in cash/stock deal

Finisar sold for $3.2 billion, Stockwinners
Finisar sold for $3.2 billion, Stockwinners

II-VI (IIVI) and Finisar (FNSR) announced that they have entered into a definitive merger agreement under which II-VI will acquire Finisar in a cash and stock transaction with an equity value of approximately $3.2B.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, Finisar’s stockholders will receive, on a pro-rated basis, $15.60 per share in cash and 0.2218x shares of II-VI common stock, valued at $10.40 per share based on the closing price of II-VI’s common stock of $46.88 on November 8, 2018.

The transaction values Finisar at $26.00 per share, or approximately $3.2B in equity value and represents a premium of 37.7% to Finisar’s closing price on November 8, 2018. Finisar shareholders would own approximately 31% of the combined company.

The combination of II-VI and Finisar would unite two innovative, industry leaders with complementary capabilities and cultures to form a formidable industry leading photonics and compound semiconductor company capable of serving the broad set of fast growing markets of communications, consumer electronics, military, industrial processing lasers, automotive semiconductor equipment and life sciences.

Together, II-VI and Finisar will employ over 24,000 associates in 70 locations worldwide upon closing of the transaction. On a pro forma basis, the combined company had approximately $2.5B of annual revenue.

The combined broad base of talent, technology and manufacturing is expected to enhance the ability to better address near-to medium-term opportunities and accelerate revenue growth.

The combined company expects to realize $150M of run-rate cost synergies within 36 months of closing. Synergies are expected to be achieved from procurement savings, internal supply of materials and components, efficient research and development, consolidation of overlapping costs and sales and marketing efficiencies.

The transaction is expected to drive accretion in Non-GAAP earnings per share for the first full year post close of approximately 10% and more than double that thereafter.

II-VI intends to fund the cash consideration with a combination of cash on hand from the combined companies’ balance sheets and $2 billion in funded debt financing.

The transaction is expected to close in the middle of calendar year 2019, subject to approval by each company’s shareholders, antitrust regulatory approvals and other customary closing conditions.Upon closing of the transaction, Dr. Mattera will continue to serve as President and CEO of the combined company.

In addition, in connection with the closing of the transaction, three Finisar board members will be appointed to the II-VI board, which will be expanded to 11 directors.


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.

LSC Communications sold for $1.4 billion

Quad/Graphics to acquire LSC Communications in all-stock deal valued at $1.4B

LSC Communications sold for $1.4 billion, Stockwinners
LSC Communications sold for $1.4 billion, Stockwinners

Quad/Graphics (QUAD) and LSC Communications (LKSD) announced that their boards of directors have approved a definitive agreement whereby Quad will acquire LSC Communications in an all-stock transaction valued at approximately $1.4B, including the refinancing of LSC Communications’ debt.

As of September 30, 2018, the combined company would have had annual revenue of approximately $8B.

The deal is expected to close in mid-2019, and be accretive to earnings, excluding non-recurring integration costs.

Net synergies are expected to be approximately $135M, and will be achieved in less than two years and result in substantial additional Free Cash Flow generation.

Under the terms of the agreement, LSC Communications shareholders will receive 0.625 shares of Quad Class A common stock for each LSC Communications share they own, representing approximately 29 percent total economic ownership of the combined company and approximately 11 percent of the vote of the combined company.

Based on the closing share prices of both companies on October 30, 2018, the merger consideration represents a premium of 34 percent to LSC Communications shareholders.

Quad shareholders will continue to own Class A and Class B shares, representing approximately 71 percent total economic ownership of the combined company and approximately 89 percent total voting power of the combined company.

The transaction supports Quad’s long-term strategic vision by preserving the Quadracci Family leadership and voting control in the company. Quad expects the transaction to be accretive to earnings, excluding non-recurring integration costs.

Net synergies are expected to be approximately $135 million, and will be achieved in less than two years, through the elimination of duplicative functions, capacity rationalization, greater operational efficiencies and greater efficiencies in supply chain management that will also benefit our clients.

Joel Quadracci will be Chairman, President and Chief Executive Officer of the combined company.

Quad will expand its board of directors to include two members from LSC Communications’ existing board.

The transaction is expected to close in mid-2019, subject to approval by Quad and LSC Communications shareholders, regulatory approval and other customary closing conditions.

The Quadracci Family Voting Trust, holder of approximately 64 percent of the voting power of Quad’s outstanding common stock, has entered into a voting agreement with LSC Communications pursuant to which it will vote in favor of the issuance of shares in connection with the transaction.


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.

Peoples Natural Gas sold for $4.28 billion

Aqua America to acquire Peoples in all-cash transaction for $4.28B

Peoples Natural Gas sold for $4.28 billion, Stockwinners
Peoples Natural Gas sold for $4.28 billion, Stockwinners

Aqua America (WTR) announced it will acquire Peoples in an all-cash transaction that reflects an enterprise value of $4.275B, which includes the assumption of approximately $1.3B of debt.

