MGT Capital Higher on Funding

Cryptocurrency firm MGT Capital jumps after completing funding for mining expansion

Cryptocurrency firm MGT jumps after completing funding for mining expansion. See Stockwinners.com Market Radar for details

Shares of Bitcoin miner and cybersecurity developer MGT Capital (MGTI) are higher after the firm announced that it completed its $2.4M financing to expand its Bitcoin mining operations.

McAFEE CONNECTION

In November of 2016, the company announced that John McAfee, the colorful founder of software company McAfee Associates was appointed CEO.

McAfee, who had previously served as the company’s executive chairman, said, “The advancements in personal and enterprise technologies have exposed us to a greater number of cybersecurity threats than ever before.”

According to a statement from the firm, MGT with the help of McAfee has made several key acquisitions of exciting new technologies and has created one of the largest Bitcoin mining operations in the U.S.

This past March, MGT completed the development of its Bitcoin mining pool.

McAfee commented, “Our mining pool is a natural outgrowth of our investment in Blockchain technology as a foundation for future cybersecurity products. Large and respected Bitcoin mining operators will rapidly take over the enormous transaction processing requirements necessary for all companies to secure themselves in the near future.

In late June, the company announced an agreement with Bit5ive to aid in a pilot program to mine the latest cryptocurrency fad Ethereum.

“We are more convinced each day of the growth and value of digital currencies, and our company is uniquely positioned to be a leading provider of processing power to relevant blockchains. The addition of Ethereum and Ethereum Classic to our crypto mining strategies is expected to be very profitable for us,” said McAfee.

Last week MGT announced that McAfee had been appointed Chief Cybersecurity Visionary of MGT, with Robert Ladd, who had been serving as president, will reassume the role of Chief Executive Officer, and that H. Robert Holmes, a long time independent director, will reassume the position of chairman of the board.

PRICE ACTION

Shares of MGT Capital (MGTI) are off earlier highs, up 3.64% to $2.28 per share in late Wednesday’s morning trading.


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Barron’s is Bullish on Starbucks, Bearish on Motorola Solutions

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

BULLISH MENTIONS

Advance Auto Parts hit wall on Q2 results, but turnaround intact – In a follow up story, Barron’s says Advance Auto Parts (AAP) ran into a brick wall when it reported Q2 adjusted EPS of $1.58, below analyst expectations of $1.66, with revenue flat at $2.26B. Nonetheless, Advance Auto remains an “attractive self-help story,” with the turnaround expected to become clearer in Q4 and beyond, the publication noted

Gardner Denver integrated strategy beginning to pay off – Under KKR (KKR), who bought the company for $3.9B in 2013, Gardner Denver (GDI) has retooled its compressor and pump business, Jack Willoughby writes in this week’s edition of Barron’s. Based on Gardner Denver’s first quarterly report as a born-again public company, the integrated strategy is beginning to pay off, the publication noted, saying that upside is 40%.

Lockheed Martin should benefit from boost in military outlays – Large-cap defense stocks have had 20%-plus total returns over the past year, and more gains could be ahead for shares of the No. 1 U.S. defense contractor, Lockheed Martin (LMT), Lawrence Strauss writes in this week’s edition of Barron’s. An expected boost in U.S. military spending amid global tensions is driving the defense sector, the publication noted, adding that President Trump’s initial budget proposal for fiscal 2018 calls for a 9% increase.

Retail stocks swings could provide opportunity – This earnings season, retail companies are “either hitting a home run or striking out,” with misses from Foot Locker (FL),  and L Brands (LB), while Urban Outfitters (URBN) and Ross Stores (ROST) were massive winners, Ben Levisohn writes in this week’s edition of Barron’s. While this could be a new normal for retail stocks, the market’s sudden swings could provide opportunity, the publication noted.

Starbucks could jump 20% – There were plenty of reasons for skepticism when Starbucks (SBUX) rolled out its digital ordering system nationally in September 2015, but the company’s mobile order-and-pay feature has become a major hit, Alex Eule writes in this week’s edition of Barron’s. In the last quarter, 9% of Starbucks’ U.S. orders were placed in advance, and nearly a third of all its orders were paid for via the company’s phone app, the publication noted. Eule believes that the stock could jump 20% or more over the next 12 months

BEARISH MENTIONS

Public-safety broadband network may supplant Motorola systems – FirstNet has tapped AT&T (T) to build a public-safety network that could link every police, fire, and emergency medical officer in the U.S., Bill Alpert writes in this week’s edition of Barron’s. Alpert says it is a “nice opportunity” not only for AT&T, but also for cellular infrastructure providers like Crown Castle International (CCI), SBA Communications (SBAC), American Tower REIT (AMT), and CommScope Holding (COMM). However, it could produce “terrible static” for Motorola Solutions (MSI), the supplier of most traditional two-way radios, the publication noted, adding that eventually FirstNet may supplant the old systems.


