Seeking Alpha
  • Today - Wednesday, April 23, 2014

  • 3:40 PM
    • Crescent Point Energy (CPG) agrees to acquire privately-held CanEra Energy for $1.1B, including ~112.9M CPG shares, $192 in cash and the assumption of $348M in debt.
    • CanEra is a Saskatchewan oil and gas producer with a large Torquay land position and production of ~10K bbl/day; assets include more than 260 net sections of land with Torquay potential.
    • Based on the deal, CPG revises its 2014 exit production rate forecast to 145K boe/day from 135K and its average daily production outlook to 133K boe/day from 126.5K; funds flow from operations for 2014 is raised to $2.38B from $2.25B.
    • Shares halted.
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  • 11:19 AM
    • Yamana Gold (AUY -0.6%) and Agnico Eagle (AEM +2%) are "clear winners" for acquiring Osisko Mining (OSKFF) because it is crucial for gold miners to secure low-risk production at this stage in the cycle, National Bank analyst Steve Parsons says.
    • It is increasingly difficult to find large gold deposits in mining friendly jurisdictions - such as Osisko's Canadian Malartic mine in Quebec - and companies need to look at obtaining those assets now or face declining production profiles in the future, Parsons says, adding that now is a good time for mid-tier miners to do business with senior producers who are busy cleaning up their balance sheets.
    • For AUY, Parsons says the addition of a low-cost, cornerstone asset should help the stock get re-rated towards its higher-multiple peers; for AEM, the deal is accretive on all metrics and adds another cornerstone asset to its already concentrated portfolio.
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  • 3:04 AM
    • Hess Corp. (HES) is selling its assets in Thailand to the country's PTT Exploration & Production (PEXNY) for $1B. The interests comprise minority stakes in onshore and offshore natural gas and condensate fields.
    • The divestiture adds to $7.8B worth of assets that Hess sold in the year through late January. It also comes as other U.S. energy companies offload non-core interests as they look to focus on unconventional projects in North America.
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  • 2:50 AM
    • Allergan (AGN) has adopted a one-year stockholder rights plan following a $47B hostile takeover bid from Valeant (VRX) and Bill Ackman's Pershing Square.
    • If any unapproved investor purchases 10% or more of Allergan's stock, other shareholders will have the right to acquire discounted shares. The plan would prevent Ackman from significantly increasing his 9.7% stake and it would stop Valeant from taking its offer directly to shareholders.
    • Allergan said the plan is not designed to prevent a takeover bid that directors are in favor of; rather it "aims to provide the board with adequate time to fully assess any proposal." (PR)
  • Tuesday, April 22, 2014

  • 6:23 PM
    • Bloomberg reports Comcast (CMCSA) is close to a deal to sell 1.5M subs to Charter (CHTR), and plans to spin off another 2.5M into a new, publicly-traded company in which Charter will have a minority stake.
    • Charter is expected to pay $20B in total. The company will also hand over 275K L.A. subs to Comcast, which stands to dominate the L.A. market should regulators sign off on the Time Warner Cable deal, as part of an asset swap.
    • A deal could be announced this week, but sources caution talks could still fall apart. Reuters previously reported Charter is talking with Comcast about an $18B-$20B deal involving the acquisition of 3M subs.
  • 3:21 PM
    • Peter Munk, stepping down next week as chairman of Barrick Gold (ABX +1.7%), hails the potential benefits of a merger with Newmont Mining (NEM -0.4%), saying investors should welcome the cost cuts and lower political risk that a combination could deliver.
    • Munk tells FT there are “obviously synergies available” from a potential combination of ABX and NEM, pointing out that the two companies had many assets “cheek by jowl” in Nevada, the top U.S. gold producing state.
    • Such comments could be an indication the companies are keeping open the possibility of resuming high-level negotiations, although talks would be unlikely to happen before NEM's annual general meeting Wednesday or ABX's annual meeting next week.
    • Deutsche Bank analysts wonder if the merger report was “a trial balloon... a matter of posturing to allow market participants an opportunity to opine and stock prices time to reflect a merger scenario."
