Vail Resorts buys Peak Resorts for $11.00 per share

The deal is valued about $170 million

Peak Resorts (SKIS) announced that it has entered into a definitive merger agreement with Vail Resorts, Inc. (MTN) pursuant to which Vail Resorts will acquire all outstanding shares of common stock of Peak Resorts for $11.00 per share in cash.

Vail Resorts to buy Peak Resorts, Stockwinners

The transaction represents a 116% premium to Peak Resorts’ closing stock price on July 19, 2019.

The transaction is expected to close in fall 2019 and is subject to certain conditions, including a vote of Peak Resorts shareholders and antitrust clearance.

Vail Resorts buys Peak Resorts, shares jump. Stockwinners

The transaction was approved by the Boards of Directors of both companies. Peak Resorts’ Board of Directors also recommends that the Company’s shareholders approve the transaction.

Moelis & Company LLC is serving as financial advisor to Peak Resorts. Perkins Coie LLP, Sandberg Phoenix & von Gontard P.C. and Armstrong Teasdale LLP are serving as legal counsel to Peak Resorts.

About the Companies

Peak Resorts, Inc. owns, operates, and leases day and overnight drive ski resorts in the United States. Its resorts activities and amenities include skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction, golf, zip lines, mountain coasters, mountain biking, hiking, paint ball, and other summer activities. It operates 17 ski resorts primarily located in the Northeast, Mid-Atlantic, and Midwest.

Vail Resorts has been on a shopping spree, Stockwinners

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 11 mountain resorts, including Vail Mountain, Breckenridge Ski, Keystone, and Beaver Creek resorts in Colorado; Park City resort in Utah; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in Canada; Stowe Mountain resort in Vermont; and Perisher in Australia, as well as 3 urban ski areas, such as Wilmot Mountain in Wisconsin, Afton Alps in Minnesota, and Mount Brighton in Michigan.

Vail Resorts expands its footprint by purchasing Peak Resorts, Stockwinners

Its resorts offer various winter and summer recreational activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand, and other lodging properties; various condominiums located in proximity to the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 5,400 owned and managed hotel and condominium units.

The Real Estate segment owns, develops, and sells real estate properties in and around the company’s resort communities. 

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No more rate hikes in 2019

Majority of Fed members see rates unchanged for rest of 2019

Members see rates to remain unchanged in 2019, Stockwinners

Minutes from the last Federal Reserve meeting read, “With regard to the outlook for monetary policy beyond this meeting, a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.

Several of these participants noted that the current target range for the federal funds rate was close to their estimates of its longer-run neutral level and foresaw economic growth continuing near its longer-run trend rate over the forecast period.

Participants continued to emphasize that their decisions about the appropriate target range for the federal funds rate at coming meetings would depend on their ongoing assessments of the economic outlook, as informed by a wide range of data, as well as on how the risks to the outlook evolved.

Short term rates should decline as 30-year rates rise, Stockwinners

Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments.

Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Economic growth in 2019 likely lower than previous forecast

“Participants continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes over the next few years.

Underlying economic fundamentals continued to support sustained expansion, and most participants indicated that they did not expect the recent weakness in spending to persist beyond the first quarter.

Nevertheless, participants generally expected the growth rate of real GDP this year to step down from the pace seen over 2018 to a rate at or modestly above their estimates of longer-run growth. Participants cited various factors as likely to contribute to the step-down, including slower foreign growth and waning effects of fiscal stimulus.

A number of participants judged that economic growth in the remaining quarters of 2019 and in the subsequent couple of years would likely be a little lower, on balance, than they had previously forecast. Reasons cited for these downward revisions included disappointing news on global growth and less of a boost from fiscal policy than had previously been anticipated.”


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Zoosk sold for $255 million

Spark Networks to acquire Zoosk, sees adjusted EBITDA to exceed $50M in 2020

Spark Networks (LOV) announced its entry into a definitive agreement to acquire Zoosk.

Zoosk shareholders will receive $95 million in cash, Stockwinners

The combination will drive a meaningful increase in Spark’s scale, with over one million monthly paying subscribers across the two platforms. Spark expects the transaction to drive meaningful margin expansion in 2020 and beyond.