This acquisition marks the creation of a new infrastructure company that will be uniquely positioned to have a powerful impact on improving the nation’s infrastructure reliability, quality of life and economic prosperity.

Peoples consists of Peoples Natural Gas Company LLC, Peoples Gas Company LLC and Delta Natural Gas Company Inc.

The multi-platform entity brings together the second-largest U.S. water utility and fifth-largest U.S. stand-alone natural gas local distribution company and will serve 1.74 million customer connections, which represent approximately 5 million people.

In 2019, the new company will have approximately $10.8 billion in assets and a projected U.S. regulated rate base of over $7.2 billion.

The transaction is not expected to have any impact on rates.

The combined enterprise will be among the largest publicly traded water utilities and natural gas local distribution companies in the U.S., uniquely positioned to meaningfully contribute to the nation’s natural gas and water infrastructure reliability.

The transaction will bring together two companies that each have more than 130 years of service and proven track records of operational efficiency, complementary service territories and strong regulatory compliance.

Aqua will acquire Peoples from infrastructure funds managed by Sausalito, California-based SteelRiver Infrastructure Partners.

The resulting company will be well positioned to grow and generate shareholder value through increased scale, a balanced portfolio and stable capital structure.


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.

Coca-Cola to acquire Costa for $5.1B

Coca-Cola to acquire Costa in deal valued at $5.1B

Coca-Cola to acquire Costa for $5.1B, Stockwinners
Coca-Cola to acquire Costa for $5.1B, Stockwinners

Coca-Cola (KO) announced that it has reached a definitive agreement to acquire Costa Limited.

The acquisition of Costa from parent company Whitbread PLC is valued at $5.1B and will give Coca-Cola a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion.

Costa operations include a leading brand, nearly 4,000 retail outlets with highly trained baristas, a coffee vending operation, for-home coffee formats and Costa’s state-of-the-art roastery.

For Coca-Cola, the expected acquisition adds a scalable coffee platform with critical know-how and expertise in a fast-growing, on-trend category. Costa has a solid presence with Costa Express, which offers barista-quality coffee in a variety of on-the-go locations, including gas stations, movie theaters and travel hubs.

Costa, in various formats, has the potential for further expansion with customers across the Coca-Cola system. The acquisition will expand the existing Coca-Cola coffee lineup by adding another leading brand and platform. The portfolio already includes the market-leading Georgia brand in Japan, plus coffee products in many other countries.

The purchase price is approximately $5.1B.

Upon the closing, Coca-Cola will acquire all issued and outstanding shares of Costa Limited, a wholly owned subsidiary of Whitbread. This subsidiary contains all of the existing operating businesses of Costa.

Whitbread will be seeking shareholder approval for the transaction, which is expected to take place by mid-October.

The deal is subject to customary closing conditions, including antitrust approvals in the European Union and China.

It is expected to close in the first half of 2019. Coca-Cola expects the transaction to be slightly accretive in the first full year, not taking into account any impact from purchase accounting.

For FY18, Costa generated revenue and EBITDA of roughly $1.7B in revenue and $312M in EBITDA.

Because Coca-Cola expects the transaction to close in the first half of 2019, there is no change to 2018 guidance.

The company’s long-term targets also remain unchanged.


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.

Yum China receives takeover offer

Yum China rises after reportedly spurning $46 per share takeover bid

Yum China receives takeover offer, Stockwinners
Yum China receives takeover offer, Stockwinners

Shares of Yum China (YUMC) are on the rise following a media report saying the company has rejected a buyout offer of $46 per share made by a consortium led by Hillhouse Capital.

Earlier this month, Bloomberg had reported that China’s sovereign wealth fund, China Investment Corp., was part of the consortium bidding to take Yum China private.

BUYOUT OFFER REPORTEDLY REJECTED

Yum China has rejected a private buyout offer from a consortium of investors that valued the company at over $17B, according to The Wall Street Journal, citing a person familiar with the matter.

An investor group led by Hillhouse Capital Group in recent months offered to take the restaurant operator private at $46 per share, but the all-cash offer was turned down by the company’s board in recent weeks, source told the publication.

Last month, The Information had reported that Hillhouse Capital was in talks to acquire Yum China. The company operates over 8,000 KFC and Pizza Hut restaurants across mainland China.

A takeover led by Hillhouse would assist the company in accelerating its efforts to implement high-tech initiatives in its brick-and-mortar stores in order to attract Chinese millennials, the report pointed out.

CHINA INVESTMENT PART OF CONSORTIUM

Earlier this month, Bloomberg reported that China’s sovereign wealth fund, China Investment Corp., was part of the consortium bidding to take Yum China private.

