Cisco to acquire Splunk for $157 per share in cash, or $28B EV
Cisco (CSCO) and Splunk (SPLK) announced a definitive agreement under which Cisco intends to acquire Splunk for $157 per share in cash, representing approximately $28B in equity value.
Upon close of the acquisition, Splunk President and CEO Gary Steele will join Cisco’s Executive Leadership Team reporting to Chair and CEO Chuck Robbins.
The transaction is expected to be cash flow positive and gross margin accretive in the first fiscal year post close, and non-GAAP EPS accretive in year two.
Additionally, it will accelerate Cisco’s revenue growth and gross margin expansion.
The transaction will not impact Cisco’s previously announced share buyback program or dividend program.
The acquisition has been unanimously approved by the boards of directors of both Cisco and Splunk. It is expected to close by the end of the third quarter of calendar year 2024, subject to regulatory approval and other customary closing conditions including approval by Splunk shareholders.
Splunk Inc, develops and markets cloud services and licensed software solutions in the United States and internationally. The company offers unified security and observability platform, including Splunk Security that helps security leaders fortify their organization’s digital resilience by mitigating cyber risk and meeting compliance requirements; and Splunk Observability, which provides visibility across the full stack of infrastructure, applications, and the digital customer experience.
SPLK is up 21% to $144.74. CSCO is down 4% to $53.25.
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.
Nasdaq to acquire Adenza from Thoma Bravo for $10.5B in cash and stock
Nasdaq (NDAQ) announced it has entered into a definitive agreement to acquire Adenza, a provider of mission-critical risk management and regulatory software to the financial services industry, from Thoma Bravo for $10.5B in cash and shares of common stock.
The acquisition accelerates Nasdaq’s strategic vision to become the trusted fabric of the world’s financial system.
Upon the closing of the transaction, Holden Spaht, a Managing Partner at Thoma Bravo, is expected to be appointed to Nasdaq’s Board of Directors, which will be expanded to twelve members.
Adenza brings an attractive financial profile, with approximately $590M of 2023E revenue, organic revenue growth of approximately 15%, annual recurring revenue growth of 18%, and an adjusted EBITDA margin of 58%.
The company has a loyal and growing client base, with 98% gross retention, 115% net retention, and a durable mix of approximately 80% recurring revenue.
The addition of Adenza is projected to enhance Nasdaq’s already strong financial profile by growing Solutions Businesses revenue from 71% of total revenue today to 77% in 2023E, increasing adjusted EBITDA margin to 57%, and adding approximately $300M of annual unlevered pre-tax cash flow.
Nasdaq is acquiring Adenza for $10.5B, comprised of $5.75B in cash and 85.6M shares of Nasdaq common stock, based on the volume-weighted average price per share over 15 consecutive trading days prior to signing.
Nasdaq has obtained fully committed bridge financing for the cash portion of the consideration and plans to issue approximately $5.9B of debt between signing and closing and use the proceeds to replace the bridge commitment.
At the closing of the transaction, Nasdaq will issue the shares to the owners of Adenza, which is a company controlled by Thoma Bravo, representing approximately 14.9% of the outstanding shares of Nasdaq.
The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close within six to nine months.
Following the Adenza transaction, Nasdaq expects leverage of approximately 4.7x and investment grade ratings of BBB/Baa2 Stable.
Nasdaq is committed to reducing leverage to 4.0x in 18 months and to approximately 3.3x in 36 months. Nasdaq intends to pursue its existing capital deployment plan, including steadily increasing its dividend per share and dividend payout ratio to achieve 35%-38% within three to four years.
The company intends to repurchase shares over time to partially offset dilution from the transaction in addition to continuing to offset employee share-based compensation.
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.
Vyjuvek is designed to treat the genetic root cause of DEB
Krystal Biotech (KRYS) announced the U.S. Food and Drug Administration has approved Vyjuvek for the treatment of patients six months of age or older with dystrophic epidermolysis bullosa, or DEB.
