Zynerba is Worth Watching

Watch Zynerba ahead of trial data on its its ZYN002 for in adult epilepsy patients

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With #Zynerba Pharmaceuticals (ZYNE) expected to release data from a Phase 2 trial over the next several weeks,#Jefferies analyst Biren #Amin recently argued that a positive update could lead the shares north of $65-$75. However, a lack of treatment effect could drop the stock to $4-$5.

CANNABIDIOL GEL

Over the coming weeks, Zynerba is expected to announce data from its ZYN002 #cannabidiol, or #CBD, gel Phase 2 STAR 1 trial in adult epilepsy patients with refractory focal seizures.

ZYN002 is a synthetic CBD formulated as a permeation-enhanced gel for transdermal delivery.

BINARY EVENT

In a research note to investors, Jefferies’ Amin pointed out that the STAR-1 trial represents a “critical catalyst” for Zynerba as it provides the first proof of concept for transdermally delivered CBD.

Given investors naturally compare the program to GW Pharmaceuticals’ (GWPH) #Epidiolex, and oral CBD, the analyst believes a better comparison would be to therapies tested in patients with partial-onset seizures who are uncontrolled on their current therapy.

Additionally, Amin noted that while the study is designed for a 20% treatment effect over a placebo, an effect greater than 15% could be considered clinically relevant. A key question that remains unanswerable is the extent of activity observed with ZYN002 given this is the first study evaluating efficacy in epilepsy patients, he contended.

He told investors that positive data could lead to shares north of $65-$75, but a lack of treatment effect could drop shares to $4-$5. The analyst assumes ZYN002 is successfully developed and launched for refractory epilepsy in 2019.

Amin reiterated a Buy rating and a $32 price target on the shares.

PRICE ACTION

In Thursday’s trading, shares of Zynerba dropped 2% to $18.81. Over the last month the stock is up 10%, but over the last three months it has declined nearly 24%.

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BankMutual Sold for $482 Milion

Associated Banc-Corp to acquire BankMutual for $10.38 per share

Stocks to Buy on Margin

Associated Banc-Corp (ASB) and Bank Mutual (BKMU) (“Bank Mutual”) announced that they have entered into a definitive agreement under which Bank Mutual will merge with and into Associated. Bank Mutual’s bank subsidiary will also merge with and into Associated’s bank subsidiary, Associated Bank, N.A.

The all stock transaction is valued at approximately $482M, based on Associated’s July 19 closing stock price of $24.60 per share.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Bank Mutual shareholders will receive 0.422 shares of Associated common stock for each share of Bank Mutual common stock.

The per common share consideration is valued at $10.38 per share based on the closing price of Associated common stock on July 19.

Subject to customary closing conditions, including regulatory approvals and approval by the Bank Mutual shareholders, the transaction is expected to close in the first quarter of 2018.

Associated expects this acquisition to be accretive to earnings per common share in 2019, excluding one-time charges, and expects the transaction to deliver strong returns on capital.

The transaction is expected to produce less than 1% tangible book value per share dilution at closing.

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Avista Sold for $5.3 Billion Cash

Avista acquired by Hydro One for $53 per share

 

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Hydro One Limited and and Avista Corp. (AVA) dustry-leading regulated utilities with over 230 years of collective operational experience as well as shared corporate cultures and values.

The combined entity will safely and reliably serve more than two million retail and industrial customers and hold assets throughout North America including Ontario, Washington, Oregon, Idaho, Montana and Alaska.

“This marks a proud moment for Canadian champions as we grow our business into a North American leader,” said Mayo Schmidt, President and CEO, Hydro One Limited.

“This transaction demonstrates the power and value of the transition into an investor-owned utility, by allowing for healthy expansion into new lines of regulated utility business and new jurisdictions, such as the U.S. Pacific Northwest which is experiencing customer and economic growth.”

“With a focus on operational excellence and building our earnings streams, we are positioned for long-term, sustainable growth,” said Schmidt.