“Zoosk is one of the strongest dating apps in the North American market, which comprises half of the $5B global online dating opportunity,” said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE.

“Similarly, North America has been a key strategic market for Spark, and the focal point for our growth initiatives. Our deal with Zoosk creates the second largest online dating platform in North America and the second largest publicly-listed dating company in the world.

Spark buys Zoosk for $255 million, Stockwinners

Over the past 18 months, our management team has successfully integrated acquisitions and developed new brands. As a result of these efforts, our brand portfolio now includes SilverSingles, which continues to exceed our expectations, and the Christian Mingle, Jdate and JSwipe brands, which have all shown significant improvement since they were acquired in late 2017.

Our acquisition of Zoosk is the most transformative deal in our history, and we expect the transaction to immediately strengthen our position in the online dating market. With the increased scale that results from the combination, we see a clear path to profitability improvements and greater opportunity to invest in innovation and growth initiatives that will drive shareholder value.”

With the addition of Zoosk, Spark will more than double in size and the combined business will be considerably more valuable than the two stand-alone entities: Following the completion of its integration plans, Spark expects to drive significant Adjusted EBITDA margin expansion.

In 2020, Spark expects Adjusted EBITDA to exceed $50M. Under the terms of the agreement, Spark will acquire 100% of Zoosk’s shares with a combination of cash and stock valuing the company at approximately $255M based on the closing price of Spark Networks SE stock on March 20.

Spark will issue 12.98M American Depository Shares valued at approximately $150M based on the closing price of Spark Networks SE stock of $11.53 on March 20.

Additionally, Zoosk shareholders will receive net cash consideration of $95M at closing and $10M via a deferred cash payment in December 2020, which will be funded through a new $120M senior secured debt facility.

The transaction is expected to close early in the third quarter of 2019.

LOV closed at $11.90.

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Chipotle to name a new CEO

Chipotle forms search committee to identify new CEO

Chipotle Mexican Grill spokesman Chris Arnold says the company is aware of a "small number" of illnesses linked to a store in Sterling, Virginia
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Chipotle Mexican Grill  (CMG) announced that Steve Ells, chairman and CEO — and the founder of the company in 1993 — will become executive chairman following the completion of a search to identify a new CEO.

The Board has formed a search committee comprised of Directors Robin Hickenlooper and Ali Namvar, as well as Ells, to identify a new leader with demonstrated turnaround expertise to help address the challenges facing the company, improve execution, build customer trust, and drive sales.

Ells said, “Simply put, we need to execute better to ensure our future success.

The Board and I are committed to bringing in an experienced leader with a passion for driving excellence across every aspect of our business, including the customer experience, operations, marketing, technology, food safety, and training.

Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food. It will ultimately improve our ability to provide our guests with delicious food that is prepared with high quality ingredients that are raised responsibly and served in a way that is accessible to everyone. I am confident that this will allow us to deliver value for our shareholders, and provide rewarding opportunities for our employees. Chipotle has vast unrealized potential.

As we work hard to restore our brand, I believe we can capitalize on opportunities, including in areas such as the digital experience, menu innovation, delivery, catering, and domestic and international expansion, to deliver significant growth.”

ANALYST COMMENTS

Chipotle CEO change to be welcomed by investors, says SunTrust – After Chipotle announced it has started a search to identify a new CEO and that founder Steve Ells will become executive chairman when one is identified, SunTrust analyst Jake Bartlett said he views the news as positive for both the company’s turnaround efforts and the stock as he expects investors to welcome a CEO with a proven operational track record. Bartlett has a Buy rating and $355 price target on Chipotle shares.

William Blair downgraded the stock to Market Perform from Outperform. William Blair analyst Sharon Zackfia downgraded Chipotle Mexican Grill to Market Perform . While a new leader may accelerate the company’s turnaround longer term, today’s move likely signals that Chipotle’s trends remain under pressure and creates more near-term uncertainty, Zackfia tells investors in a research note. The analyst adds that transition years, in which costs accelerate before sales trends rebound, often follow new CEOs. As such, she’s more cautious on Chipotle’s earnings recovery trajectory following today’s announcement. The market, on the other hand, is applauding the company’s decision.

CMG closed at $285.86. It last traded at $300 in pre-market action.