DEB is a rare disease that appears at birth or during the first few years of life, and lasts a lifetime. Prognosis is variable, but tends to be serious. Life expectancy isย 50 years, and the disease brings with it complications related to infections, nutrition and neoplastic complications.
“Vyjuvek is designed to address the genetic root cause of DEB by delivering functional copies of the human COL7A1 gene to provide wound healing and sustained functional COL7 protein expression with redosing.
Vyjuvek is the first-ever redosable gene therapy and the first and only medicine approved by the FDA for the treatment of DEB, both recessive and dominant, that can be administered by a healthcare professional in either a healthcare professional setting or in the home,” the company stated.
With this approval, the FDA issued the Company a Rare Pediatric Disease Priority Review Voucher, or PRV, which confers priority review to a subsequent drug application that would not otherwise qualify for priority review, the company noted.
“Vyjuvek is expected to be available in the United States in the third quarter of 2023, and the company will begin the promotion of Vyjuvek immediately.
Outside of the US, the European Medicines Agency has granted Vyjuvek orphan drug designation and PRIME – PRIority MEdicines – eligibility for the treatment of DEB.
The Company anticipates starting the official Marketing Authorization Application procedure in the second half of 2023 with a potential approval in 2024.
The Company is also working with the Pharmaceuticals and Medical Devices Agency in Japan to study Vyjuvek and seek approval for potential launch in 2025,” the company added.
KRYS is up 8.7% to $95.00 per share on heavy trading volume.
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.
Diversey to be acquired by Solenis for $8.40 per share in cash
Solenis and Diversey Holdings (DSEY) announced they have entered into a definitive merger agreement under which Solenis will acquire Diversey in an all-cash transaction valued at an enterprise value of approximately $4.6B.
Diversey Holdings, Ltd. provides infection prevention and cleaning solutions worldwide. It operates in two segments, Institutional, and Food & Beverage.ย
Upon completion of the merger, Diversey will become a private company.
Under the terms of the agreement, Diversey shareholders — other than shareholders affiliated with Bain Capital Private Equity — will receive $8.40 per share in cash, which represents a premium of approximately 41.0% over Diversey’s closing share price on March 7, 2023, the last full trading day prior to the transaction announcement, and a premium of approximately 59.0% over Diversey’s 90-day volume-weighted average price.
Bain Capital will receive $7.84 per share in cash and will rollover a portion of its shares of Diversey into an affiliate of Solenis in exchange for common and preferred units of such affiliate.
Headquartered in Wilmington, Delaware, Solenis is a manufacturer of specialty chemicals used in water-intensive industries, which was acquired by Platinum Equity in 2021.
“The merger presents a unique opportunity to enhance value and create a more diversified business with increased scale, broader global reach, and superior customer service capabilities. It will enable the combined company to grow and provide a number of attractive cross-selling opportunities, including meeting increasing customer demand for water management, cleaning and hygiene solutions,” said Phil Wieland, Chief Executive Officer of Diversey.
Solenis CEO John Panichella will lead the combined company following the transition and integration.
Diversey’s Board of Directors formed the Special Committee to evaluate and negotiate the transaction with the assistance of independent financial and legal advisors.
Following this process, the Special Committee unanimously determined that the transaction with Solenis is in the best interests of Diversey and its shareholders, and, acting upon unanimous recommendation by the Special Committee, the Diversey Board of Directors unanimously approved the merger and recommended that Diversey shareholders vote in favor of the merger.
The Special Committee negotiated the terms of the merger agreement with assistance from its independent financial and legal advisors.
In connection with the transaction, Solenis has entered into a support agreement with Bain Capital, pursuant to which Bain Capital has agreed to vote all of its Diversey shares — which represent approximately 73% of Diversey’s outstanding shares — in favor of the transaction, subject to certain terms and conditions set forth therein.
Solenis intends to finance the transaction with a combination of committed debt and equity financing, including the contribution by Bain Capital.
