Circor receives $1.7B takeover offer

Crane proposes to acquire Circor for $45.00 per share in cash

Crane proposes to acquire Circor for $45.00 per share in cash, Stockwinners

Crane Co. (CR) announced that it has submitted a proposal to the Board of Directors of CIRCOR International (CIR) to acquire CIRCOR for $45 per share in cash.

CIRCOR International, Inc. designs, manufactures, and markets engineered products and sub-systems worldwide. It operates through three segments: Energy, Aerospace and Defense, and Industrial. 

The proposal represents a 47% premium over yesterday’s closing price and a 37% and 51% premium over a three- and six-month volume weighted average share price, respectively.

This reflects an enterprise value of approximately $1.7B at a multiple of approximately 13.5x the last 12-month adjusted EBITDA. Crane Co. proposed the all-cash transaction to CIRCOR’s President and CEO Scott Buckhout on April 30, the terms of which were confirmed by a letter to the CIRCOR Board of Directors.

On May 13, the CIRCOR Board summarily rejected Crane Co.’s proposal with no offer of discussions or due diligence.

“While we had hoped to complete a transaction privately, the Board’s rejection of our proposal without comment or discussion led to our decision to make our proposal known to CIRCOR shareholders so they can express their views directly to the CIRCOR Board,” said Max Mitchell, Crane Co. President and CEO.

“Our proposal provides CIRCOR shareholders with attractive value and certainty compared to the continued uncertainty surrounding CIRCOR’s plans to improve operating performance.

Based on CIRCOR’s history of underperformance and inability to meet its own financial targets, we believe CIRCOR’s standalone plan is unlikely to generate value comparable to what we are proposing.”

Mitchell continued, “We believe that this business, which has great brands and products, has been meaningfully undermanaged for years.

This has resulted in a persistent decline in CIRCOR’s share price, making it the worst performer of the peers in the S&P Midcap Capital Goods Index since the end of 2013.

Based upon the strength of our disciplined operating approach, Crane Co. is well positioned to integrate CIRCOR’s businesses into our focused portfolio, realize operational synergies, and deliver long-term value to Crane shareholders.

Combining CIRCOR’s Fluid Handling, Aerospace and Defense assets with Crane’s portfolio of leading brands would create a stronger competitor with additional scale and growth potential.”

CIR +13.49 to $44.15.

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Tesaro sold for $75 per share

Tesaro to be acquired by GSK for approx. $5.1B

 

Tesaro could be sold soon, Stockwinners
Tesaro sold for $75 per share, Stockwinners

GlaxoSmithKline (GSK) and TESARO (TSRO) announced that the companies have entered into a definitive agreement pursuant to which GSK will acquire TESARO, an oncology-focused company based in Waltham, Massachusetts, for an aggregate cash consideration of approximately $5.1B.

The proposed transaction significantly strengthens GSK’s pharmaceutical business, accelerating the build of GSK’s pipeline and commercial capability in oncology. The acquisition price of $75 per share in cash represents a 110% premium to TESARO’s 30 day Volume Weighted Average Price of $35.67 and an aggregate consideration of approximately $5.1B including the assumption of TESARO’s net debt.

Zejula’s revenues in its current approved indication as second-line maintenance treatment for ovarian cancer were $166 million for the 9 months ended 30 September 2018.

GSK expects the acquisition of TESARO and associated R&D and commercial investments will impact Adjusted EPS for the first two years by mid to high single digit percentages, reducing thereafter with the acquisition expected to start to be accretive to Adjusted EPS by 2022. GSK’s guidance for full-year 2018 Adjusted EPS growth remains unchanged at 8 to 10% at CER.

GSK continues to expect to deliver on its previously published Group Outlooks to 2020, but following the acquisition of TESARO now expects Adjusted EPS growth at CER for the period 2016-2020 to be at the bottom end of the mid to high single digit percentage CAGR range.

GSK confirms no change to its current dividend policy and continues to expect to pay 80p in dividends for 2018. GSK expects to fund the acquisition from cash resources and drawing under a new acquisition facility.

Please click here and read our blog when we predicted this transaction.