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Meredith to buy Time for $2.8 billion

Meredith will pay $18.50 per share for publisher of Fortune and Time

TIME sold to Meredith for $2.8 B

Meredith Corp.  (MDP) said it will acquire Time Inc.  (TIME) in a deal valued at $2.8 billion, a further sign of consolidation in the print magazine industry.  Meredith has agreed to pay $18.50 a share for the publishing company that owns magazines  such as Time, Fortune and Sports Illustrated.

The deal includes $1.85 billion in cash and the assumption of debt. It had been approved by both firms’ boards of directors and is expected to close in the first quarter in 2018.

The transaction received financial backing from the billionaire Koch brothers. Meredith said it secured $650 million from Koch Equity Development, the investment arm of Koch Industries, but the publisher said Koch Equity Development would not have a seat on the Meredith board and “will have no influence on Meredith’s editorial or managerial operations.”

Meredith Corporation is the owner of Family Circle, Better Homes and Gardens and AllRecipes, and is based in Des Moines Iowa.  The company also owns local television stations — that has allowed Meredith to better weather the economic storm that has faced print publishers.

A deal between Meredith and Time Inc. fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc.’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time Inc. earlier this year before it walked away — in part because it could not secure sufficient financing. The Kochs helped the company overcome that problem.

MDP closed at $61.00. TIME closed at $16.90.


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Tesla’s Cash Burn Accelerates

Tesla burning through cash at $480K per hour pace

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Tesla’s (TSLA) latest announcement of designing a sports car should take a back seat to investors’ focus of the company’s cash burn, says Bloomberg, estimating that at the current rate, Tesla would be out of cash by August 6th.

Bloomberg Intelligence analyst Kevin Tynan estimates that the company may have to raise at least $2B in fresh capital by mid-2018.

The report adds that the bond market route may not be welcoming, as Tesla investors who bought $1.8B in debt 3 months ago remain under water.

Over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour), Bloomberg data show. At this pace, the company is on track to exhaust its current cash pile on Monday, Aug. 6.

To be fair, few Tesla watchers expect the cash burn to continue at quite such a breakneck pace, and the company itself says it’s ramping up output of its all-important Model 3, which will bring money in the door. Investors don’t seem concerned.

The Founders Series Roadster will cost buyers a $250,000 down payment even though it’s not coming for more than two years. Orders of those cars are capped at 1,000, meaning they alone could generate $250 million. Tesla is charging a total of $50,000 for reservations of the regular Roadster. Companies can also pre-order electric Semi trucks for $5,000, though they don’t go into production until 2019.

Tesla has said it has ample money to meet its target of producing 5,000 Model 3 sedans by the end of March. After that date, the company expects to “generate significant cash flows from operating activities,” Tesla said in a Nov. 1 letter to shareholders. Tesla’s capital expenditures should also decline as the company pays off its expenses related to the Model 3, CFO Deepak Ahuja said on a conference call the same day.

TSLA last traded at $314.40


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Wal-Mart reports on Thursday

What to watch in Wal-Mart earnings report

Wal-Mart Guides Higher. See Stockwinners.com for details

Wal-Mart (WMT) is scheduled to report results of its third quarter before the market open on Thursday, November 16, with a conference call scheduled for 7:00 am EDT.

What to watch for:

1. GUIDANCE:

Wal-Mart is expected to update its guidance for the fiscal year. Wal-Mart previously forecast Q3 EPS of 90c-98c and comp sales for Walmart U.S. up 1.5%-2% excluding fuel and Sam’s Club comps excluding fuel up 1%-1.5%.

The company raised the low end of its FY18 adjusted EPS view to $4.30-$4.40 from $4.20-$4.40 and backed this guidance at its investor day.

Also at the investor day event, Wal-Mart forecast FY19 EPS to be up approximately 5% vs. FY18 adjusted EPS, with consolidated net sales growing at or above 3%. Baird analyst Peter Benedict expects a solid quarter with good comps and traffic momentum and a guide to earnings growth.

2. COMPETITION:

Retailers like Wal-Mart have been hurt by an increase in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores.

According to reports, Wal-Mart has raised prices for some food and household items on its U.S. website to be higher than prices for the same products sold in-store in an effort to increase profits and drive store traffic.