  • 12:14 PM
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  • 9:14 AM
    • Verizon's (VZ) Federal Network Systems (FNS) unit is being sold to Jacobs Engineering (JEC) for an undisclosed sum. The deal is expected to close this summer. (PR)
    • FNS has over 750 employees, and provides IT, network design/maintenance, data security and systems integration services. It's focused on servicing intelligence, DoD, and federal civilian clients.
    | 1 Comment
  • 5:32 AM
    • Allergan (AGN) has had no discussions with Valeant (VRX) or Bill Ackman's Pershing Square about a possible takeover of the Botox maker, nor has it received an offer.
    • Allergan's board would evaluate any offer that was made, the company said. It was responding to filings by Valeant and Peshing Square about a potential deal. (PR)
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  • 3:18 AM
    • Hospital Corp of America (HCA) is among a number of suitors interested in acquiring Healthscope, an Australian hospital and pathology company being sold by private-equity owners Carlyle (CG) and TPG, the WSJ reports. A deal could be worth $5B.
    • Other prospective buyers for Healthscope include China's Shanghai Fosun Pharmaceutical and Malaysia's IHH Healthcare (IHHHF).
    • Alternatively, Healthscope could carry out an IPO.
    • TPG and Carlyle bought the company for $1.7B in 2010.
    | Comment!
  • Monday, April 21, 2014

  • 5:53 PM
    • David Faber reports Valeant (VRX) will make a $45B+ hostile bid for Allergan (AGN), of which 1/3 will be financed with cash. He expects an announcement tomorrow.
    • After factoring a 6% gain in regular trading a 19.7% AH gain, Allergan is currently worth $50.9B. Valeant is worth $46.4B, after accounting for a 3.2% gain in regular trading and a 10.3% AH gain.
    • Valeant and Bill Ackman's Pershing Square Capital have each filed 13Ds (I, II) stating Pershing Square now has a 9.7% stake in Allergan.
    • Valeant says it expects to propose a merger with a ~$15B cash component, and that it's contributing $75.9M in working capital to an entity (known as PS Fund 1) to be used by Valeant and Pershing to pursue their bid.
    • Faber: "So Ackman can buy $3b in [Allergan] stock, which he will sell to [Valeant] for a lot more if it succeeds in an offer Ackman knew was coming."
    • Previous: Valeant and Ackman eye Allergan
  • 4:59 PM
    • The bond market is rooting for a merger of Newmont Mining (NEM) and Barrick Gold (ABX), sending bond prices higher amid reports the companies have recently explored a merger, which could help shore up their finances while gold prices are down.
    • NEM debt maturing in 2042 was the second-most-traded U.S. corporate bond today, with ~$65M of bonds changing hands, trading with a yield of ~5.90% vs. ~6.15% earlier this month; ABX debt maturing in 2043 was yielding 5.64%, down from ~5.80% earlier in the month.
    • Bonds from investment-grade metals and mining companies have performed well YTD, returning 4.51% vs. 3.59% for investment-grade companies overall.
  • 4:45 PM
    • Along with its Q1 results, Cadence (CDNS) announces it's buying Jasper Design Automation, a provider of verification software tools to chipmakers, system developers, and IP providers, for $170M in cash ($140M exc. cash on hand).
    • Cadence notes Jasper is a leader in the formal analysis segment of the verification tool market, and that many of the companies' joint customers are "increasingly adopting formal analysis to complement traditional verification methods, so as to better address the challenge of verifying increasingly complex and flexible IP designs and [SoCs]."
    • The deal is expected to close in Q2, and will be paid for using both cash on hand and a credit facility. Cadence sees Jasper's technology complementing its System Development Suite. Jasper competes against Cadence archrival Synopsys (SNPS), which offers clients its Magellan formal analysis product.
    • Cadence is guiding for Q2 revenue of $370M-$380M and EPS of $0.19-$0.21 vs. a consensus of $372.2M and $0.23. Full-year guidance is for revenue of $1.55B-$1.59B and EPS of $0.92-$1.02, in-line with. a consensus of $1.57B and $0.97.