“We are further accomplishing this goal by bringing together two companies with shared cultures and industry expertise to create a North American regulated utility leader. This combination means greater scale, diversity and financial flexibility.”

Hydro One has a uniquely strong track record consolidating electricity utilities. Since the IPO, Hydro One has also delivered on cost savings and efficiencies for shareholders and customers.

Through the company’s energy conservation programs, Hydro One has helped customers and municipalities save 700 GWh year-to-date.

“Since our initial public offering, we have significantly enhanced our current operations while exploring opportunities that extend and diversify our regulated assets,” said #MayoSchmidt.

“We constantly seek to deliver exceptional value to shareholders, customers, and the communities we serve through stable, increasing regulated returns, exceptional service, and community engagement.”

This strategic combination demonstrates the value of consolidation by bringing together two highly complementary platforms to create one of North America’s largest regulated utilities, meaningfully enhancing both shareholder and customer value.

In addition, over time, non-headcount efficiencies will be realized through collaboration and sharing of best practices on IT, innovation and supply chain purchasing, all of which will further enhance cost savings.

No workforce reductions are anticipated as a result of this transaction for either Avista or #HydroOne.

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Stocks to Watch – Changes to S&P Indices

ResMed, Packaging Corp., A.O. Smith, Duke set to join S&P 500 at open on 7/26

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S&P MidCap 400 constituents ResMed (RMD), Packaging Corporation of America (PKG), A.O. Smith Corp. (AOS) and Duke Realty Corp. (DRE) will replace Mallinckrodt (MNK), Murphy Oil (MUR), Bed Bath & Beyond (BBBY) and Transocean (RIG) respectively, in the S&P 500 effective prior to the open of trading on Wednesday, July 26.

MGM Resorts Int’l. (MGM) will replace Reynolds American Inc. (RAI) in the S&P 500. British American Tobacco plc  is acquiring Reynolds American in a deal expected to be completed on July 25, pending final conditions.

Mallinckrodt, Murphy Oil, Bed Bath & Beyond and Transocean will replace ResMed, Packaging Corporation of America, A.O. Smith and Duke Realty, respectively in the S&P MidCap 400.

All stocks moving to the S&P 500 have total market capitalizations above $10B making them more representative of the large-cap market space.

All stocks moving to the S&P MidCap 400 have total market capitalizations below $4.5B making them more representative of the mid-cap market space.

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Vertex Higher on its Cystic Fibrosis Drug

Vertex jumps after ‘wowing’ analysts with cystic fibrosis data

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Shares of Vertex (VRTX) are on the rise after the company reported positive data from Phase 1 and Phase 2 studies of three different triple combination regimens in people with cystic fibrosis who have one #F508del mutation and one minimal function mutation.

Reacting to the news, several Wall Street analysts upgraded the stock to buy-equivalent ratings and raised their price targets on the shares.

BUY VERTEX

In a research note to investors this morning, Janney Capital analyst Debjit Chattopadhyay upgraded Vertex to Buy, stating that the Phase 2 data for its three triple combination programs in CF were “significantly above the most optimistic expectations.”

The analyst argued that the quality of the data should allow Vertex to potentially accelerate commercialization under the “New FDA” and importantly sets the bar very high for competition. Citing its “potential dominance of CF,” Chattopadhyay said he thinks Vertex becomes the “most logical large-cap M&A target.”

Chattopadhyay was not the only analyst upgrading the stock this morning.

His peer at Cowen also upgraded Vertex to Outperform, saying efficacy data from its triple regimens showed “breakthrough-quality” results, and will very likely “dramatically” improve the quality of life and extend the life span of 80% of the 75K patients with CF worldwide.

Phil Nadeau pointed out that he expects a launch in 2021 and $10B in franchise sales in 2025. The analyst raised his price target on the shares to $200 as he sees a 10-year path of revenue growth for Vertex.