Wal-Mart, which has previously tried to keep online prices equal to in-store prices, is testing a new system, which has caused higher web prices for products that would otherwise be unprofitable to ship.

Wal-Mart recently sent a recreational vehicle to the University of Pennsylvania as part of a roughly dozen college recruitment tour to break into Ivy League recruitment, Bloomberg reported. The move comes after CEO Doug McMillon told investors Wal-Mart would “look even more like a tech company” to respond to competition from Amazon.

Recently, rival eBay (EBAY) said it will match rivals’ prices on many top Black Friday deals through Cyber Monday. Lidl is gaining little traction after expanding in the U.S. with grocers Wal-Mart and Kroger (KR) recovering most of the market share they lost when the German discounter opened its first nine U.S. stores in June, The Wall Street Journal reported last month.

In October, Wal-Mart said it expects to have grocery pickup in over 2,000 stores by the end of 2018 and noted that its Sam’s Club fresh food efforts are “really encouraging.”

3. OTHER INITIATIVES:

Wal-Mart is looking to grow its presence in the online fashion market, recently buying Bonobos, ShoeBuy, Moosejaw and ModCloth.

Wal-Mart President and CEO Doug McMillon said on the Q2 earnings call that the retailer is testing associate delivery of online orders in “a few” stores and plans to have approximately 100 automated pickup towers in stores across the U.S. by the end of the year, “where customers can pick up their orders within a matter of minutes.”

He also noted that Wal-Mart has tests going on with “digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing.”

More recently, Walmart.com and Lord & Taylor said that Lord & Taylor will launch a flagship store on Walmart.com in Spring 2018.

4. HOLIDAY SEASON:

Wal-Mart is giving employees the opportunity to work extra hours during the holiday season rather than hire temporary seasonal workers.

In addition, the retailer said it will offer more than 2M items for free two-day shipping without a membership fee on orders over $35.

Also, Wal-Mart announced plans to bring back its Holiday Helpers, associates dedicated to assisting customers, and will increase the number of them in stores to help customers.

Wal-Mart will also host more than 20,000 holiday parties at its Supercenters.

WMT last traded at $90.58.


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Target reports on Wednesday

What to watch in Target’s earnings report

target

Target (TGT) is scheduled to report results of its third fiscal quarter before the market open on Wednesday, November 15, with a conference call scheduled for 8:00 am EDT.

What to watch for:

1. COMPETITION WITH ONLINE RETAILERS

Retailers like Target have been hurt by an in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores. Analysts and investors will be listening for Target executives to comment on Amazon’s acquisition of Whole Foods.

Earlier this month, Reuters said Target and other retailers are using legal rights in real estate agreements to limit the initiatives of Amazon’s Whole Foods Market in malls, adding that the retailers have legal rights that enable them to limit Amazon’s Whole Foods activity near their location and bans on Amazon lockers and delivery operations near Target stores in Illinois and Florida have already been established. Morgan Stanley analyst Kimberly Greenberger told investors that her firm’s latest apparel survey lends support to her belief that Amazon is quickly gaining traction at the expense of department stores and certain specialty retailers.

Target Chairman and CEO Brian Cornell said that the retail environment is “crowded” and the environment will continue to be challenging.

2. GUIDANCE

Following better than expected second quarter results, Target forecast third quarter adjusted EPS of 75c-95c and said both Q3 and Q4 comp growth will be within the range the company experienced in Q1 and Q2. The company expects FY17 comp sales growth to be around flat, plus or minus 1%.

Target again raised its FY17 adjusted EPS view to $4.34-$4.54 from $3.80-$4.20.

3. HOLIDAY SEASON UPDATE

Target recently announced plans for the holiday season, including free shipping and gifts under $15.

The company is also allowing customers to receive their orders in several ways, including visiting one of its 1,800 stores, ordering online for delivery from Target.com, using Order Pickup or using Target Restock.

Last month Target said it planned to hire about 100,000 team members across the country for the upcoming holiday season, up from the 70,000 employees it hired last year, and said it would hire 4,500 team members at the company’s distribution and fulfillment centers to replenish products to stores and fulfill digital sales throughout the season. Earlier this month, Target announced its nationwide expansion on Google Express (GOOG, GOOGL), including voice- activated shopping, as well as the addition of Target REDcard as a payment option in 2018.