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Short Squeeze in Urban Outfitters

Urban Outfitters jumps after reporting earnings, sales beat

Shorts Getting Squeezed in Urban Outfitters. See Stockwinners.com Market Radar to read more.

Shares of Urban Outfitters (URBN) rose in Wednesday’s trading after the retailer reported better than expected second quarter earnings per share and sales, although its comparable store sales declined.

EARNINGS

After the market close on Tuesday, Urban Outfitters reported Q2 EPS of 44c on revenue of $873M, handily beating analysts’ estimates of 37c and $861.78M, respectively. However, comparable retail segment net sales, which include the comparable direct-to-consumer channel, decreased 4.9% for the quarter.

By brand, comparable retail segment net sales increased 2.9% at Free People, but decreased 4% at the Anthropologie Group and 7.9% at Urban Outfitters.

The company said the decline in was due to negative retail store sales, which was partially offset by continued sales growth in the direct-to-consumer channel.

The company also reported an increase of wholesale segment net sales of 10% and a gross margin of 34.1%. “While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments,” CEO Richard Hayne said in a statement. “We believe these initiatives combined with encouraging fashion apparel trends could lead to improved topline performance in future quarters.”

SHORT RATIO

Prior to the earnings, shares of Urban Outfitters were trading at a 52-week low. Shares have been shorted heavily into the earnings report. The short ratio, short interest ratio (SIR) or float short for a public company is the ratio of tradable shares being shorted to shares in the market, or the float. It is an indirect metric of investor sentiment.

A short squeeze is a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock. Short squeezes result when short sellers cover their positions on a stock, resulting in buying volume that drives the stock price up.

Shorts Getting Squeezed in Urban Outfitters. See Stockwinners.com Market Radar for the story

ANALYSTS ENCOURAGED:

SunTrust analyst Pamela #Quintiliano reiterated a Buy rating on the stock saying the Q2 results and conference call were “encouraging” and the company’s comments about the positive momentum of its apparel business “bodes well” for 2H17.

Jefferies analyst Randal #Konik also kept a Buy rating and upped his price target to $25 from $23 saying he sees long-term opportunity as improved execution, cost savings and plans to invest in higher return areas are expected to drive margin recovery.

KeyBanc analyst Edward #Yruma kept a $26 price target and an Overweight rating on Urban, saying there are “reasons to believe that Urban Outfitters is finally turning the corner,” as the company’s “controlled store count, 35%+ e-commerce penetration, and focus on differentiated merchandise” are “attractive,” and the company’s selling of more products at regular prices could be “an early indicator of a turn.”

In addition, Baird analyst Mark #Altschwager said with its better earnings visibility, lean store base, clean balance sheet, brand-level operational improvements underway, and undemanding valuation metrics, he likes the 12 month risk/reward. Altschwager reiterated his Outperform rating and raised his price target to $22 from $21.

GOLDMAN STILL SAYS SELL

Goldman Sachs analyst Lindsay Drucker Mann said Urban Outfitters’ Q2 report showed a notable improvement in business relative to its mid-quarter comp update in early June; however, the analyst remains Sell rated given structural pressures impacting specialty retailers and said it’s too early to have conviction for sustained positive momentum.

Drucker #Mann stills sees risk to the downside and said negative sentiment across the group should keep a cap on multiples. The analyst raised Urban’s price target to $18 from $16.

INDUSTRY PEERS

Mall-based retailers and department stores have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping on sites such as Amazon (AMZN).

After the company reported weak Q1 results, Urban CEO Hayne commented that sluggish sales are “impacting virtually all U.S. brick-and-mortar retailers. There are simply too many stores and too many malls in North America.”

Nordstrom (JWN) said in June that members of its founding family formed a group to explore the possibility of pursuing a “going private” transaction, but WWD recently said that the retailer is not in negotiations with “anybody” regarding a potential sale.