Meanwhile, Barclays analyst Geoff Meacham told investors that he thought the Phase 2 data in CF was an “unequivocal success and constitutes a major de-risking event.” Citing more confidence in the viability of the triple combo and the likely accelerated development path, the analyst upgraded Vertex to Overweight and raised his price target on the stock to $180.

Also this morning, Raymond James analyst Laura Chico upgraded Vertex to Outperform, with a $181 price target, citing the “compelling” efficacy data for its triple-combo CF regimens.

WOW: JPMorgan analyst Cory Kasimov began his research note with “Wow. Just wow,” following last night’s data release from Vertex.

To say that the initial results for Vertex’s triple combinations beat expectations would be an understatement, Kasimov told investors, adding that the data not only sets up well to reach a large majority of the CF patient population, but also greatly increases the competitive hurdle while also enhancing the scarcity value of the company. He raised his price target on the shares to $175 and reiterated an Overweight rating on the name.

Credit Suisse, Stifel, Citi and Piper Jaffray also raised their price targets on the stock following the data release.

OTHERS TO WATCH

Competitor Galapagos (GLPG) is sliding in morning trading following Vertex’s CF data announcement.

However, commenting on the news, H.C. Wainwright analyst Andrew Fein said the data may also be “encouraging” in a roundabout way for Galapagos and another smaller company exploring an add-on to a CF doublet combo, Proteostasis (PTI).

If increasing the dosing of the Vertex compounds does not differentiate them further in efficacy, then this consistency in benefit “may truly be a class phenomenon,” and similar results should be expected from any competitor add-on agent out there, he suggested.

PRICE ACTION

In Wednesday’s trading, shares of Vertex (VRTX) have gained about 22% to $161.26, while Galapagos and Proteostasis have dropped over 4% and 3%, respectively.

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Stocks to Watch: Paratek Pharmaceuticals Study Meets EndPoint

Paratek study meets primary, secondary FDA, EMA efficacy endpoints

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Paratek Pharmaceuticals (PRTK) announced positive top-line results from a pivotal Phase 3 clinical study comparing its once-daily, oral investigational antibiotic, omadacycline, to twice-daily oral linezolid in the treatment of acute bacterial skin and skin structure infections.

The study met all of its primary and secondary endpoints required to support approval for this indication by the U.S. Food and Drug Administration and the European Medicines Agency.

This represents the third positive Phase 3 registration study of omadacycline.

“This successful study demonstrates the potential of an oral-only dosing regimen of omadacycline, which would enable treatment in the outpatient setting and potentially reduce the need for admission to the hospital,” said Michael Bigham, Chairman and Chief Executive Officer of Paratek.

“The utility of the oral only dosing regimen represents a significant potential benefit to patients and prescribers who are in need of new, effective oral agents to combat serious community-acquired infections.”

The pivotal Phase 3 clinical study known as #OASIS-2 evaluated the efficacy and safety of once-daily, oral-only omadacycline compared to twice-daily, oral-only linezolid in 735 adults with ABSSSI.

#Omadacycline met the FDA-specified primary endpoint of statistical non-inferiority in the modified intent-to-treat population compared to linezolid at the early clinical response 48 to 72 hours after the first dose of study drug.

The ECR rate for omadacycline was 87.5% compared to 82.5% for linezolid.

Additionally, omadacycline met statistical NI compared to linezolid for the EMA-specified co-primary endpoints at the post therapy evaluation, 7 to 14 days after completion of therapy in the mITT and the Clinically Evaluable populations.

Clinical success rates at PTE in the mITT population for the omadacycline and linezolid arms were 84.2% vs. 80.8%, respectively; and in the CE population were 97.9% vs. 95.5%, respectively.

Omadacycline demonstrated high clinical success rates for infections caused by the most common #ABSSSI pathogens, including methicillin-resistant Staphylococcus aureus.

STOCK PRICE

PRTK last traded at $24.95. Stock has a 52-week trading range of $9.80 – $26.10.