4. STORE REMODELS, CLOSURES

Target is expanding its plans to remodel supercenters and open smaller stores in cities. Target will remodel over 55% of its current stores by year end 2020.

CEO Brian Cornell said sales have increased 2%-4% at recently remodeled stores.

In addition to the 110 stores remodeled in 2017, Target plans to fully renovate more than 325 in 2018, 350 in 2019 and 325 in 2020.

CNBC said Target is planning to close about a dozen underperforming stores in Michigan, Florida, Illinois, and Texas, with those locations closing in February of 2018.

“We have a rigorous process in place to evaluate the performance of every store on an annual basis, closing or relocating underperforming locations as needed,” a spokesperson said, adding that “Typically, a store is closed as a result of seeing several years of decreasing profitability.”

TGT last traded at $59.78. The issue has a 52-weeks trading range of $48.56 – $79.33.


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Michael Kors Higher following results

Michael Kors’ beat and raise boosts shares of luxury retailers

Michael Kors to acquire Jimmy Choo PLC for $1.35B. See Stockwinners.com for stocks to buy, stocks to watch, stocks to follow

Shares of Michael Kors (KORS) jumped in Monday’s trading after the apparel and accessories maker gave better than expected guidance for the fiscal year after announcing top and bottom line results for its most recent quarter that topped consensus forecasts.

EARNINGS BEAT

Michael Kors reported second quarter earnings per share of $1.33 on revenue of $1.15B, handily beating analysts’ consensus estimates of 83c and $1.04B, respectively.

Second quarter comparable store sales decreased 2.5%, a smaller decline than the 4.7% drop analysts were expecting.

The company’s earnings also beat previous guidance calling for EPS of 80c-84c on revenue of $1.035B-$1.055B and comp sales down in the mid-single digits range.

Retail net sales for the quarter increased 8% to $645M, while wholesale net sales were up 2.5% to $263.6M on a constant currency basis. Licensing revenue fell 2.1% to $38M.

Looking ahead, Michael Kors raised its fiscal 2018 forecast and now sees EPS of $3.85-$3.95 on revenue of about $4.59B, against analysts’ estimates of $3.71 and $4.3B, respectively.

Comparable sales for the Michael Kors brand are expected to decline in the mid-single digits. In its last earnings report, Michael Kors forecast EPS of $3.62-$3.72 on revenue of $4.275B and SSS down in the mid-single digits.

Third quarter earnings per share, however, is expected to be $1.22-$1.27, well below analysts’ estimates of $1.50, but includes anticipated dilution from Jimmy Choo of about 4c.

Revenue is seen at $1.355B-$1.385B, including $105M-$110M of incremental Jimmy Choo revenue, above estimates of $1.29B. Comparable sales for the Michael Kors brand are expected to decline in the high-single digits.

TRANSITION YEAR

Michael Kors Chairman and Chief Executive Officer John Idol said in a statement that “Our second quarter results were better than expected, and we are pleased with our continued progress executing on our strategic plan, Runway 2020.” Idol, who reiterated that FY18 will be a “transition year” for the Michael Kors brand, said its efforts will ultimately drive improved financial performance.

On its earnings conference call, Idol reiterated that he believes Jimmy Choo can reach $1B in sales over time.

Additionally, Idol revealed a 360-degree marketing campaign with Google (GOOG, GOOGL) to support Access smartwatches “to further heighten demand.”

Idol said the fashion watch category is “challenging” and sees continued sales declines for the year in the total watch category. The company expects to close 40-50 stores in the fiscal year, more than its previous view of 20-40 stores. Kors previously announced plans to close 100-125 of its full-price retail stores over the next two years.

ANALYST COMMENTARY

Buckingham maintained its Neutral rating on Michael Kors and noted that Q3 guidance calls for “significant” deceleration and margin pressure. The firm said the Kors brand still has a loyal consumer base, albeit smaller than at its peak, that will pay full price for the brand, but that overall growth will be “a challenge.” The firm remains on the sidelines despite an “attractive” valuation, but would look to become more constructive when it is more confident that sales and margins represent “trough” levels.

Oppenheimer noted Kors’ “strong” quarter, and said the stock would be up more if not for the lower Q3 guidance.