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GE fires CEO, Shares rise

GE shares jump after CEO Flannery ousted amid Power unit challenges

GE introduces new company AiRXOS, Stockwinners
GE fires CEO, Shares rise

Shares of GE (GE) are rising in pre-market trading after the shrinking conglomerate announced that H. Lawrence Culp, Jr. has been named Chairman and CEO, replacing John Flannery, effective immediately.

POWER WRITE-OFF

The company stated that while its businesses other than Power are “generally performing consistently with previous guidance,” the company will fall short of previously indicated guidance for free cash flow and EPS for 2018 due to weaker performance in the GE Power business.

GE expects to take a non-cash goodwill impairment charge related to the GE Power business that will likely be as much as the approximately $23B current goodwill balance for the business, GE added.

GE previously forecast FY18 EPS at the low end of its $1.00-$1.07 range. The current EPS consensus is 95c.

RECENT ANALYST CONCERNS

In a recent note to investors, RBC Capital analyst Deane Dray lowered his price target on GE shares to $13 from $15, stating that the company had yet to reach a point where bad news does not make the stock decline and arguing that the bottom had not yet been reached.

Last month, JPMorgan analyst Stephen Tusa lowered his price target for General Electric to $10 from $11 and kept an Underweight rating on the shares.

The analyst’s channel checks, which were confirmed by GE Power’s CEO, GE investor relations, suggested GE had experienced a failure in a first stage blade on an H-frame in one of its two initial marquee installations in the U.S., Colorado Bend. Further, Tusa said the problem was material enough for Exelon (EXC) to have shut the plant down, along with the “award winning” Wolf Hollow plant for precautionary measures.

There should no longer be any doubt that GE Power has company-specific issues, Tusa contended at the time, stating that his new price target assumed weaker results at GE Power and some franchise value impact.

PRICE ACTION

In Monday’s pre-market trading, GE shares are up $1.53, or 13.5%, to $12.82.


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Pinnacle Foods sold for $10.9B in cash

Conagra Brands to acquire Pinnacle Foods for $10.9B in cash  and stock

 

Pinnacle Foods sold for $10.9B in cash , Stockwinners

Conagra Brands (CAG) and Pinnacle Foods (PF) announced that their boards of directors have unanimously approved a definitive agreement under which Conagra Brands will acquire all outstanding shares of Pinnacle Foods in a cash and stock transaction valued at approximately $10.9B, including Pinnacle Foods’ outstanding net debt.

Under the terms of the transaction, Pinnacle Foods shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock for each share of Pinnacle Foods held.

The implied price of $68.00 per Pinnacle Foods share is based on the volume-weighted average price of Conagra Brands’ stock for the five days ended June 21, 2018.

The purchase price reflects an adjusted EBITDA multiple of 15.8x, based on Pinnacle Foods’ estimated fiscal year 2018 results excluding synergies, and 12.1x adjusted EBITDA including run-rate cost synergies.

The combination of two growing portfolios of iconic brands will serve as a catalyst to accelerate value creation for shareholders.

The transaction will enhance Conagra Brands’ multi-year transformation plan and expand its presence and capabilities in its most strategic categories, including frozen foods and snacks.

With annual net sales in excess of $3B, Pinnacle Foods’ portfolio of frozen, refrigerated and shelf-stable products includes such well-known brands as Birds Eye, Duncan Hines, Earth Balance, EVOL, Erin’s, Gardein, Glutino, Hawaiian Kettle Style Potato Chips, Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others.

Based on both companies’ latest fiscal year results, pro forma net sales would have been approximately $11B.

Under the terms of the agreement, each share of Pinnacle Foods common stock will be converted into the right to receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock.

Conagra Brands has secured $9B in fully committed bridge financing from affiliates of Goldman Sachs Group (GS).

The $10.9B purchase price is expected to be financed with $3B of Conagra Brands equity issued to Pinnacle Foods shareholders and $7.9B in cash consideration funded with $7.3B of transaction debt and approximately $600M of incremental cash proceeds from a public equity offering and/or divestitures.

On a pro forma basis, Pinnacle Foods shareholders are expected to own approximately 16% of the combined company, assuming issuance of the incremental equity to the public.