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  • 2:45 PM
    • Newmont Mining (NEM +6%) shares are on the move because of a deal that isn't happening - at least not yet; WSJ reported Friday that NEM was in advanced merger talks with rival Barrick Gold (ABX -3.5%) that had broken down.
    • J.P. Morgan hopes a deal happens: With overlaps in Australia and Peru plus bigger buying power helping to drive down costs, it thinks the combined entity could claim as much as $3B in savings, improve free cash flows and better service combined debt.
    • However, Cowen analysts see little benefit for ABX shareholders in such a merger: construction of Donlin, Goldrush, and the completion of Pascua Lama during 2016-19 would require additional balance sheet size, which could be the underlying motivation for a merger, but as with past mergers between the largest gold producers, it does not believe that being the biggest creates significant value for the shareholder.
  • 1:16 PM
    • H&R Block (HRB +0.7%) looks like an attractive target for a thirsty P&E firm, according to analysts.
    • The prevailing thought is that an acquisition play became much more likely after the company moved to sell its bank.
    • H&R Block's extensive retail network and strong brand name could give a buyer a chance to leverage an affiliated business.
    | 1 Comment
  • 12:51 PM
    • Goldcorp (GG +0.8%) officially gives up its bid for Osisko Mining (OSKFF -0.1%), saying it will not raise its offer to acquire the company; its most recent C$3.6B offer will expire tomorrow night before midnight.
    • Yamana Gold (AUY -3.5%) and Agnico Eagle Mines (AEM -3.7%) joined forces last week for a C$3.9B offer to acquire Osisko.
  • 11:59 AM
    • Once Holcim (HCMLF, HCMLY) and Lafarge (LFGEF, LFRGY) start shedding assets across the world to complete their $40B merger and satisfy antitrust regulators, cement producers from Europe to the U.S. are likely to start lining up with offers.
    • Bloomberg says likely bidders for North American cement plants may include Europe’s HeidelbergCement (HDELY) and Titan Cement (TITCF), as well as Mexico’s Cemex (CX) and Ireland's CRH; for businesses in cement aggregates - crushed rock, gravel and sand - potential buyers are Vulcan Materials (VMC) and Martin Marietta Materials (MLM), as well as P-E firms.
    • These are prime assets that don’t come up for sale often, so almost everyone in the industry will take a look, a Cantor Fitzgerald analyst says.
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  • 10:53 AM
    • Treehouse Foods (THS -0.3%) has agreed to snap up Protenergy Natural Foods for $154M to beef up its soup and broth portfolio.
    • The company expects the deal to add $200M to revenue and $0.05-$0.07 to EPS this year.
    • The cash acquisition will be funded through Treehouse's existing credit facility.
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  • 10:40 AM
    • Microsoft's (MSFT -0.5%) acquisition of Nokia's (NOK -0.1%) Devices & Services unit will close on April 25.
    • Three changes have been made to the original deal: 1) Microsoft won't acquire Nokia's Korean manufacturing facility. 2) Microsoft will "manage" and Nokia social media sites for up to a year. 3) 21 Chinese employees of Nokia's Chief Technology Office will join Microsoft.
    • Chinese government approval (provided two weeks ago) ended the last major regulatory hurdle for the deal, which was originally set to close in March. Nokia stands to reap a $7.5B cash windfall that it might direct towards a mixture of acquisitions - the company has said it's focusing on smaller deals - and capital returns.
    • Microsoft, meanwhile, will have to get to work on turning around a business that posted a 29% Y/Y sales drop and a -7.3% non-IFRS op. margin in Q4, in large part due to plunging feature phone sales.
  • 10:35 AM
    • CtW Investment Group - which advises union pension funds - is expected to oppose the deal, arguing the acquisition process was flawed, leading to too-low of a price.
    • The group's views may not mean a whole lot as its advises investors holding a little more than 0.1% of KFN's shares, and two more influential shareholder advisory groups - ISS and Glass Lewis - are supportive of the deal (though both raised concerns over conflicts of interest). Also, large shareholder Leon Cooperman (with more than a 7% stake) has given his blessing to the sale.
    • KFN owners will get 0.51 shares of KKR for each share of KFN they own.
    | 1 Comment
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