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Multi-Color on $1.3 Billion Shopping Spree

Multi-Color to acquire Labels Division of Constantia Flexibles for $1.3B

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Multi-Color announces that it has signed a definitive agreement to acquire the Labels Division of Constantia Flexibles from Constantia Flexibles GmbH for approximately $1.3B, payable in cash and stock.

The combined annual revenues and EBITDA of the two businesses will be approximately $1.6B and $300M, respectively.

The combination brings together Constantia Labels’ high performing Food and Beverage business with Multi-Color’s strong Wine and Spirit, and Home and Personal Care platforms, and emerging global position in Healthcare.

Additional growth opportunities for Multi-Color exist in Home and Personal Care by utilizing Constantia Labels’ European operational footprint and assets. Growth opportunities for Constantia Labels exist in Food & Beverage and derive from Multi-Color’s U.S. operational footprint and assets.

The stronger combined footprint in Asia will provide further revenue opportunities. Cost synergies are anticipated to reach $15M by FY20 through a combination of procurement, SG&A, and manufacturing efficiencies.

As an example, Multi-Color will utilize Constantia Labels’ pressure sensitive substrate manufacturing capability in the U.S. and Europe to drive future efficiencies. Both companies currently generate EBITDA margins of approximately 18%.

As part of the transaction, Mike Henry, current EVP and Head of Constantia Labels, is expected to become CEO-elect of Multi-Color Corporation.

Current Multi-Color CEO, Vadis Rodato, is expected to retire in early 2018 after a transition period. Nigel Vinecombe will remain Executive Chairman. Two representatives of Constantia Flexibles will join Multi-Color’s board, and the shares issued as consideration will be subject to customary lock-up provisions.

The transaction is expected to close in Q3 of 2018.

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Dominion Diamond Sold for $1.2 Billion

Dominion Diamond to be acquired by The Washington Cos for $14.25/share in cash

 

Dominion Diamond in advanced talks to be bought by Washington Companies. See Stockwinners.com Market Radar for more

 

Dominion Diamond (DDC) and The Washington Companies, a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington, announced that they have entered into an arrangement agreement under which an entity affiliated with Washington will acquire all of Dominion’s outstanding common shares for $14.25 per share in cash or a total equity value of approximately $1.2B pursuant to a plan of arrangement under the Canada Business Corporations Act.

The transaction represents a 44% premium to Dominion’s unaffected share price of $9.92 on March 17, 2017. The transaction marks the result of Dominion’s review of strategic alternatives as previously announced on March 27, 2017.

The Board of Directors of Dominion, after consultation with financial and legal advisors, and based on the recommendation of a special committee of the Board consisting of four independent directors, has unanimously determined that the Arrangement is in the best interests of the Company, approved the Arrangement and recommends that Dominion’s shareholders vote in favor of the Arrangement.

All directors of the Company have entered into support agreements to vote their common shares in support of the Arrangement.

As part of this acquisition, Washington plans to: Operate Dominion as a standalone business as Washington does with its other successful operating companies; Appoint a new CEO based in Canada to the Dominion management team; Keep Dominion’s headquarters in Canada and maintain a significantly Canadian management team.

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Barron’s is Bullish on Adidas, Cisco, Whirlpool and Gilead

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue is bullish on several names. They include:

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Adidas could double as profit margins expand, Barron’s says – Despite the nearly 40% run up in the past 12 months, adidas (ADDYY) shares still have significant upside, particularly if the company can make good on its goal of achieving the lofty profit margins of rival Nike (NKE), Victor Reklaitis writes in this week’s edition of Barron’s, citing portfolio managers for European equities at Hermes Investment Management.

Vertex, Gilead seen as innovators, Barron’s says – Jason #Kritzer and Samantha Pandolfi, co-managers of Eaton Vance Worldwide Health Sciences fund, believe it is “a great time” to invest in the health care sector, with a lot of innovation under way by drugmakers, medical-device companies and companies developing technologies used to deliver health care, Johanna Bennett writes in this week’s edition of Barron’s. Eaton Vance finds innovation in Vertex (VRTX), Zoetis (ZTS), and Gilead (GILD), publication notes.