PRICE ACTION

Shares of Michael Kors are up about 15% in early trading to $54.70. Shares are up nearly 28% year-to-date.

OTHERS TO WATCH

Others in the luxury accessory space trading higher include Vera Bradley (VRA), up 3%, and Coach, which recently changed its name to Tapestry (TPR), up 1%.


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Nordstrom can’t find a buyer

Nordstrom suspends active exploration of going private transaction

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Nordstrom (JWN) announced that members of the Nordstrom family – company co-presidents Blake Nordstrom, Peter Nordstrom, and Erik Nordstrom, president of stores James Nordstrom, chairman emeritus Bruce Nordstrom, and Anne Gittinger – have notified the Special Committee of the Board of Directors of Nordstrom that the group has suspended active exploration, for the balance of the year, of the possibility of proposing a transaction to take the company private.

The Group informed the Special Committee that it intends to continue its efforts to explore the possibility of making a going private proposal after the conclusion of the holiday season.

The Special Committee, which is committed to protecting the interests of the Company and all its shareholders, is prepared to thoroughly evaluate such a proposal from the Group at that time, if one is made.

In the meantime, the Company and its employees will remain focused on running the business and delivering the best shopping experience for customers.

Shares of Nordstrom are down 5%, or $2.12 to $40.53.


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Wabco to exit Meritor WABCO joint venture

Wabco agrees to buyout of Meritor WABCO joint venture

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WABCO Holdings (WBC) announced that it will further expand its commitment and operations in the commercial vehicle market in North America by taking full ownership of the Meritor WABCO joint venture. WABCO has signed an agreement to purchase Meritor (MTOR) stake in the joint venture business.

WABCO’s purchase price is $250M. The transaction is expected to close on October 1, 2017 and immediately prior to closing, Meritor will receive a final closing partnership distribution.

Meritor WABCO, employing approximately 200 persons, is headquartered in Troy, Michigan, U.S.A. and had sales of $300M in fiscal year 2016.

It currently sells and distributes a range of WABCO’s leading safety and efficiency technologies for commercial vehicles in North America.

With this agreement, WABCO will take over the former joint venture’s application engineering and supply chain operations, including the distribution center and customer service hub in Hebron, Kentucky.

In addition, WABCO will continue to have exclusive access to a winter test track in Sault St. Marie, Michigan, and joint access to a year-round test track in East Liberty, Ohio to support local customers.

Following closure of the buyout, WABCO has agreed for Meritor to continue to be its exclusive distributor for a certain range of WABCO’s Aftermarket products in the U.S. and Canada, and its non-exclusive distributor in Mexico.

In connection with the purchase transaction, both parties have the option to terminate the distribution arrangements at certain points during the first three and half years, for an exercise price between $225M-$265M based on the earnings of the business.


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Barron’s is Bullish on Carlyle Group, Bearish on Nike

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

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BULLISH  MENTIONS

Altaba could reward investors ‘nicely’  – Alibaba (BABA) is having a stellar year and a cheap way to play it is through Altaba (AABA), whose 15% stake in Alibaba is valued at $65B, Andrew Bary writes in this week’s edition of Barron’s. While Altaba shares are up 65% this year on Alibaba’s big gains, it trades at a 30% discount to the value of the company’s assets, the publication adds’

New Apple Watch may threaten telecoms – As the world awaits the 10th-anniversary iPhone, the real news may be buried within a redesigned Apple Watch 3, Tiernan Ray writes in this week’s edition of Barron’s. Apple (AAPL) has said that the next smartwatch will gain the ability to dial up the internet wirelessly even when not connected to an iPhone, the publication notes, adding that the new Apple Watch will probably make use of an embedded SIM. Apple already allows people using its iPad tablet to select which wireless carrier they want on a month-by-month basis, and Apple Watch will allow the same, signaling that Apple may want to take more control of the mobile subscriber, Tiernan says.

Carlyle Group may be ‘best deal’ in private equity – Carlyle Group (CG) is one of the world’s largest private-equity managers, with $170B in assets under management spread over six continents, but has had a much lower profile with investors, with its units fallen 24% over the past five years, Jack Willoughby writes in this week’s edition of Barron’s. Carlyle has finally put its hedge fund woes behind it and expects a big jump in earnings, Willoughby notes, while questioning if the stock price can double.