Following the transaction, Conagra Brands’ pro forma net debt-to-EBITDA ratio is expected to be approximately 5.0x. Conagra Brands is committed to maintaining a solid investment grade credit rating and targeting a debt-to-EBITDA ratio of 3.5x.

Conagra Brands intends to maintain its quarterly dividend at the current annual rate of $0.85 per share during fiscal 2019.

In the future, it expects modest dividend increases while it focuses on deleveraging, subject to the approval of its board of directors.

The company also plans to repurchase shares under its authorized program only at times and in amounts as is consistent with the prioritization of achieving its leverage targets.

Pinnacle Foods will continue to pay its quarterly dividend at the current annual rate of $1.30 per share until the transaction is completed. The transaction is expected to close by the end of calendar 2018, subject to the approval of Pinnacle Foods shareholders, the receipt of regulatory approvals and other customary closing conditions.


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Franklin American Mortgage sold for $511M

Citizens Financial to purchase Franklin American Mortgage for $511M

Citizens Financial to purchase Franklin American Mortgage for $511M, Stockwinners.com
Citizens Financial to purchase Franklin American Mortgage for $511M, 

Citizens Financial Group (CFG) announced a definitive agreement to purchase the assets of Franklin American Mortgage Company, a Franklin, Tennessee-based national mortgage servicing and origination firm with a leading position among private, non-bank mortgage companies.

As of March 31, 2018, Franklin American Mortgage managed a $41.4B mortgage servicing portfolio and generated approximately $13.7B in annualized originations for the first quarter 2018, nearly 100% of which was conforming.

“The addition of Franklin American Mortgage triples the size of Citizens’ off-balance sheet mortgage servicing portfolio, providing significantly more balance sheet leverage. The transaction also more than doubles Citizens’ origination platform while significantly diversifying its origination capabilities with the addition of correspondent and wholesale channels, which complement Citizens’ strong retail capabilities,” the bank said.

Under the terms of the asset purchase agreement, Citizens’ wholly-owned subsidiary, Citizens Bank, N.A., will purchase assets with a net book value of approximately $488M, which includes a mortgage servicing rights portfolio valued at $550M, for $511M in cash, or approximately 1.1 times tangible book value.

The transaction is expected to improve fee income, produce attractive returns and have a crossover earnback period of less than three years. The transaction is expected to reduce the company’s Basel III common equity tier one ratio by approximately 18 basis points at the transaction close.

This transaction has no impact on the execution of Citizens’ previously announced planned share repurchases under its 2017 capital plan. The company expects to achieve annual expense synergies of approximately $50M by 2020 with total estimated after-tax integration costs of $30M-$45M.

Return on average tangible common equity accretion is expected to be approximately 30 basis points in 2019 and approximately 45 basis points in 2020 with earnings per diluted common share accretion of approximately 2% in 2019 and approximately 3% in 2020.

The transaction is expected to close in the third quarter of 2018, subject to customary closing terms and conditions and regulatory approval.


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Shire sold for $62 billion

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

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

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

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

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

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

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

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

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


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Netflix and Comcast join forces

Netflix, Comcast announce expansion of Netflix-Xfinity packages 

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

Comcast (CMCSA) and Netflix (NFLX) announced an expansion of their partnership that will provide Comcast the ability to include a Netflix subscription in new and existing Xfinity packages.

In 2016, Comcast launched Netflix on the X1 platform, offering customers a fully integrated entertainment experience featuring voice control and seamless access to the Netflix service.

Netflix has quickly become one of the most popular voice searches and highly-viewed services on the platform; and among households watching Netflix on X1, X1 has quickly become the most used platform for Netflix viewing.

Comcast has integrated the Netflix service with the X1 user experience, enabling customers to easily browse and access the entire Netflix service, including TV shows, films, documentaries, stand-up comedy, kid’s titles and a catalog of Ultra HD 4K and HDR programming-alongside the live, on demand, DVR and web video from hundreds of networks, studios and digital brands available with their Xfinity TV subscription.

Comcast will launch a variety of initial offers this month that include a Netflix subscription. Offers and availability will vary by market and be open to new and existing customers.

Netflix-related billing will be handled directly by Comcast, giving customers one, simple monthly statement.


