Today - Wednesday, October 22, 2014
- Railroad stocks were hammered today after some executives threw cold water on the idea that the railroad industry is ripe for consolidation.
- Norfolk Southern (NYSE:NSC) CEO said during today's earnings conference call that he thinks a major merger would be “highly problematic,” since in the past they have led to "significant service problems for some period of time" and potential cost savings such as overlapping routes do not exist as much anymore.
- Yesterday, Canadian Pacific (NYSE:CP) CEO Hunter Harrison confirmed that talks with CSX fell apart after several meetings because they couldn't agree on key issues, and added that a deal with Kansas City Southern (NYSE:KSU) is unlikely because the stock is expensive.
- In today's trade: NSC -3%, CP -1.6%, CSX -0.6%, KSU -2.7%, UNP -1.8%, GWR -2.6%, CNI -0.9%, BRK.B -0.9%.
- Valley National Bancorp (NYSE:VLY) will close its acquisition of 1st United Bancorp (NASDAQ:FUBC) on November 1, with full integration of the two's systems to be completed in 2015 Q1.
- Source: Press Release
- Previously: Valley National greenlighted for 1st United purchase
- Sources tell dealReporter Riverbed (RVBD +2.6%) plans to contact potential buyers next week. Shares have spiked higher after previously trading near breakeven.
- The WAN optimization hardware leader announced on Oct. 9 (along with a Q3 warning and job cuts) it would explore strategic and financial alternatives," as long sought by Elliott Management. Q3 results arrive tomorrow.
- Fresenius Medical Care (FMS -0.2%) acquires National Cardiovascular Partners (NCP) for an undisclosed sum. The company expects the acquisition to add more than $200M to the top line in 2015 and be accretive to earnings in the first year after closing.
- NCP is a leading operator of endovascular, vascular and cardiovascular services in the outpatient setting. It partners with over 200 doctors in 21 outpatient vascular centers in six states.
- In response to the changes in the tax code related to inversions, Abbott (ABT -1.1%) and Mylan (MYL -2.5%) adjust the terms of their $5.3B all-stock deal. The pricing terms related to product manufacturing and supply have been changed in favor of New Mylan and the number of shares of stock to be issued to Abbott have been increased to 110M from 105M.
- Former shareholders of Mylan will own ~78% of New Mylan and Abbott and its affiliates will own ~22%. The transaction is expected to close in Q1 2015.
- Confirming yesterday's Bloomberg report, Cisco (NASDAQ:CSCO) and EMC state the latter will take control of the companies' VCE JV. Cisco's stake will be cut to 10% from 35%, VMware (currently has a sub-10% stake) will maintain an interest, and the business will be included in EMC's income statement after the deal closes in Q4.
- The companies add VCE was on a $2B/year run rate for its Vblock converged server/storage/networking systems exiting Q3, and that the quarter was its sixth consecutive one of 50%+ Y/Y growth. VCE previously forecast 2014 sales of $1.8B. Gartner and IDC have ranked VCE the leader in a converged infrastructure market that also features Oracle, H-P, IBM, and Dell.
- The Vblock like makes use of Cisco's servers and data center switches, EMC's storage systems, and VMware's virtualization and systems management software. Cisco, EMC, and VCE have "existing and renewed multi-year engineering, resell and support agreements" between them.
- Nonetheless, Cisco's decision to cut its VCE stake could pave the way for it to directly compete against Vblock through its UCS server ops, particularly given the recent launch of the UCS Mini (less powerful than Vblock hardware, but also a converged system).
- Separately, EMC has issued nearly in-line guidance to go with its its mixed Q3 results: The company expects 2014 revenue of $24.5B and EPS of $1.90 vs. a consensus of $24.54B and $1.91.
- EMC +0.7% premarket. CSCO +0.3%.
- Raleigh-based TrustAtlantic Financial has about $453M in total assets and $395M in deposits. It will operate under the First Tennessee name (FHN's banking subsidiary) after the purchase is closed.
- TrustAtlantic owners have the option of accepting First Horizon stock or cash. Based on the most recent closings of FHN, the deal is valued at $17 for each TrustAtlantic share.
- Source: Press Release
- Amtech (NASDAQ:ASYS) agrees to acquire BTU International (NASDAQ:BTUI) in an all-stock transaction, which values BTUI at ~$3.33/share, a 4.2% premium over yesterday's closing price.
- ASYS says BTUI provides it with complementary thermal processing technologies in the semiconductor, electronics and solar sectors, and strengthens its footprint in China and other areas with attractive growth trends.
- Upon completion of the transaction, ASYS and BTUI stockholders will own ~76% and 24%, respectively, of the combined company.
- BTUI +12.5% premarket.
- Alongside Q3 results, Pacific Premier Bancorp (NASDAQ:PPBI) agrees to the purchase of Newport Beach-based Independence Bank (OTCQB:IDPK) for $71.5M, based on last night's closing price of $14.73.
- Independence shareholders will receive either $13.75 per share in cash of $0.9259 of a share of PPBI stock for each share of IDPK they own (last night's close was $12.50).
- Source: Press Release
- BGC Partners (NASDAQ:BGCP) went ahead with its $675M bid for rival GFI Group (NYSE:GFIG) after talks between the two companies reached a deadlock.
- "Despite our best efforts to engage with GFI regarding a negotiated transaction, we have been met with only unreasonable demands and delay tactics," says BGC Chief Executive Howard Lutnick.