Texas Instruments, CVS Health worth a look for income investors.  Barron’s has looked for firms with the highest dividend-safety rankings that yield at least 2% and have market caps above $25B. The top five finishers based on those criteria were Texas Instruments (TXN), CVS Health (CVS), PNC Financial (PNC), Sysco (SYY) and Medtronic (MDT), Lawrence Strauss writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Nike could fall another 10% – As Adidas (ADDYY) picks up the pace, Nike (NKE) is losing ground in the sneaker race, and its stumbling stock could fall another 10% or more in the coming year, Jack Hough writes in this week’s edition of Barron’s. Hough argues that Nike’s problem is twofold, namely the growth of e-commerce which has rattled Nike’s retail partners, including Foot Locker (FL), and Adidas that seems to have finally figured out how to sell sneakers in the U.S.


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Alnylam Tumbles after Patient Dies

Alnylam suspends dosing in all ongoing fitusiran studies after patient death

ALNY-LOGO

Alnylam Pharmaceuticals (ALNY) announced today an update on the company’s fitusiran and givosiran investigational RNAi therapeutic programs.

With fitusiran, an RNAi therapeutic in development for the treatment of hemophilia A and B with or without inhibitors, Alnylam is reporting a fatal thrombotic event in a patient with hemophilia A without inhibitors in the Phase 2 open-label extension study of fitusiran.

As a result, the company has suspended dosing in all ongoing #fitusiran studies pending further review of the safety event and development of a risk mitigation strategy. “Based on overall consideration of fitusiran’s benefit-risk profile, Alnylam is guiding that it aims to resume dosing as soon as possible upon agreement with global regulatory authorities and with appropriate protocol amendments in place for enhanced patient safety monitoring.”

With givosiran, an RNAi therapeutic in development for the treatment of acute hepatic porphyrias, Alnylam said it has reached alignment with the FDA on a Phase 3 study design which includes an interim analysis based on reduction of a urinary biomarker, aminolevulinic acid, as a surrogate endpoint reasonably likely to predict clinical benefit.

Based on the new givosiran Phase 3 design, the company is now guiding that pending FDA review of the program at the time of interim analysis and assuming positive results, it expects to submit a new drug application at or around year-end 2018.

Based on today’s update, Alnylam will postpone its fitusiran RNAi Roundtable webinar previously scheduled for September 12 until a later date.

“We are deeply saddened to learn of this patient’s death, and we extend our sympathies to his family,” said Akshay Vaishnaw, M.D., Ph.D, Executive Vice President of R&D at Alnylam.

“We believe that fitusiran holds great promise as a potential treatment option for patients with hemophilia, and we remain fully committed to its ongoing development.

Following further investigation of this safety finding, implementation of a risk mitigation strategy, and alignment with global regulatory authorities, we expect to resume fitusiran dosing in our clinical studies as soon as possible, potentially as early as late 2017, with a goal of advancing this innovative investigational medicine to hemophilia patients in need.”

PRICE  ACTION

ALNY has a 52-weeks trading range of $31.38 – $89.45. It closed at $86.02, last traded at $77.00.


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Wells Fargo Apologizes to Customers

Wells Fargo completes expanded third-party review of banking accounts

Wells Fargo outlines steps to compensate customers impacted by sales practices

Wells Fargo to close 450 branches. See Stockwinners.com Market Radar for the story.

In the coming weeks, Wells Fargo (WFC) will be taking steps to compensate its retail and small business customers who may have been harmed or impacted by unacceptable retail sales practices within the company’s retail bank.

As Wells Fargo makes things right with customers, these steps also will help the company fulfill its remediation commitments under the sales practices consent orders with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.

These steps include: Beginning communications associated with the company’s $142M class action settlement agreement covering all persons who claim that Wells Fargo opened, without their consent, a consumer or small business checking or savings account or an unsecured credit card or line of credit, and customers who enrolled in certain identity theft protection services, between May 1, 2002 and April 20.

Over the next two months, both Wells Fargo and the court-appointed claims administrator will be sending communications about how to join the class to current and former Wells Fargo customers.