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CHMP recommends against use of Pfizer’s SUTENT

Pfizer says CHMP recommends against expanding use of SUTENT

CHMP recommends against use of Pfizer’s SUTENT

Pfizer (PFE) announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency has recommended against expanding use of SUTENT to include the adjuvant treatment of adult patients at a high risk of recurrent renal cell carcinoma following nephrectomy.

The #CHMP’s recommendation is not binding but will now be taken into consideration by the European Commission.

There is currently no approved adjuvant treatment option available for patients with non-metastatic RCC at high risk for recurrence in the European Union.

In the U.S., #SUTENT is approved for the adjuvant treatment of adult patients at high risk of recurrent RCC following nephrectomy. On November 16, 2017, the U.S. Food and Drug Administration approved an expanded indication for SUTENT as the first treatment for adult patients at high risk of recurrence following nephrectomy.

The FDA expanded indication was based on results from the S-TRAC trial, a multicenter, international, randomized, double-blind, placebo-controlled Phase 3 trial of SUTENT versus placebo in 615 patients with clear cell histology and high risk of recurrence following nephrectomy.

The results were published by The New England Journal of Medicine in October 2016.

PFE closed at $35.74.


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Kite and Sangamo to develop engineered cell therapies

Kite, Sangamo announce collaboration to develop engineered cell therapies

Kite, Sangamo to develop engineered cell therapies. Stockwinners.com
Kite, Sangamo to develop engineered cell therapies

Kite, a Gilead Company (GILD) and Sangamo Therapeutics (SGMO) announced the companies have entered into a worldwide collaboration using Sangamo’s zinc finger nuclease technology platform for the development of next-generation ex vivo cell therapies in oncology.
Ex vivo cell therapy is in essence gene therapy delivered by transfer of therapeutic genes to cells in culture, which are then given to the patient to treat fatal infections such as AIDS, or other conditions such as cancer or genetic diseases.

 

These manipulations include the purification and culture of therapeutic cell subtypes, as well as elimination of cells which cause disease (cancer cells or immune cells reacting to the body itself). Gene therapy can be delivered by transfer of therapeutic genes to cells in culture, which are then given to the patient to treat fatal infections such as AIDS, cancer or genetic diseases.

 

Kite will use Sangamo’s ZFN technology to modify genes to develop next-generation cell therapies for autologous and allogeneic use in treating different cancers.

 

Allogeneic cell therapies from healthy donor cells or from renewable stem cells would provide a potential treatment option that can be accessed directly within the oncology infusion center, thus reducing the time to infusion for patients.

 

Under the terms of the agreement, Sangamo will receive an upfront payment of $150M and is eligible to receive up to $3.01B in potential payments, aggregated across 10 or more products utilizing Sangamo’s technology, based on the achievement of certain research, development, regulatory and successful commercialization milestones.

 

Sangamo would also receive tiered royalties on sales of potential future products resulting from the collaboration. Kite will be responsible for all development, manufacturing and commercialization of products under the collaboration, and will be responsible for agreed upon expenses incurred by Sangamo.

 

This transaction is subject to clearance under the Hart-Scott Rodino Antitrust Improvements Act and other customary closing conditions.

 

A Current Report on Form 8-K describing the proposed transaction in more detail will be filed by Sangamo, and this press release is subject to further detail provided in Sangamo’s 8-K.

 

Separately, Sangamo reported Q4 EPS (15c) vs consensus (18c) – Reported Q4 revenue $13.1M, consensus $11.43M.


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Albertsons and Rite Aid to merge

Rite Aid CEO to become CEO of combined Rite Aid, Albertsons

Albertsons and Rite Aid to merge

Albertsons Companies and Rite Aid Corporation (RAD) announced a definitive merger agreement under which privately held Albertsons Companies will merge with publicly traded Rite Aid.

Under the terms of the agreement, in exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders will have the right to elect to receive either (i) one share of Albertsons Companies common stock plus approximately $1.83 in cash or (ii) 1.079 shares of Albertsons Companies stock.

Depending upon the results of cash elections, upon closing of the merger, shareholders of Rite Aid will own a 28.0 percent to 29.6 percent stake in the combined company, and current Albertsons Companies shareholders will own a 70.4 percent to 72.0 percent stake in the combined company on a fully diluted basis.