- Talks hit a roadblock over negotiations relating to a confidentiality agreement that would give BGC access to inside information about GFI's energy-trading platform Trayport and its pricing-and-data business known as Fenics. In return for the information, GFI had sought a pledge from BGC not to recruit its key employees.
- The terms of the bid remain unchanged from BGC's Sept. 9 proposal of an all-cash tender offer of $5.25 per share that topped exchange-operator CME Group's (NASDAQ:CME) $4.55 per share all-stock bid.
- Lufthansa (OTCQX:DLAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
- The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
- Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
- Siemens (OTCPK:SIEGY) is in advanced talks to sell its hearing-aid business, which could be valued at up to €2B ($2.55B), WSJ reports.
- P-E firm Permira Holdings is bidding for the hearing-aid unit by itself, while rival EQT Partners, may form a consortium with hearing aid maker GN Store Nord (OTCPK:GNNDY) to acquire the assets.
- Siemens tried to sell the unit in 2010 but was unable to find a buyer due to its declining operating profit at the time.
Tuesday, October 21, 2014
- Bloomberg reports EMC plans to announce tomorrow it's buying out much of Cisco's (NASDAQ:CSCO) stake in the companies' VCE JV, which sells high-end integrated server/storage/networking systems (the Vblock line). EMC owns 58% of VCE, and Cisco 35%.
- The report shortly follows a statement from EMC that the company will be announcing a "new business development" tomorrow, to go with its Q3 report.
- Taking a larger stake in VCE would allow EMC to recognize the fast-growing unit's sales in its quarterly results at a time when its standalone storage hardware sales remain pressured by high-end weakness. In May, VCE predicted its sales would rise 80% in 2014 to $1.8B.
- Cisco stated in July it had invested $716M in VCE, and recorded $644M in losses related to it, since the JV's 2010 founding. CRN reported two weeks ago Cisco is thinking of "ending further financial investment in VCE."
- Letting EMC take control of VCE would leave Cisco's server efforts focused on its UCS blade/rack server line (leveraged by VCE), which has been growing quickly itself and is now on a $3B/year run rate. Cisco recently added an integrated system to its UCS lineup (the UCS Mini), albeit one less powerful than VCE's systems.
- EMC is now only up 1.1% AH. Shares were previously higher on hopes the "new business development" would be a VMware (NYSE:VMW) spinoff. VMware, meanwhile, is now only down 1.4% AH after providing light Q4 guidance.
- Ancora Advisors has disclosed a 428K-share (4.7%) stake in Autobytel (NASDAQ:ABTL), and has called on its board to "immediately explore the sale of the Company."
- Ancora observes Autobytel trades at a far lower valuation than larger rival TrueCar, and argues its relative lack of scale puts it at a major disadvantage. The firm also declares Autobytel's management lacks credibility, and criticizes a governance structure deemed to disenfranchise shareholders.
- With a current market cap of $79M, Autobytel should be easy for a larger player to digest, provided one is interested.
- BrightRoll, long seen as an IPO candidate, offers video ad buyers a network of 21K+ sites and apps. It both directly sells to advertisers looking to run programmatic (automated) video ad campaigns across the network, and also connects with 3rd-party ad platforms such as Google's DoubleClick, AOL's Adap.tv, and Facebook's LiveRail.
- comScore estimates BrightRoll's network reached 155M U.S. users as of June. The company was reported last year to pulling in over $100M/year in revenue.
- TechCrunch reports hearing Yahoo (YHOO +1.3%) has signed term sheets with BrightRoll, and that a deal (if it closes) is likely to involve a ~$700M-$725M price.
- Yahoo, which just reaped an Alibaba IPO windfall, has been hungry to grow its video ad sales for some time. The company has signed a slew of video content deals and acquired streaming tech developer RayV, and is reportedly thinking of launching a YouTube rival (possibly while leveraging Tumblr)
- Fellow video ad tech provider TubeMogul (TUBE +2.5%) is rallying; its market cap is currently $398M
- Australian taxi payment company Cabcharge says it rebuffed an approach from FleetCor Technologies (FLT +0.1%) to buy its core payments business.
- Local media reported that FLT had made an approach to acquire the Cabcharge unit for A$500M ($439M), although the Australian company said terms had not been discussed.
- More tensions are rising in the takeover battle for Allergan (NYSE:AGN), as Bill Ackman and Valeant (NYSE:VRX) say CEO David Pyott tried to discredit Valeant as it was making a hostile takeover bid.
- The court filing made late on Monday in California, accuses Pyott of providing false and misleading information about Valeant to investors, failing to disclose Allergan CFO Jeff Edward's resignation in a timely manner, and ignoring outside advisors' input when he falsely called Valeant's account "opaque" and "problematic."
Monday, October 20, 2014
- RightSignature provides a solution for quickly adding electronic signatures to PDFs and Word docs, both on PCs and mobile devices. Citrix (NASDAQ:CTXS) has acquired the startup for an undisclosed sum.
- RightSignature's solution is already integrated with Citrix's ShareFile cloud file-storage/document-syncing platform (acquired in 2011), as well as with cloud services from the likes of Dropbox and Salesforce.
- Over the last few years, Citrix has bought a a slew of startups (I, II, III) providing cloud and/or mobile productivity tools for office workers. VMware and SAP are among its top rivals in this space.
- Q3 results arrive on Wednesday.