Visteon rally far from over, Barron’s says – In a follow-up story, Barron’s tells readers that while shares of Visteon (VC) are up sharply this year, due to the popularity of the company’s auto electronics, the stock could have more room to run. Rapid earnings growth could power Visteon’s shares to $116 from $105, and a deal could lift them even higher, the publication notes, adding that potential buyers include nontraditional auto plays, such as Apple (AAPL) and Alphabet (GOOGL; GOOG), which are developing driverless cars.

Cisco seems undervalued as future looks brighter, Barron’s says – Seen as “Old Tech,” Cisco (CSCO) seems overlooked, while Verint Systems appears overvalued, Vito Racanelli writes in this week’s edition of Barron’s. With its 3.7% dividend yield, the former could be just “the ticket for a healthy-double-digit annual return” with somewhat low downside over the next 24 months, the publication notes.

Trade policy may favor some Americans over others, Barron’s say – Steel tariffs and import restrictions may secure profits for steel mills and employment for steel workers, but will inevitably drive up the cost of any product, Thomas Donlan writes in this week’s edition of Barron’s, noting that other American companies are the customers of the U.S. steel industry and protectionism will not put them first. While protecting steel is supposed to solidify national defense, protectionism actually “hardens the economic arteries of commerce,” Donlan added. Companies that may be impacted by Trump’s potential steel tariffs include U.S. Steel (X), AK Steel (AKS), Nucor (NUE), Steel Dynamics (STLD), ArcelorMittal (MT), Alcoa (AA), and Century Aluminum (CENX).

Whirlpool could rise 35% next year, Barron’s says – Whirlpool (WHR) is a “cash machine” for shareholders, and despite coping with the aftermath of the U.S. housing crisis, price competition from South Korean rivals, and troubled markets like Brazil, the maker of washers, dryers, dishwashers, ovens, and refrigerators has more than doubled earnings since 2012, Robin Goldwyn Blumenthal writes in this week’s edition of Barron’s. The shares remain cheap, the publication noted, but the stock may be worth about $260 a share, or 35% higher, if Whirlpool can continue to execute well in the year ahead.

Orion Engineered aiming for continued gains, Barron’s says – The carbon-black market is growing twice as fast as the commodity business and is more profitable, Nicholas #Jasinski writes in this week’s edition of Barron’s. Orion Engineered (OEC) is the smallest of the three key global players, after Cabot (CBT) and Aditya Birla, but is the largest in the specialty carbon-black market, and “a little gem hiding in all of this black dust,” the publication noted. Orion’s long-term relationships with customers give the company the bargaining power to negotiate contracts indexed to the cost of carbon black’s main input, namely oil, the report added.

Bearish Names

Premium video on demand may pressure movie-theater operators, Barron’s says – This year, stocks of AMC Entertainment (AMC), Regal Entertainment (RGC) and Cinemark (CNK) have declined due to a “mediocre” summer box office on franchise fatigue, more beguiling choices on Netflix (NFLX) or Amazon (AMZN), and as technology is changing people shop, Kopin Tan writes in this week’s edition of Barron’s. Studios and distributors like Comcast’s (CMCSA; CMCSK) Universal Pictures or Walt Disney (DIS) are now debating how to roll out “premium video-on-demand,” which lets viewers watch a movie within a day to 50 days after it hits the big screen, the publication adds, pointing out that while this can benefit the studios, theaters will have much to lose.

Verint looks overvalued given performance, Barron’s says – Riding the “tech momentum” but looking overvalued, Verint Systems weakening track record over the past four years suggests that investor enthusiasm is misplaced, Vito Racanelli writes in this week’s edition of Barron’s. Verint Systems (VRNT) does not look like a tech company with sustainable growth, with its revenue growth dropping steadily, the report notes.