Immediately following completion of the merger and assuming that all Rite Aid shareholders elect to receive shares plus cash, Albertsons Companies will have approximately 392.9 million shares outstanding on a pro forma and fully diluted basis.

Following the close of the transaction and the share exchange, Albertsons Companies’ shares are expected to trade on the New York Stock Exchange.

Albertsons Companies is backed by an investment consortium led by Cerberus Capital Management, L.P., which also includes Kimco Realty Corporation (KIM), Klaff Realty LP, Lubert-Adler Partners LP, and Schottenstein Stores Corporation.

Current Rite Aid Chairman and Chief Executive Officer John Standley will become CEO of the combined company, with current Albertsons Companies Chairman and CEO Bob Miller serving as Chairman.

The combined company is expected to be comprised of leadership from both companies and will be dual headquartered in Boise, Idaho, and Camp Hill, Pennsylvania.

The name of the combined company will be determined by transaction close.

The integrated company will operate approximately 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington, D.C., serving 40+ million customers per week.

Most Albertsons Companies pharmacies will be rebranded as Rite Aid, and the company will continue to operate Rite Aid stand-alone pharmacies.

The combined company expects to deliver annual run-rate cost synergies of $375 million in approximately three years and access potential annual revenue opportunities of $3.6 billion.

Over 60 percent of the cost synergies are expected to be realized within the first two years post-close. Identified revenue opportunities primarily include partnering with payors, including Rite Aid’s PBM, EnvisionRx, through preferred networks to drive additional high-value customers, connecting Rite Aid’s reliable pharmacy customer base to Albertsons Companies through loyalty programs and targeted marketing, leveraging Albertsons Companies’ grocery capabilities and Rite Aid’s pharmacy expertise to enhance the customer offering, and driving traffic through the omni-channel experience.

Cost synergies will be achieved primarily through procurement savings, leveraging efficiencies realized by a combined supply chain, combined distribution and fulfillment channels, and leveraging manufacturing capabilities.

The board of directors will be comprised of nine directors, four of whom will be named by Albertsons Companies, four of whom will be named by Rite Aid (including John Standley), and one of whom will be a jointly selected director. A majority of the Board will be independent. Lenard Tessler will serve as Lead Director.

Kimco Realty Corp (KIM) confirms its participation as an investor in connection with today’s announced execution of a definitive agreement under which Albertsons Companies will acquire all outstanding shares of Rite Aid Corporation (RAD).

RAD closed at $2.13. It last traded at $2.68.


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Amazon.com enters delivery business

Amazon.com to directly compete with United Parcel Service and FedEx

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Amazon.com to directly compete with United Parcel Service and FedEx

Amazon.com Inc. (AMZN) is preparing to launch a delivery service for businesses, positioning it to directly compete with United Parcel Service Inc. and FedEx Corp.

Amazon is planning to launch a delivery services for businesses called “Shipping with Amazon” that would compete with FedEx (FDX) and UPS (UPS), The Wall Street Journal reports.

The service would involve Amazon picking up packages from businesses and shipping them to consumers, people familiar with the matter say.

The tech giant expects to roll out the SWA service in Los Angeles “in the coming weeks” with third-party merchants that sell products through its website, the people say, and could expand the service to more cities as soon as this year.

Amazon’s business delivery is expected to roll out in Los Angeles in the coming weeks with third-party merchants that sell goods via its website. More cities are to follow.

UPS said it is still a partner of Amazon.

“UPS continues to support Amazon and many other customers and we don’t make comments about their business strategies or decisions regarding their utilization of UPS services,” a spokesperson for the company said.

In pre-market trading, FedEx is down about 2% and UPS dropped 3.5%.


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Ply Gem sold for $2.4B

Ply Gem to be acquired by Clayton, Dubilier & Rice in deal valued at $2.4B

Ply Gem to be acquired by Clayton, Dubilier & Rice in deal valued at $2.4B. Stockwinners.com
Ply Gem sold for $2.4B

Ply Gem Holdings (PGEM) and Clayton, Dubilier & Rice announced a definitive agreement under which CD&R funds will acquire all of the outstanding shares of Ply Gem common stock in a go-private transaction valued at approximately $2.4B.