Continuing to work with any customers who contact us with concerns about harm that could have been caused to their credit score by an account opened without their authorization and correcting records for these customers with the credit bureaus.

Customers who inform us of an account they did not authorize that led to increased borrowing costs due to credit-score impact will be eligible for compensation from the class action settlement. Compiling a list of customers who complained to Wells Fargo about an unauthorized account that was opened without their consent.

Those customers will be notified by both Wells Fargo and the court-appointed claims administrator and automatically enrolled in a portion of the class-action settlement. Continuing to offer free mediation services to customers if the company is unable to resolve an issue related to an unauthorized account directly with the customer.

Wells Fargo will continue to offer this service to customers who are not satisfied with any of the outcomes from the steps above.


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Harvey’s Winners and Losers

Harvey impact seen as boon for some E&Cs, bane for others

Insurance Stocks down on Harvey. See Stockwinners.com Market Radar for details

As Harvey leaves a path of destruction in Texas, Citi analyst Andrew #Kaplowitz tells investors he sees potential impacts for Engineering & Construction names he covers, both positive and negative.

Meanwhile, his peer at Wells Fargo noted that multiple Houston area refineries have initiated shutdowns or curtailed operations, and may remain offline.

IMPACT FOR E&CS

Commenting on the potential impact of Hurricane Harvey, Citi’s #Kaplowitz noted that he sees potential impacts for his Engineering & Construction names, both positive and negative.

While it is way too early to tell how much ultimate impact the storm will have on the companies he covers, the analyst told investors he thinks there could be modest positive impacts for Jacobs Engineering (JEC), Fluor (FLR) and potentially Aecom (ACM) and for Quanta Services (PWR) and MasTec (MTZ), as E&Cs can assist with recovery and relief.

Additionally, he sees potentially negative impacts for Chicago Bridge & Iron (CBI). There are several larger projects still currently under construction on the Texas Gulf Coast and Southern Louisiana that could be significantly impacted by flooding rains, Kaplowitz pointed out, including CBI’s Cameron and Freeport LNG, and Axiall/Lotte Cracker, and Fluor’s CP Chem Ethylene Cracker and Sasol’s Cracker.

Nonetheless, the analyst acknowledged that forecasting any negative impact on these projects would be “highly speculative” at this point.

[youtube https://www.youtube.com/watch?v=iaqLVm-bEZs?rel=0&controls=0&showinfo=0&w=560&h=315]

ROOFING and BUILDING SUPPLY STOCKS

One primary beneficiary of any natural disaster of this magnitude would be supplier of products that are needed to rebuild. Here are a list of such companies:

  • Beacon Roofing (BECN): The company is a maker of roof shingles
  • Home Depot (HD)
  • Lowes (LOW)
  • Lumber Liquidator (LL)
  • United Rentals (URI)
  • Waste Management (WM)
  • Republic Industries  (RSG)

IMPACT FOR REFINERS

Significant portions of U.S. refining capacity are offline following Category 4 Hurricane Harvey’s landfall on the middle Texas Coast and epic flooding in the Houston area, Wells Fargo’s Roger Read noted.

The analyst told investors that the majority of the refining units from Corpus Christi to Houston, Texas are offline and will remain so for much if not all of the coming week.

With approximately 25% of Gulf Coast refining capacity offline the impact of Hurricane Harvey is on par with prior major hurricane impacts on the Gulf Coast, he contended, adding that disruptions to normal activities may persist, crack spreads are likely to remain elevated and refining equities are likely to respond positively.

Nonetheless, Read noted that it is unclear if the flooding has damaged the refining units. Including condensate splitters, the analyst estimates 2.5-3.0 million barrels per day of refining capacity is offline, which represents just over one-quarter of Gulf Coast capacity and about 15% of U.S. refining capacity. Publicly traded companies in the refining space include Delek US (DK), HollyFrontier (HFC), Marathon Petroleum (MPC), Phillips 66 (PSX), Tesoro (TSO), Valero (VLO) and Western Refining (WNR).

PRICE ACTION

Fluor and Aecom are fractionally up in late morning trading, Quanta Services has gained almost 2%, and MasTec and CBI have risen about 1%. HollyFrontier has jumped almost 7%, while Marathon Petroleum and Philips 66 are up 1% and Valero has gained about 2%.


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