The sovereign fund and DCP Capital, an investment fund run by former KKR (KKR) executives, are considering a buyout of Yum China, which runs KFC and Pizza Hut outlets, along with Hillhouse Capital, the publication added. Yum China spun off from Yum! Brands (YUM) in 2016.

PRICE ACTION

In tuesday’s trading, shares of Yum China trading in New York are off their earlier highs, but are trading up 3.8% to $37.14.


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.

Zoe’s Kitchen sold for $300 million

Zoe’s Kitchen to be acquired by CAVA Group for $12.75 per share

Zoe's Kitchen sold for $300 million, Stockwinners
Zoe’s Kitchen sold for $300 million, Stockwinners

Zoe’s Kitchen (ZOES) announced that it has entered into a definitive agreement to be acquired in a transaction by privately held Cava Group, fast-growing Mediterranean culinary brand with 66 restaurants.

The combined companies will have 327 restaurants in 24 states throughout the U.S. Under the terms of the agreement, Zoes Kitchen shareholders will receive $12.75 in cash for each share of common stock they hold.

This represents a premium of approximately 33% to Zoes Kitchen’s closing share price on August 16, 2018 and a premium of approximately 33% to Zoes Kitchen 30-day volume weighted average price ended on August 16, 2018, and an enterprise value of approximately $300M.

The acquisition of Zoes Kitchen will be financed through a significant equity investment in CAVA led by Act III Holdings, the investment vehicle created by Ron Shaich, founder, chairman, and former CEO of Panera Bread, and funds advised by The Invus Group, with participation from existing investors SWaN & Legend Venture Partners and Revolution Growth.

After closing, Brett Schulman, current CEO of CAVA, will serve as CEO of the combined company and will work closely with the existing leadership teams at Zoes Kitchen and CAVA to oversee their growth and evolution.

Ron Shaich will serve as Chairman of the combined company.

Consummation of the merger is subject to certain closing conditions, including the adoption of the merger agreement by the holders of a majority of the Company’s outstanding common stock, and the expiration or early termination of all applicable waiting periods under the HSR Act.

CAVA has agreed to pay to the Company a $17M termination fee if the merger agreement is terminated under certain circumstances and the merger does not occur.

The parties expect the merger to close in the fourth quarter of 2018.

Under the terms of the merger agreement, the Company is permitted to actively solicit, for a 35-day period, alternative acquisition proposals from potential buyer and business combination candidates.

There can be no assurance that any superior proposals will be received during this solicitation process or that any alternative transaction providing for a superior proposal will be consummated.

Except as may be required by law, the Company does not intend to disclose any developments with respect to such a solicitation process unless and until the Company’s board of directors determines that it has received a superior proposal. The Company would be required to pay to CAVA an $8.5M termination fee if the Company terminates the merger agreement to accept a superior proposal under certain circumstances. T

he Company’s Board of Directors has determined that the merger agreement with CAVA is fair to and in the best interests of the Company and the holders of the Company’s common stock.

Zoes Kitchen also announced that it will not hold its previously scheduled second quarter 2018 earnings conference call and web simulcast on the morning of Friday, August 17 and will not issue a press release with second quarter 2018 financial results.

The Company expects to file its quarterly report with second quarter 2018 financial results on or before August 20, 2018.


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.

Scotts Miracle-Gro dragged down by Bayer woes

Bayer drags Scotts Miracle-Gro down after Monsanto weed killer ruling

Scotts Miracle-Gro dragged down by Bayer woes, Stockwinners
Scotts Miracle-Gro dragged down by Bayer woes, Stockwinners

Shares of Bayer (BAYRY) trading in New York are sliding after the recently acquired Monsanto was ordered to pay $289M by a California court, who found it liable in a lawsuit alleging that the company’s Roundup caused cancer.

Commenting on the news, JPMorgan analyst Richard Vosser told investors that the selloff in the shares is “significantly overdone” as he sees the potential for the verdict to be overturned on appeal and for the damage amount to be greatly reduced.

Meanwhile, his peer at Bank of America Merrill Lynch argued that the ruling adds cloud over an important product for Scotts Miracle-Gro (SMG).

ROUNDUP RULING

Last week, a jury found Monsanto, which was recently acquired by Bayer for $63B, liable in a lawsuit alleging that the company’s glyphosate-based weedkillers, including its Roundup brand, caused cancer.

The case against Monsanto is the first of more than 5,000 similar lawsuits across the U.S.

The jury at San Francisco’s Superior Court of California found that Monsanto had failed to warn school groundskeeper Dewayne Johnson and other consumers of the cancer risks posed by its weed killers, and awarded Johnson $250M in punitive damages and about $39M in compensatory damages.