The merger is expected to be completed in the second half of 2023, subject to the satisfaction of customary closing conditions, including approval by Diversey shareholders holding a majority of the outstanding shares of the Company and receipt of regulatory approvals.
Upon closing of the transaction, Diversey’s ordinary shares will no longer be listed on any public market.
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.
Netflix provides update on sharing guidelines as 100M households share accounts
In an “update on sharing,” Netflix (NFLX) said that,
“Today, over 100 million households are sharing accounts – impacting our ability to invest in great new TV and films.
So over the last year, we’ve been exploring different approaches to address this issue in Latin America, and we’re now ready to roll them out more broadly in the coming months, starting today in Canada, New Zealand, Portugal and Spain.
Our focus has been on giving members greater control over who can access their account.
Set primary location: We’ll help members set this up, ensuring that anyone who lives in their household can use their Netflix account.
Manage account access and devices: Members can now easily manage who has access to their account from our new Manage Access and Devices page.
Transfer profile: People using an account can now easily transfer a profile to a new account, which they pay for – keeping their personalized recommendations, viewing history, My List, saved games and more.
Netflix Spain raises prices
Watch while you travel: Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental.
Netflix Canada raises prices
Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with – each with a profile, personalized recommendations, login and password – for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain.”
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.
Amgen to acquire Horizon Therapeutics for $116.50 per share in cash
The board of directors of Horizon Therapeutics (HZNP) and the board of directors of Amgen (AMGN) announced that they have reached agreement on the terms of a cash offer for the company by Pillartree, a newly formed private limited company wholly owned by Amgen, which is unanimously recommended by the company board and pursuant to which acquirer sub will acquire the entire issued and to be issued ordinary share capital of the company.
Under the terms of the acquisition, each company shareholder at the Scheme Record Time will be entitled to receive: $116.50 for each Company Share in cash.
The acquisition represents: a premium of approximately 47.9% to the closing price of $78.76 per company share on November 29 and a premium of approximately 19.7% to the closing price of $97.29 per company share on December 9.
The acquisition values the entire issued and to be issued ordinary share capital of the company at approximately $27.8B on a fully diluted basis and implies an enterprise value of approximately $28.3B.
Amgen has entered into a Bridge Credit Agreement, dated December 12, for an aggregate amount of $28.5B.
Having taken into account the relevant factors and applicable risks, the company board, which has been so advised by Morgan Stanley, which as financial advisor to the company board has rendered a fairness opinion, considers the terms of the acquisition as set out in this announcement to be fair and reasonable.
In providing its advice to the company board, Morgan Stanley has taken into account the commercial assessments of the company directors.
The company board has unanimously determined that the transaction agreement and the transactions, including the scheme, are advisable for, fair to and in the best interests of, the company shareholders.
Accordingly, the company board unanimously recommends that company shareholders vote in favor of the scheme meeting resolution and the Required EGM Resolutions, or, if the acquisition is implemented by a takeover offer, accept or procure acceptance of such takeover offer.
It is agreed that the acquisition will be implemented by way of an Irish High Court-sanctioned scheme of arrangement under Chapter 1 of Part 9 of the Irish Companies Act.
The acquisition will be subject to the satisfaction or waiver of the conditions, which are set out in full in Appendix 3 to this announcement, including, in summary: the requisite approval by company shareholders of the scheme meeting resolution and the required EGM Resolutions; the sanction of the scheme by the Irish High Court and the receipt of required antitrust clearances in the United States, Austria and Germany and the receipt of required foreign investment clearances in France, Germany, Denmark and Italy.
It is expected that the scheme document, containing further information about the acquisition and notices of the scheme meeting and the EGM, the expected timetable for completion and action to be taken by company shareholders, will be published as soon as practicable.
It is anticipated that the scheme will, subject to obtaining the necessary regulatory approvals, be declared effective in the first half of 2023. An expected timetable of key events relating to the acquisition will be provided in the scheme document.