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Berkshire, Liberty Media Exploring Sprint Investment

 

Berkshire may invest more than $10B into the transaction with Sprint

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Sprint Corp’s boss, Masayoshi Son, has been in talks with Berkshire Hathaway Inc’s Warren Buffett and media mogul John Malone for a potential investment in the U.S. wireless company, the Wall Street Journal reported

Talks are at an early stage, but one possibility would see Berkshire put more than $10B into a transaction with Sprint, the sources added to the Journal.

Son met Buffett and Malone, the chairman of Liberty Interactive Corp, separately this week at an annual gathering of CEOs in Sun Valley, Idaho, the Journal reported.

Rumors of a Sprint sale have been circulating the market for the past few month. T-Mobile (TMUS) has often being mentioned a suitor along with some cable companies.

S is up 37 cents to $8.57. Sprint has a 52-week trading range of $4.420 – $9.650.

 

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Macau Casinos Drop on Money Laundering Probe

Macau gaming names slide after Daiwa uncovers junket operator warning

Macau gaming names slide on money laundering probe. See Stockwinners.com Market Radar for the latest.

Shares of several Macau gaming stocks are lower after #Daiwa analyst Jamie Soo told investors that his checks uncovered that a memo was distributed to customers and key staff by “one of Macau’s largest” #junket operators warning of recently heightened enforcement of anti-money laundering initiatives in both China and #Macau.

The junket operator advised its customers to withdraw funds out of “underground” bank accounts, which is the first time such a dissemination has occurred to Soo’s knowledge, he informed clients.

The expected further heightening of enforcement continues to be reaffirmed given this news and other events over the past six months, added #Soo, who said he remains Neutral on the Macau gaming sector.

Stocks to watch

Las Vegas Sands (LVS) MGM Resorts (MGM), Wynn Resorts (WYNN) and Melco Resorts (MLCO).

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Congressman Requests Hearing on Amazon Whole Food Merger

Democratic Rep calls for oversight hearing on Amazon-Whole Foods tie-up

Democratic House Representative David Cicilline of Rhode Island wrote a letter to the Republican leaders of the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law, requested that the committee hold an oversight hearing on Amazon’s (AMZN) proposed takeover of Whole Foods (WFM).

#Cicilline said in the letter that he has heard concerns that the merger may discourage innovation and entrance into emerging markets, such as grocery and food delivery.

The Rep added that some have raised concerns that the deal will also increase Amazon’s online dominance, enabling it to “prioritize its products and services over competitors.”

“Without taking a position on the legality of the transaction under the antitrust laws, Amazon’s proposed acquisition of Whole Foods raised important questions concerning competition policy, such as how the transaction will affect the future of retail grocery stores, whether platform dominance impedes innovation, and if the antitrust laws are working effectively to ensure economic opportunity, choice, and low prices for American families,” Cicilline said in the letter.

Note that United Natural Foods (UNFI) is headquartered in the Congressman’s district. United Natural Foods, Inc. distributes and retails natural, organic, and specialty foods and non-food products in the United States and Canada. The company operates through three divisions: Wholesale, Retail, and Manufacturing and Branded Products.

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Dominion Diamond is For Sale

Dominion Diamond in advanced talks to be bought by Washington Cos.

 

Dominion Diamond in advanced talks to be bought by Washington Companies. See Stockwinners.com Market Radar for more

Washington Companies is in advanced negotiations to purchase Dominion Diamond after it raised its prior unsolicited cash offer of $13.50 per share and a deal could be announced within weeks, the New York Times reports.

Dominion Diamond Corp of Canada is the world’s third-largest diamond producer by market value.

Dominion Diamond Corporation engages in the mining and marketing of rough diamonds. It operates through Diavik Diamond Mine and Ekati Diamond Mine segments.

The company holds 88.9% ownership interest in the Core zone and 72.0% ownership interest in Buffer zone of Ekati Diamond Mine; and a 40% ownership interest in the Diavik Diamond Mine located at Lac de Gras in Northwest Territories, Canada.