Macy’s (M) last week reported another quarter of declining comps, though its EPS and revenue were above analysts’ estimates. While Macy’s backed its guidance for FY17, it forecast Q3 comp sales on an owned plus licensed basis down 2.5% “or worse” and fall season comp sales on an owned plus licensed basis to be down 0.8% to down 2.6%.

Kohl’s (KSS) also reported earnings last week, with EPS and revenue narrowly beating estimates, though its comp sales declined 0.4% from the year ago period.

J.C. Penney (JCP) reported a larger than expected loss for the latest quarter, with its comp sales dropping 1.3%.

Earlier in the year, Gap (GPS) said it would take steps to better position the company for improved business performance and that it was identifying opportunities to streamline its operating model to be “more efficient and flexible.”

Meanwhile, bebe (BEBE) secured deals with landlords in May to shutter all of its stores, allowing it to avoid bankruptcy and continue to sell products online.

PRICE ACTION

Urban Outfitters rose 17.5% to $19.76 in Wednesday’s trading. Shares are down nearly 29% year-to-date.


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Otonomy Could Rise to $28

Otonomy seen rallying up to 95% on positive Meniere’s disease data

Otonomy seen rallying up to 95% on positive Meniere's disease data. See Stockwinners.com Market Radar to learn more

JPMorgan this morning upgraded Otonomy (OTIC) to Overweight from Neutral, saying that the stock could rise up to 95% if the results of an upcoming trial of its #Otividex drug are positive.

Otividex is supposed to treat #Meniere’s disease, which affects the inner ear and causes vertigo and hearing loss.

RISK/REWARD FAVORABLE

There is a 70% chance that the results of the trial will be positive, wrote JPMorgan analyst Anupam Rama in a note to investors. Adjustments the company made ahead of the trial, whose results are due out next month increase the probability that the trial will be successful, according to the analyst. If the results are positive, Otonomy’s stock will jump 65%-95%, while a negative outcome would cause the stock to fall 25%-35%, he predicted.

HIGH UNMET NEED

There are currently no treatments that have been approved specifically for Meniere’s disease, according to Rama. Steroids, which are currently used to treat the condition, produce “variable” outcome that are “not optimal in all cases,” while surgery/ablative treatment is viewed as “a last resort,” he stated. The analyst believes that there is a “high unmet need” for a #Meniere’s disease treatment.

Meniere’s disease is a disorder of the inner ear that causes episodes in which you feel as if you’re spinning (vertigo), and you have fluctuating hearing loss with a progressive, ultimately permanent loss of hearing, ringing in the ear (tinnitus), and sometimes a feeling of fullness or pressure in your ear. In most cases, Meniere’s disease affects only one ear.

TARGET

Rama raised his price target on Otonomy (OTIC) to $28 from $17.

PRICE ACTION

In Tuesday morning trading, Otonomy jumped 8.7% to $18.70.


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Neff Receives $25 a Share Offer

Neff announces receipt of superior proposal for $25 per share in cash

Neff Corp sold for $1.2 Billion. See Stockwinners.com Market Radar to read more.

Neff Corporation (NEFF) announced that its Board of Directors has determined that an acquisition proposal received from a strategic bidder to acquire all of the outstanding shares of Neff common stock for $25.00 per share in cash constitutes a “Superior Proposal” as such term is defined in the company’s previously announced agreement and plan of merger with H&E Equipment Services (HEES).

The definitive terms and conditions of a merger agreement and other related agreements detailing the acquisition proposal have been fully negotiated, and such agreements are subject only to execution by the Company.

See our earlier blog about this company.

In making its determination that the bidder’s proposal constitutes a Superior Proposal, the Board consulted with its independent financial advisor and outside legal counsel. Under the terms of the Existing Merger Agreement, H&E agreed to acquire all of the outstanding shares of Neff common stock for $21.07 per share in cash, subject to certain potential downward adjustments.

The company has provided notice to H&E of the Board’s determination that the proposal constitutes a Superior Proposal.

Under the Existing Merger Agreement, H&E has certain matching rights, including the right to propose modifications to the terms of the Existing Merger Agreement and related agreements prior to the expiration of a five business day period.

The company is required to, and intends to, negotiate in good faith with H&E during this period.

Under the Existing Merger Agreement, the company is required to pay a $13.2M termination fee to H&E if the Company terminates the Existing Merger Agreement in order to enter into an agreement with the bidder.