Horizon Therapeutics Public Limited Company is an Irish biotechnology company, It focuses on the discovery, development, and commercialization of medicines that address critical needs for people impacted by rare, autoimmune, and severe inflammatory diseases. Its portfolio comprises 12 medicines in the areas of rare diseases, gout, ophthalmology, and inflammation.
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.
Mirati Therapeutics shares are up 20% on heavy trading volume
Mirati Therapeutics (MRTX) is attracting fresh takeover interest from large pharma companies, sources tell Bloomberg’s Michelle Davis and Dinesh Nair.
Mirati Therapeutics, Inc. is a clinical-stage oncology company. It develops product candidates to address the genetic and immunological promoters of cancer in the United States.
The company develops MRTX849, a KRAS G12C inhibitor, which is in Phase 1/2 clinical trial for treating non-small cell lung (NSCL), colorectal, pancreatic, and other cancers; and Sitravatinib, an investigational spectrum-selective kinase inhibitor that is in Phase 3 clinical trial for the treatment of NSCL cancer, as well as a KRAS G12D inhibitor program, which is in preclinical development. It has a collaboration and license agreement with BeiGene, Ltd. to develop, manufacture, and commercialize sitravatinib.
Sitravatinib
Sitravatinib (MGCD516) is an orally-available, small molecule inhibitor of a closely related spectrum of receptor tyrosine kinases (RTKs) including MET, TAM (Tyro3, AXL, MERTK) family, VEGFR family, PDGFR family, KIT, FLT3, TRK family, RET, DDR2, and selected EPH family members. Nivolumab is a human IgG monoclonal antibody that binds to the PD-1 receptor and selectively blocks the interaction with its ligands PD-L1 and PD-L2, thereby releasing PD-1 pathway mediated inhibition of the immune response, including anti-tumor immune response. RTKs have been implicated in mediating an immunosuppressive tumor microenvironment, which has emerged as a potential resistance mechanism to checkpoint inhibitor therapy. Inhibition of these RTKs by sitravatinib may augment anti-tumor immune response and improve outcomes by overcoming resistance to checkpoint inhibitor therapy.
On November 8th, Mirati Therapeutics (MRTX) reported a 3rd Quarter September 2022 loss of $3.09 per share on revenue of $5.4 million. The consensus estimate was a loss of $3.46 per share on revenue of $4.6 million.
The stock has a 52-week trading range of $32.96 to $154.17. Shares last traded at $89.50.
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.
Twitter jumps after Musk offers deal on original terms
Tesla (TSLA) CEO Elon Musk is proposing to buy Twitter (TWTR) for the original offer price of $54.20 per share, Jeff Feeley and Ed Hammond of Bloomberg reports, citing people familiar with the matter.
Elon Musk
Musk made the proposal in a letter to Twitter, sources told Bloomberg. Shares of Tesla (TSLA) moved well off their highs after Bloomberg reported, and CNBC followed, that its CEO Elon Musk is proposing to buy Twitter (TWTR) for the original offer price of $54.20 per share. Shares of Twitter are halted at $47.93 pending news while Tesla shares paired their gains to up about 2% to $247.29.
Tesla (TSLA) CEO Elon Musk has offered to close his acquisition of Twitter (TWTR) on the terms he originally agreed to, Cara Lombardo and Dana Cimilluca of WSJ report, citing a person familiar with the matter.
Musk’s lawyers communicated the proposal to Twitter’s lawyers overnight Monday and filed a letter confidentially with the Delaware Chancery Court ahead of an emergency hearing on the matter Tuesday, the person said.
The two sides are discussing how to ensure the deal can be closed, according to Lombardo and Cimilluca. The judge overseeing the case requested they come back to her by the end of the day with a potential plan that would allow the litigation to be dropped, a source told the Journal.
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.
Third Point lays out case for Disney to spin off ESPN
Third Point’s Dan Loeb has sent a letter to Disney CEO Bob Chapek to outline recommendations.
ESPN
Third Point said, “ESPN is a great business that currently generates significant free cash flow, enabling the Company to pay down debt and increase strategic options down the line.