It produces, sorts, and sells rough diamonds in Canada, Belgium, and India. The company was formerly known as Harry Winston Diamond Corporation and changed its name to Dominion Diamond Corporation in March 2013.

It is unclear how much Washington increased its proposal for Dominion, which previously rejected Washington’s initial bid, saying it undervalued the company.

Trade in Dominion shares on the Toronto Stock Exchange was halted pending news. The stock had gained as much as 4.74 percent following Reuters’ report on the talks. DDC last traded at $13.46, up 70 cents.

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Nutanix Could Be Sold

Nutanix climbs after Goldman adds to Conviction List, highlights M&A potential

Nutanix climbs after Goldman says it could be take over target. See Stockwinners.com Market Radar

The shares of Nutanix (NTNX) are rallying after Goldman Sachs added the stock to its Conviction List and called the company a potential takeover target.

The firm added that the company is “a once-in-a-decade tech infrastructure story,” while its results are poised to beat consensus estimates in “coming quarters.”

POSSIBLE TARGET IN HIGH-GROWTH MARKET

Calling hyperconvergence “the biggest trend in IT since public cloud,” Goldman analyst Simona Jankowski estimated that Nutanix has a roughly 30% share of the $2B hyperconvergence market, which she predicted would grow to $20B in a decade.

Hyper-convergence (hyperconvergence) is a type of infrastructure system with a software-centric architecture that tightly integrates compute, storage, networking and virtualization resources and other technologies from scratch in a commodity hardware box supported by a single vendor.

Meanwhile the stock’s 30% drop so far this year and the lack of similar companies makes a takeover of Nutanix “increasingly likely,” the analyst stated.

RESULTS OUTLOOK POSITIVE

Nutanix’s strong fundamentals and an accounting change it’s making should enable the company to report strong results, wrote Jankowski.

Later this year, Nutanix’s switch to new accounting rules that will allow it to recognize software revenue up front should significantly boost its results, Jankowski believes.

Goldman’s checks indicate that adoption trends for hyperconverged infrastructure in general and Nutanix specifically have been strong, according to the analyst.

COMPETITIVE ADVANTAGES

A number of Nutanix’s advantages over its competitors should enable it to retain its market share over the longer term even as competition in its category heats up, Jankowski stated.

Specifically, while the hypercoverged solutions of Cisco (CSCO) and HP Enterprise (HPE) can only work on their servers, Nutanix’s products can work on a number of third party servers, the analyst noted. Additionally, Nutanix’s system works with several hypervisors, including its own, free hypervisor, enabling users to avoid paying for VMware’s (VMW) product, thereby saving them as much as 30%, according to Jankowski.

TARGET

The analyst set a $31 price target on the stock, but she believes that the shares can rise more than 50% above her target.

PRICE ACTION:

In Friday trading, Nutanix rose 7.5% to $21.79.

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Nerf Sold for $1.2 Billion

Neff Corporation sold for $21.07 per share

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

H&E Equipment Services, Inc. (HEES) and Neff Corporation (NEFF) today announced that they have entered into a definitive merger agreement under which H&E Equipment Services (“H&E”) will acquire Neff Corporation (“Neff”).

Neff Corporation operates as an equipment rental company in the United States. The company offers earthmoving equipment, including excavators, backhoes, loaders, bulldozers, mini-excavators, trenchers, sweepers and tractors, track loaders, and skid steers; and material handling equipment comprising reach forklifts, industrial forklifts, and straight-mast forklifts.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, H&E will pay $21.07 in cash per share of Neff common stock, for a total enterprise value of approximately $1.2 billion, including approximately $690 million of net debt.

The per share merger consideration payable to Neff stockholders is subject to certain downward adjustments, not to exceed $0.44 per share, in the event that H&E incurs certain increased financing costs due to the transaction not being consummated on or prior to January 14, 2018.

The transaction is expected to close in the late third quarter or early fourth quarter of 2017, and is subject to customary closing conditions including Hart-Scott-Rodino Act clearance.

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