The bidder has agreed to pay the termination fee to H&E on the company’s behalf in such event.

The company’s Board has not changed its recommendation in support of the H&E merger. There can be no assurance that a transaction with the bidder will result from the bidder’s offer or that any other transaction will be consummated.


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Western Refining Logistics Sold for $1.8 Billion

Western Refining Logistics Sold for $25.28 per share

Western Refining Logistics Sold for $25.28 per share. See Stockwinners.com Market Radar

Andeavor (ANDV), Andeavor Logistics LP (ANDX) and Western Refining Logistics, LP (WNRL) announced the merger of Andeavor Logistics and Western Refining Logistics and the financial repositioning of Andeavor Logistics through a buy-in of Andeavor Logistics’ incentive distribution rights.

These transactions will generate approximately 93M newly issued ANDX common units to Andeavor, which will bring Andeavor’s total ownership to approximately 127M units.

Andeavor Logistics and WNRL jointly announced a definitive merger agreement whereby Andeavor Logistics will acquire WNRL in a unit-for-unit exchange at a blended exchange ratio of 0.4921, representing an equity value of $1.5B based on Andeavor Logistics closing unit price of $48.31 on August 11, 2017.

Western Refining unitholders will receive 0.5233 Andeavor Logistics units for each Western Refining unit. The deal values each Western Refining unit at $25.28, representing a premium of 6.4 percent to Western Refining Logistics’ Friday closing price.

This represents an enterprise value of $1.8 billion, including the assumption of approximately $310M of WNRL’s net debt.

The estimated 2018 EBITDA multiple is approximately 8.6x, excluding estimated 2018 GP/IDR distributions for WNRL of $22M.

Andeavor and Andeavor Logistics also announced an agreement for Andeavor Logistics to issue, conditional upon the closing of the Merger, 78M ANDX common units to Andeavor in exchange for the cancellation of Andeavor Logistics’ IDRs.

The IDR Buy-In is expected to take place immediately after the Merger.

These transactions have been approved by the boards of directors of all three companies as well as the conflicts committees of both MLPs.

Upon closing, Greg Goff will continue to serve as Chairman and Chief Executive Officer and Steven Sterin as President and Chief Financial Officer of the general partner of Andeavor Logistics.

The Merger transaction and IDR Buy-In is expected to close in the fourth quarter 2017 and the Merger is subject to customary closing conditions, including regulatory and approval from holders of a majority of the WNRL units.


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Watch Achieve Life Sciences

FDA accepts the Investigational New Drug application for Cytisine as a smoking cessation treatment

Watch Achieve Life Sciences. See Stockwinners.com Market Radar to read more.

Achieve Life Sciences (ACHV) announced that the U.S. FDA has accepted the Investigational New Drug application for cytisine, an established smoking cessation treatment that has been approved and marketed in Central and Eastern Europe for more than 15 years.

The company is now authorized to proceed with clinical development of cytisine in the U.S.

Cytisine is a plant-based alkaloid with a high binding affinity to the nicotinic acetylcholine receptor.

It is estimated that over 20 million people have used cytisine to help combat nicotine addiction, including approximately 2,100 patients in Phase 3 clinical trials conducted in Europe and New Zealand.

Achieve expects to commence a Phase 3 trial of cytisine in the United States in the first-half of 2018.

Two prior, large-scale Phase 3 clinical studies of cytisine, with favorable outcomes, have been successfully completed in over 2,000 patients.

The #TASC trial was a 740 patient, double-blind, placebo controlled trial conceived by Professor Robert West at University College London and funded by the U.K. National Prevention Research Initiative. The CASCAID trial was a 1,310 patient, single-blind, non-inferiority trial comparing cytisine to nicotine replacement therapy (NRT).

The #CASCAID trial was conceived by Dr. Natalie Walker, National Institute for Health Innovation, University of Auckland and funded by the Health Research Council of New Zealand.

Both trials were published in the New England Journal of Medicine.

STOCK PRICE

Achieve Life Sciences, Inc. (ACHV) has a 52-week trading range of $2.77 – $4.85. It closed at $2.97. Please note that this is a low volume stock, it only trades 46k shares a day. Be careful!

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Planet Payment is For Sale

Planet Payment Announces Exploration of Strategic Alternatives

Planet Payment announces exploration of strategic alternatives. See Stockwinners.com Market Radar for details.