In addition, we realize ESPN content is part of the bundle being offered to subscribers of other products, both in Disney’s Linear and DTC businesses.
Despite these advantages, we believe that a strong case can be made that the ESPN business should be spun off to shareholders with an appropriate debt load that will alleviate leverage at the parent Company.
The important questions to ask before commencing a spinoff are: Will both companies be better off? Will the needs of customers be better served? Can any synergies that exist between the two companies be replicated by contractual arrangements? Will the transaction contribute to creating long-term value for Disney shareholders?
While acknowledging that broader capital structure considerations may be at issue, we believe that the answer to all four of these questions is affirmative.
Employees of ESPN could be compensated in a security directly tied to their performance.
ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting.
Customers of ESPN and sports leagues would be better served by a focused management team driving a leadership position in sports distribution. We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.
Disney CEO Bob Chapek
Lastly, as a result of this transaction, both companies will attract shareholders seeking the respective qualities of each company, allowing the Disney parent multiple to expand as its earnings growth rate increases and the remaining business is no longer haunted by the specter of cord cutting. While I understand you have considered this idea in the past, we urge the Company to retain advisors to reassess the desirability of the transaction in the current environment, recognizing that a key determination would be the proforma capitalizations, cashflow and credit profile of both companies.”
HULU
Third Point said, “We believe that integrating Hulu directly into the Disney+ DTC platform will provide significant cost and revenue synergies, ultimately reigniting growth in the domestic market.
Daniel Loeb, Third Point
We urge the Company to make every attempt to acquire Comcast’s remaining minority stake prior to the contractual deadline in early 2024.
We believe that it would even be prudent for Disney to pay a modest premium to accelerate the integration but are cognizant that the seller may have an unreasonable price expectation at this time while noting the seller has already made the decision to prematurely remove their own content from the platform. We know this is a priority for you and hope there is a deal to be had before Comcast is contractually obligated to do so in about 18 months.”
COST CUTTING
Third Point said, “Disney’s costs are among the highest in the industry, and we believe Disney significantly underearns relative to its potential. We urge the Company to embark on a cost cutting program that addresses both margins and the disposal of excess underperforming assets.”
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.
Whirlpool confirms pact with Emerson Electric to acquire InSinkErator for $3B
Whirlpool (WHR) announced that it has entered into a definitive agreement with Emerson Electric (EMR) to acquire InSinkErator, the world’s largest manufacturer of food waste disposers and instant hot water dispensers for home and commercial use, in an all-cash transaction for $3B.
The acquisition is expected to be immediately accretive to Whirlpool Corporation’s margins, adding approximately $1.25 EPS accretion in fiscal 2023.
Whirlpool also expects to generate revenue upside by capitalizing on InSinkErator’s leading consumer brand preference, an installed base that is five times larger than the rest of the industry driving a recurring sales profile, the strong underlying secular tailwinds of the U.S. housing market, and the expansion of the InSinkErator brand into new markets and product offerings.
Whirlpool plans to initially fund the acquisition through available liquidity, with new debt put in place at a later date.
The acquisition, which has been approved by the Board of Directors of both companies, is subject to customary closing conditions, including regulatory approvals, and is expected to close in the fourth quarter. Whirlpool’s 2022 guidance remains unchanged.
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.
ย iRobot to be acquired by Amazon for $61/share in deal valued at $1.7B
Amazon (AMZN) and iRobot (IRBT) announced that they have entered into a definitive merger agreement under which Amazon will acquire iRobot. Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.ย
We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, SVP of Amazon Devices.
“Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive-from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin.
Customers love iRobot products-and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
iRobot makes the popular Roomba
Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.
Completion of the transaction is subject to customary closing conditions, including approval by iRobot’s shareholders and regulatory approvals.
On completion, Colin Angle will remain as CEO of iRobot.
ย In light of the transaction with Amazon.com, iRobot will not hold its Q2 financial results conference call, which was originally scheduled for August 10.