Monsanto, which plans to appeal the verdict, has denied that glyphosate causes cancer and has contended that decades of scientific studies have shown the chemical to be safe for human use.

SELLOFF ‘SIGNIFICANTLY OVERDONE’

In a research note to investors, JPMorgan’s Vosser said he views the selloff in shares of Bayer after a California jury ordered the company’s Monsanto unit to pay $289M for not warning of cancer risks posed by its weed killer, Roundup, as “significantly overdone.”

The analyst added that he sees the potential for the verdict to be overturned on appeal and for the damage amount to be greatly reduced. Overall, Vosser believes current share levels of Bayer provide a good long-term buying opportunity and reiterated an Overweight rating on the name.

RULING ‘ADDS CLOUD’ OVER IMPORTANT PRODUCT

Also commenting on the California court’s ruling, BofA/Merrill analyst Christopher Carey pointed out in a research note of his own that while the product is owned by Monsanto, Scotts Miracle-Gro is the exclusive distributor/marketer of consumer Roundup in the U.S. and Canada, with the brand on track to be about 15% to FY18 profit, but less in FY19 as a 3-year term for $20M annual payments from Monsanto ends in FY18.

Carey noted that he does not expect a ban of glyphosate, but argued that the court decision nevertheless “adds a cloud” over a product which is important for Scotts Miracle-Gro.

While any additional impact from Roundup is unclear, this adds another layer to risks, he contended, highlighting that the company already must overcome a number of headwinds in 2019.

The analyst reiterated an Underperform rating and $74 price target on Scotts Miracle-Gro’s shares. Meanwhile, his peer at SunTrust told investors that there is likely no legal risk to Scotts Miracle-Gro from Friday’s jury verdict in California.

As part of the master agreement between Scotts and Monsanto signed three years ago, Scotts is indemnified from any litigation relating to the Roundup/glyphosate issue, analyst William Chappell pointed out.

Further, the analyst noted that the company is not listed as a defendant in any of the cases filed against Monsanto.

Nevertheless, Chappell estimates that Roundup represents roughly 10% of Scotts’ EBITDA, and believes sales could be impacted over the long-term from these trials.

The analyst reiterated a Buy rating and $100 price target on Scotts Miracle-Gro’s shares.

PRICE ACTION

In Monday morning trading, shares of Bayer in New York have dropped over 10% to $23.75, while Scotts Miracle-Gro’s stock has slipped 2.25% to $73.65.


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.

Tribune Media terminates merger agreement with Sinclair Broadcast

Tribune Media terminates merger agreement with Sinclair Broadcast, files suit

Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners
Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners

Tribune Media (TRCO) announced that it has terminated its merger agreement with Sinclair Broadcast Group (SBGI), and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract.

The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.

In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval.

Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay-all in derogation of Sinclair’s contractual obligations.

Ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.

As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media’s CEO.

“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”


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.

US Foods to acquire SGA’s Food for $1.8B

US Foods to acquire SGA’s Food group of Companies for $1.8B 

US Foods to acquire SGA's Food for $1.8B, Stockwinners
US Foods to acquire SGA’s Food for $1.8B, Stockwinners

US Foods (USFD) and Services Group of America announced that they have entered into a definitive agreement under which US Foods will acquire five operating companies collectively known as SGA’s Food Group of Companies, for $1.8B in cash.

The transaction has been unanimously approved by US Foods’ Board of Directors.

Headquartered in Scottsdale, Arizona, SGA’s Food Group of Companies has combined 2017 net sales of $3.2B and approximately 3,400 employees.

SGA’s Food Group of Companies currently operates as five separate operating companies.

US Foods will finance the acquisition primarily with $1.5B in fully committed term loan financing from J.P. Morgan and Bank of America Merrill Lynch and will fund the balance of the purchase price through its existing liquidity resources.

At the closing of the acquisition, US Foods’ pro forma net leverage is expected to be 4.1x.

Given the combined company’s strong cash flow generation, including synergies, US Foods expects to reduce net leverage to approximately 3.0x by the end of fiscal 2020. The acquisition is subject to regulatory approval and other customary closing conditions.

US Foods expects to achieve approximately $55M in annual run-rate cost synergies by the end of fiscal 2022, primarily driven by savings in distribution, procurement and administrative expenses.

The purchase price reflects a multiple of 12.5x SGA’s Food Group of Companies 2018E Adjusted EBITDA of $123 million, after taking into account the approximately $260 million estimated present value of cash tax benefits to be realized as a result of the acquisition. Including $55M in annual run-rate synergies, the price reflects a 2018E Adjusted EBITDA multiple of 8.6x.

Excluding amortization, the transaction is expected to become accretive to US Foods’ Adjusted EPS in the second full year following closing.

USFD closed at $40.60.


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.