Planet Payment (PLPM) announced that its Board of Directors, working together with its management team and legal and financial advisors, has commenced a process to explore and evaluate potential strategic alternatives focused on maximizing shareholder value.

These alternatives could include, among other things, the sale of the company, a merger with another party or other strategic transaction or continuing to execute on Planet Payment’s stand-alone business plan.

“Planet Payment’s Board of Directors is committed to fully evaluating appropriate strategic alternatives while simultaneously supporting the company’s management and employees in their ongoing efforts to deliver innovative products and outstanding service to our customers,” said Carl J. Williams, Chairman and CEO of Planet Payment.

“We believe that pursuing these complementary paths is in the best interests of our shareholders and is designed to maximize value.”

The Company’s Board has not set a timetable for this process nor has it made any decisions related to any specific strategic alternatives at this time.

There can be no assurance that the exploration of strategic alternatives will result in a transaction. The Company does not intend to provide any updates unless or until it determines that further disclosure is appropriate or necessary.

PRICE ACTION

PLPM closed at $3.17. It has a 52-week trading range of $2.75 – $4.64. It only trades about 120K per day.

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American Medical Response Sold for $2.4 Billion

Envision Healthcare to sell American Medical Response

Envision Healthcare to sell American Medical Response. See Stockwinners.com Market Radar to read more.

Envision Healthcare (EVHC) and an entity controlled by funds affiliated with KKR (KKR) have entered into a definitive agreement under which KKR’s portfolio company, Air Medical Group Holdings and Envision’s medical transportation subsidiary, American Medical Response, will combine to create a new industry leading medical transportation company. The transaction will be structured as a cash acquisition of AMR from Envision valued at $2.4B.

The combination of AMGH and AMR will create an integrated medical transportation company with the capability to serve patients across multiple transport modalities in the patient’s time of need.

The combined company is expected to transport more than five million patients per year through a fleet of air and ground ambulances across 46 states and the District of Columbia.

Upon completion of the transaction, the combined company will adopt a new name that reflects the unique capabilities of the two organizations. Following the closing of the transaction, AMR and AMGH will continue to support operations from two key leadership locations in Greenwood Village, CO, and Lewisville, TX.

The new company’s two divisions will continue to be led by strong leaders with extensive experience running medical transportation organizations.

The pending acquisition is subject to regulatory approval and customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the fourth quarter of 2017.

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NxStage Medical Sold for $2 Billion

NxStage Medical to be acquired by Fresenius Medical for $30 per share

NxStage Medical to be acquired by Fresenius Medical for $30 per share. See Stockwinners.com Market Radar

Fresenius Medical Care (FMS) has signed an agreement to acquire NxStage Medical (NXTM).

NxStage, with 3400 employees, develops, produces and markets an innovative product portfolio of medical devices for use in home dialysis and in the critical care setting.

In 2016, NxStage delivered $366M in revenue. Fresenius Medical Care intends to acquire all outstanding shares of NxStage through a merger for $30.00 per common share, thus the transaction would be valued at approximately $2B.

The merger, which has been approved by NxStage’s board, is subject to approval of NxStage stockholders, receipt of regulatory approvals and other customary closing conditions.

Fresenius Medical Care currently expects the closing to occur in 2018.

The transaction would be cash and debt financed. An initial net cost synergies potential of approximately $80M to $100M p.a. before tax over three to five years is expected.

Integration cost of around $150M in the first three years from announcement are assumed.

Fresenius Medical Care expects the acquisition to be accretive to net income and EPS within three years from closing.

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MyoKardia Sharply Higher on Phase 2 Results

MyoKardia says Phase 2 PIONEER-HCM study met primary, key secondary endpoints

MyoKardia says Phase 2 PIONEER-HCM study met primary, See Stockwinners.com Market Radar

MyoKardia (MYOK) announced positive topline data from the first patient cohort of its Phase 2 PIONEER-HCM study of mavacamten in symptomatic, obstructive hypertrophic cardiomyopathy, or oHCM, patients.

This cohort met the primary endpoint of change in post-exercise peak left ventricular outflow tract, or LVOT, gradient from baseline to week 12 as well as key secondary endpoints, including peak oxygen consumption, or peak VO2.

Based on these results and subject to discussions in the coming months with the FDA, MyoKardia is planning for its next study, EXPLORER-HCM, to be a pivotal study.