In addition, iRobot has withdrawn its prior 2022 financial expectations issued in early May, as well as its long-term financial targets provided in December 2021. Given the ongoing disruptions and uncertainty that could impact the company’s outlook, iRobot is suspending its practice of providing financial guidance.
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.
Crane plans to split into two independent public companies
Crane (CR) announced that its Board of Directors has unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment and capital allocation, accelerate growth, and unlock shareholder value.
Upon completion, Crane Co.’s shareholders will benefit from ownership in two focused and simplified businesses that are both leaders in their respective industries and well-positioned for continued success:
Crane Co. will be a leading global provider of mission-critical, highly engineered products and solutions, with differentiated technology, respected brands, and leadership positions in its markets.
After the separation, Crane Co. will include the Aerospace & Electronics and Process Flow Technologies businesses.
This year, these businesses are expected to generate approximately $1.9B in annual sales with a pre-corporate Adjusted EBITDA margin of approximately 18.5%.
The company will be well-positioned to accelerate organic growth in its large and attractive end markets, benefit from favorable secular trends, and apply its proven processes to drive growth through new product development and commercial excellence.
Richard Teller Crane, Founder of Crane Co.
Crane Co. is expected to have a strong, well-capitalized balance sheet underpinning a capital deployment strategy focused on supporting the company’s organic and inorganic strategic growth objectives, while providing a dividend in-line with peers.
Crane Co. will be led by Max Mitchell, who will continue to serve as President and Chief Executive Officer, with Rich Maue continuing to serve as Chief Financial Officer.
The company intends to continue to be listed on the NYSE under its current ticker symbol, “CR”.
Crane NXT will be a premier Industrial Technology business with substantial global scale, a best-in-class margin profile, and strong free cash flow generation.
This year, the Payment and Merchandising Technologies business that will become Crane NXT is expected to achieve approximately $1.4 billion in sales with a pre-corporate Adjusted EBITDA margin of approximately 28%.
In addition to its market leading brands, Crane NXT will differentiate itself through its technology leadership, positioning it to leverage long-term secular drivers including automation, security and productivity, across several high-growth adjacent markets.
After the separation, Crane NXT will be positioned to drive earnings growth through continued investment in the business and value-enhancing bolt-on acquisitions. Its balance sheet and strong free cash flow will also allow it to support a robust and differentiated level of capital return to shareholders that is expected to include a competitive dividend.
Crane NXT’s shares are expected to be listed on the NYSE under the ticker symbol “CXT”. A process is currently underway to identify Crane NXT’s chief executive, including evaluation of both internal and external candidates.
The executives currently leading Crane’s PMT business will continue to serve in senior positions with Crane NXT.
The separation is expected to occur through a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to the Company’s shareholders.
Payment & Merchandising Technologies will be renamed Crane NXT concurrent with the separation, and the Aerospace & Electronics and Process Flow Technologies businesses will retain the Crane Co. name.
Upon completion of the separation, shareholders will own 100% of the equity in both of the publicly traded companies.
The separation is expected to be completed within approximately 12 months of this announcement, subject to the satisfaction of customary conditions and final approval of the separation by Crane Co.’s Board of Directors. Shareholder approval is not required.
Crane Co. will maintain its current capital deployment policies until the separation is completed.
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.
Berkshire Hathaway to acquire Alleghany for $848.02 per share
Berkshire Hathaway (BRK.A) and Alleghany (Y) jointly announced they have entered into a definitive agreement under which Berkshire Hathaway will acquire all outstanding Alleghany shares for $848.02 per share in cash.
Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally.ย
The transaction, which was unanimously approved by both boards of directors, represents a total equity value of approximately $11.6B.
Buffett buys Alleghany
The acquisition price represents a multiple of 1.26 times Alleghany’s book value at December 31, 2021, a 29% premium to Alleghany’s average stock price over the last 30 days and a 16% premium to Alleghany’s 52-week high closing price.
The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by Alleghany stockholders and receipt of regulatory approvals.
Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway after closing.
Chairman Jefferson Kirby, who controls 2.5% of Alleghany common shares, intends to vote his shares for the transaction.