Ply Gem’s board of directors unanimously approved the agreement, which provides for the payment of $21.64 per share in cash to all holders of Ply Gem common stock.

The cash purchase price represents a premium of approximately 20% over Ply Gem’s closing stock price on January 30, 2018.

Promptly following entry into the agreement, stockholders holding greater than 50% of the outstanding shares of Ply Gem common stock executed a written consent to approve the transaction, thereby providing the required stockholder approval.

CD&R has also entered into a definitive agreement to acquire Atrium Windows & Doors and combine the company with Ply Gem to create an exterior building products company with total revenue of more than $2.4B in 2017.

The transactions are expected to close simultaneously in the second quarter of 2018 and are subject to the receipt of customary closing conditions, including regulatory approvals.

Closing of the acquisition of Ply Gem is not subject to the closing of the acquisition of Atrium.

However, assuming both transactions close simultaneously, CD&R funds will own approximately 70% of the new privately-held company, and Atrium shareholders, which include funds managed by Golden Gate Capital, will hold approximately 30%.

The new Ply Gem will continue to be headquartered in Cary, NC, and Gary E. Robinette, currently Chairman and CEO of Ply Gem, will continue as Chairman and CEO. John Krenicki, a CD&R Operating Partner and former Vice Chairman of General Electric Company, will become Lead Director of the Board.

Ply Gem Holdings, Inc. manufactures and sells residential and commercial building products primarily in the United States and Canada.


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Honda recalls 465,000 vehicles with faulty airbag

Honda to recall additional 465,000 vehicles with faulty airbag inflators

Honda to recall additional 465,000 vehicles with faulty airbag inflators. Stockwinners.com
Honda to recall additional 465,000 vehicles with faulty airbag inflators

In the third phase of planned recalls announced by NHTSA in May 2016 and based on recent Defect Information Reports from the airbag inflator supplier Takata (TKTDY), Honda (HMC) will conduct recalls covering approximately 717,000 Honda and Acura automobiles in the United States to replace, for free, Takata passenger front airbag inflators that do not contain a moisture absorbing desiccant.

Excluding vehicles subject to the earlier Takata airbag inflator recalls, approximately 465,000 additional Honda and Acura vehicles in the U.S. will become subject to recall for the first time as a result of this action.

Including the recall announced today, Honda has adequate replacement part supplies to repair all Honda and Acura models currently included in inflator recalls in the United States.

Owners of affected vehicles can seek repair immediately at authorized Honda and Acura dealers.

No additional driver front airbag inflators in Honda or Acura automobiles will be subject to recall in this action, as all potentially affected driver inflators already are subject to prior recalls.

However, some vehicles previously repaired under earlier driver front inflator recalls will now require replacement of those vehicles’ passenger front inflators under this new action.

In addition, 960 Honda Gold Wing Airbag motorcycles from the 2009-2016 model years will be recalled to replace optional Takata non-desiccated airbag inflator modules installed on those vehicles.

Due to the relatively small vehicle population and an adequate supply of replacement inflators, Honda has elected to pull forward the recall of motorcycles that would have been included in Phase 4 of NHTSA’s recall plan (scheduled for January 2019), placing them under recall earlier than required.

With this action, all Honda motorcycles equipped with defective inflators in the U.S. are now eligible for repair. There have been no Takata airbag inflator ruptures involving Honda motorcycles globally.

With this new action, a total of approximately 11.9 million Honda and Acura automobiles have been or now are subject to recall for replacement of a Takata driver and/or passenger front airbag inflator in the United States, with approximately 4,540 Honda motorcycles subject to recall for the replacement of the Takata airbag inflator module.

HMC closed at $36.00


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Hartford sells Talcott Resolution for $2.05 billion

Hartford Financial to sell Talcott Resolution to investors for $2.05B

Hartford Financial to sell Talcott Resolution to investors for $2.05B
Hartford Financial to sell Talcott Resolution to investors for $2.05B

The Hartford (HIG) has entered into a definitive agreement to sell Talcott Resolution, its run-off life and annuity businesses, to a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group.