EXPLORER-HCM is expected to initiate by the end of this year. In this first patient cohort of PIONEER-HCM, 11 patients enrolled and 10 completed the study.

A statistically significant improvement was observed in the primary endpoint, change in post-exercise peak LVOT gradient from baseline to week 12.

After 12 weeks of treatment, all 10 subjects achieved a reduction in post-exercise peak LVOT gradient from a baseline mean of 125 mmHg. In eight of the 10 subjects, the post-exercise peak LVOT gradient was reduced below the diagnostic threshold for oHCM, with the other two patients’ measurements below 50 mmHg.

Clinically meaningful improvements in resting LVOT gradient were observed as early as week 2 in nine out of 10 subjects, providing the rationale for the addition of a second, low-dose cohort to the PIONEER study.

Additionally, clinically and statistically significant improvements were observed in peak VO2.

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Genesis Energy to Buy Tronox Alkali Business for $1.33B in cash

Genesis Energy agrees to acquire Tronox Alkali Business for $1.33B in cash

Genesis Energy to Buy Tronox Alkali Business for $1.33B in cash. See Stockwinners.com Market Radar for details

Genesis Energy (GEL) announced that it has entered into a stock purchase agreement with a subsidiary of Tronox (TROX) to acquire all of Tronox’s trona and trona-based exploring, mining, processing, producing, marketing and selling business for approximately $1.33B in cash.

The Alkali Business is the world’s largest producer of natural soda ash, also known as sodium carbonate, a basic building block for a number of ubiquitous products, including flat glass, container glass, dry detergent and a variety of chemicals and other industrial products.

The Alkali Business produces approximately four million tons of natural soda ash per year, representing approximately 28% of all the natural soda ash produced in the world and, based on current production rates, has an estimated reserve life remaining of over 100 years.

Having been in continuous operations for almost 70 years, it sells its products to a broad, industry-diverse and worldwide customer base, including numerous long-term relationships.

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Discovery to acquire Scripps for $14.6B

Discovery to acquire Scripps for $90 per share in cash and stock deal

Media Stocks to Watch, Stock to Watch today, Stock of the day, Stock Headline, media mergers

Discovery Communications (DISCA) and Scripps Networks Interactive (SNI) announced that they have signed a definitive agreement for Discovery to acquire Scripps in a cash-and-stock transaction valued at $14.6B, or $90 per share, based on Discovery’s Friday, July 21 closing price.

The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday, July 18, 2017.

The transaction is expected to close by early 2018.

Combined, Discovery and Scripps will have nearly 20% share of ad-supported pay-TV audiences in the U.S. Additionally, the combined company will be home to five of the top pay-TV networks for women and will account for over 20% share of women watching primetime pay-TV in the U.S.

The combination is expected to create significant cost synergies, estimated at approximately $350M. The deal is expected to be accretive to adjusted EPS and to Free Cash Flow in the first year after close.

Scripps shareholders will receive $90 per share under the terms of the agreement, comprised of $63.00 per share in cash and $27.00 per share in Class C Common shares of Discovery stock, based on Discovery’s Friday, July 21 closing price. The stock portion will be subject to a collar based on the volume weighted average price of Discovery Class C Common Shares over the 15 trading days ending on the third trading day prior to closing.

Scripps shareholders will receive 1.2096 Discovery Class C Common shares if the Average Discovery Price is below $22.32, and 0.9408 Discovery Class C Common shares if the Average Discovery Price is above $28.70. If the Average Discovery Price is greater than or equal to $22.32 but less than or equal to $28.70, Scripps shareholders will receive a number of shares between 1.2096 and 0.9408 equal to $27.00 in value.

If the Average Discovery Price is between $22.32 and $25.51, Discovery has the option to pay additional cash instead of issuing more shares.

Scripps shareholders will have the option to elect to receive their consideration in cash, stock or the mixture described above, subject to pro rata cut backs to the extent cash or stock is oversubscribed. This purchase price implies a total transaction value of $14.6 billion, including the assumption of Scripps’ net debt of approximately $2.7 billion.

Post-closing, Scripps’ shareholders will own approximately 20% of Discovery’s fully diluted common shares and Discovery’s shareholders will own approximately 80%. Kenneth Lowe, Chairman, President & CEO, Scripps Networks is expected to join Discovery’s board following the close of the transaction.

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