Under the terms of the definitive merger agreement, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day “go-shop” period.
Alleghany has the right to terminate the merger agreement to accept a superior proposal during the go-shop period, subject to the terms and conditions of the merger agreement.
There can be no assurances that the “go-shop” process will result in a superior proposal, and Alleghany does not intend to communicate developments regarding the process unless and until Alleghany’s board of directors makes a determination requiring further disclosure.
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.
Ancora urges IAA to replace CEO or run sale process
IAA, Inc. (IAA) operates a digital marketplace that connects vehicle buyers and sellers. The company’s platform facilitates the marketing and sale of total loss, damaged, and low-value vehicles for a range of sellers. It provides buyers with various bidding/buying digital channels, vehicle merchandising, evaluation services and online bidding tools, and replacement part inventory.ย
IAA operates a car auction platform
Ancora Holdings Group, which beneficially owns approximately 2% of IAA’s outstanding common stock, sent a letter to the company’s board which stated in part,
“Given IAA’s underperformance and the fact that the Company’s market capitalization has plummeted by roughly 40% since reporting third quarter earnings in November 2021, the status quo cannot persist. We believe there are two strategic actions for the Board of Directors to consider at this point:
1. Replace Mr. Kett with a new CEO who is more dynamic and equipped to reinvigorate the organization. In our view, IAA needs a leader with a vision for achieving organic market share growth, improved margins and effective capital allocation.
2. If the Board is unwilling to act with urgency to improve leadership, it should run a formal sale process to sell the Company. ”
IAA salvage auction lot
The activist added, “In light of IAA’s attractive attributes and business model, we anticipate the Company would obtain a significant premium relative to its current share price if taken private by one of the many well-capitalized potential acquirers in the marketplace.
Ancora owns 5% of shares or $250M
We estimate a takeout price of $55 or more is achievable based on a trailing 12-month EBITDA of 15.5x and an analysis of peers’ valuations and precedent transactions.
2 At this point, a sale seems like the best risk-adjusted path forward for stockholders.”
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.
Ford CEO says no plans to spin off electric business or ICE business
Ford (F) CEO Jim Farley said while speaking at the Wolfe Research Auto, Auto Tech and Mobility conference:
Jim Farley, Ford CEO
“I wanted to talk quickly about running a successful ICE (internal combustion engines) business versus a BEV (battery-powered electric vehicle) business as we’re scaling. The customers are different.
The EV customers are not like our ICE customers. Our go-to-market as the result has to be digital, no inventory and remote. It’s different. We can bridge to it today, but we have to go much deeper…
Ford will ensure we have the right structure and talent in place to compete and win in this digital software-enabled vehicle business, but as well to revitalize our ICE business.
And here, I really want to emphasize the shift that we’re thinking about.
There’s a lot of focus on the digital electric growth opportunity. But we believe we have lots of room on our ICE business for better quality, lower structural costs and radical reduction in complexity.
All electric Ford Mustang
And despite the press speculation, we have no plans to spin off our electric business or ICE business. It’s really more around focus and capabilities, expertise and talent. Those are key for Ford, and this is what we’re working on. Now many companies have studied this.
Some even have a person in charge of EVs here and there. But trust me, Ford will go deeper because we know our competition is Nio and Tesla, and we have to beat them, not match them…
Nio electric car
We believe and we acknowledge that we have upside in our ICE business and it’s critical that we leverage that and we’ve been working on and making progress to get to that 8% EBIT margin as a company…
We believe that both ICE and BEV portfolios are under-earning. Let me say that one more time. This management team firmly believes that our ICE and BEV portfolios are under-earning and that is not price. That is lower structural costs, improving our bill of material for our BEV vehicles and scaling…
Tesla Model 3
The net all of this is we have ample headroom for growth, as you said, Rod, and increased our company EBIT margin target to get to that 8%… And what we want to get across to all of you is that we have a long view of Ford that we have rethought our entire portfolio.”
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