Total consideration to The Hartford is $2.05B, comprised of cash from the investor group, a pre-closing cash dividend, debt included as part of the sale, and a 9.7% ownership interest in the acquiring company. The total consideration amount does not include $1.4B in dividends previously paid by Talcott Resolution in 2017.

The sale is anticipated to close in the first half of 2018, subject to regulatory approval and other closing conditions.

Under the terms of the sale agreement and subject to regulatory approval, the investor group will form a new company that will purchase Hartford Life, the holding company for the Talcott Resolution operating subsidiaries, for a net payment of $1.443B in cash.

The Hartford will receive a 9.7% ownership interest, valued at $164M, in the new company.

Subject to regulatory approval, The Hartford also expects to receive $300M in a pre-closing dividend from Talcott Resolution and will reduce its long-term debt by $143M because debt issued by HLI will be included as part of the sale.

In addition, The Hartford will retain Talcott Resolution tax benefits with an estimated GAAP book value of $950M, which will be available for realization subject to the level and timing of The Hartford’s taxable income.

As a result of The Hartford’s election to retain certain tax benefits, the company will not recognize a tax capital loss on the sale.

Based on the terms of the sale and the retention of the tax attributes, The Hartford estimates that the sale will result in a GAAP net loss of approximately $3.2B, after tax, which would be recorded in discontinued operations in fourth quarter 2017.

The estimated loss on sale and the estimated retained tax benefits and our ability to realize such benefits are based on current tax law and are subject to a final determination of the tax basis of the operations sold.

Beginning in fourth quarter 2017 and continuing until closing of the transaction, the results of operations of Talcott Resolution will be reported as discontinued operations for all periods presented in The Hartford’s financial statements.

Prior to the closing of the transaction, the company’s Group Benefits and Mutual Funds subsidiaries, which are currently subsidiaries of HLI, will be transferred to another Hartford subsidiary and will not be part of the transaction.

In addition, immediately after closing, Talcott Resolution will reinsure a portion of its fixed annuity, payout annuity and structured settlement businesses to a subsidiary of Global Atlantic Financial Group.

Following the sale, Hartford Investment Management Company, The Hartford’s investment management group, will continue to manage a significant majority of Talcott Resolution’s investment assets for an initial 5-year term.

HIMCO also will be retained by Global Atlantic to manage certain assets associated with the post-closing reinsurance agreement. As part of the transaction, about 400 Hartford employees will become employees of the new company and will be located at offices currently owned or leased by The Hartford in Windsor, Connecticut, and Woodbury, Minnesota.

HIG closed at $57.43.


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Cognizant Higher as Immigration Reform Dies Down

Easing immigration reform worries seen as boost for Cognizant

Cognizant Higher as Immigration Reform Dies Down. See Stockwinners.com Market Radar to read more.

Research firm Berenberg upgraded Indian IT outsourcing company Cognizant (CTSH) to Buy from Hold, saying that the stock is poised to rise because investors have become less worried about the company being hurt by immigration reform.

EASING WORRIES

Noting that Cognizant’s stock has rallied recently, Berenberg analyst Georgios #Kertsos says the surge indicates that investors are less worried that Cognizant could be hurt by immigration reform. The longer it takes Congress to enact immigration reform, the better positioned Cognizant will be since it is reducing its reliance on foreign workers by hiring more employees who are already in the U.S., Kertsos added.

Meanwhile, Kertsos is upbeat about the company’s decision to expand its consulting business, saying that this strategy will increase the company’s addressable market and “drive sustainable top-line performance.” He raised his price target on the stock to $85 from $65.

LOOP MORE BULLISH TOO

On August 4, Loop Capital analyst Joseph Vafi upgraded Cognizant to Buy from Hold. “Demand headwinds” that had been hurting the company are easing, while the company “has ample room” to meet its 2019 margin target, wrote Vafi, noting that its margins are currently below those of its peers.

Easy comparisons should help the company’s earnings per share growth begin to accelerate at the end of this year, potentially enabling its multiple to rise slightly, according to the analyst. He raised his price target on Cognizant shares to $83 from $63.

PRICE ACTION

In Tuesday trading, Cognizant added 0.7% to $70. Shares have a 52-week trading range of $45.44 – $71.57.

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