Monday, January 26, 2015
- TE Connectivity (NYSE:TEL) is "nearing a deal" to sell its telecom/networking equipment unit to CommScope (NASDAQ:COMM) for about $3B, the WSJ reports. A deal could be announced as soon as this week.
- The business in question, known as TE's network solutions unit, had FY14 (ended Sep. '14) sales of $2.9B (21% of TE's total revenue). For reference, CommScope's 2014 revenue consensus is only at $3.84B, and the company had a market cap of $4.06B as of today's close.
- TEL +6.1% AH to $67.00. COMM +6.4% to $23.00.
- Virtus Investment Partners (NASDAQ:VRTS) agrees to buy a majority interest in ETF Issuer Solutions which operates a platform for listing, operating, and distributing ETFs. The deal will give Virtus the capability for creating both active and passive ETFs to add to its product lineup.
- The Newfleet Multi-Sector Unconstrained Bond ETF will be the first new fund managed by a Virtus affiliate added to the ETFis platform.
- Source: Press Release
- Bloomberg reports activist Elliott Management (already familiar to many tech investors) plans to push Informatica (NASDAQ:INFA) to "sell itself to private equity or another technology company."
- Elliott is said to have amassed an ~8% stake in the data warehousing software vendor. Riverbed, BMC Software, and Compuware are among the companies that have been sold after Elliott vocally called for a deal.
- Informatica's Q4 report arrives on Thursday.
- Centene (CNC +1.3%) acquires Eugene-based Agate Resources, a diversified holding company that offers a variety of healthcare products and services to Oregon residents.
- Chairman and CEO Michael F. Neidorff says, "We view the Oregon CCO (coordinated care organization) model as consistent with our philosophy that healthcare is best delivered locally. Agate has demonstrated success working closely with providers and key community stakeholders and we are committed to maintaining that approach in the future."
- The transaction, expected to close in Q3, will be accretive to earnings in the first year following the close. Financial terms are undisclosed.
12:30 PM| Comment!
- Lack of scale has never been the problem at Axis Capital (AXS +5.4%), say Citigroup's Todd Bault and James Kaklick. The current issue is low demand, they say, and a merger with PartnerRe (PRE +1%) won't solve that.
- Noting the merger is being done at "no premium" (presumably to book value), the two say this deal and others in the industry are acts of necessity, rather than strategic opportunities. "The pressure to cut even more costs will be enormous given the lack of significant deal premiums."
- The team reiterates its Sell rating and $46 price target on Axis.
- More on the terms: PartnerRe owners will receive 2.18 shares in the combined company for each share they own, and Axis shares will convert on a one-to-one basis.
- A check of others in the industry: ACE Limited (ACE +0.1%), XL Group (XL +0.4%), Everest Re (RE +0.7%), RenaissanceRe (RNR +0.9%), Aspen Insurance (AHL +0.9%), Arch Capital (ACGL +0.2%), Reinsurance Group of America (RGA -0.6%), Montpelier Re (MRH +0.3%), Unum Group (UNM +0.1%).
- Previously: Axis Capital to merge with PartnerRe (Jan. 26)
- A Chinese media rumor that local CPU vendor BLX IC Design Co. is looking to acquire AMD (AMD +4.5%) has given a lift to the beaten-down chipmaker's shares. It doesn't hurt that 129.2M shares (20% of the float) were shorted as of Dec. 31.
- Thanks to low expectations, AMD rallied last week in spite of providing soft Q1 guidance to go with a slight Q4 EPS miss. Today's gains come as Intel sells off due to Seagate's light Q1 guidance.
- Update (3:08PM): Bernstein's Stacy Rasgon is skeptical about the rumor. Among other things, he notes Intel's x86 instruction set license to AMD "does not transfer under a change of control." AMD is now up 6.7%.
10:20 AM| Comment!
- Shares of Rock-Tenn (NYSE:RKT) and MeadWestvaco (NYSE:MWV) are higher in early trading following an announcement on the merger between the two paper product companies
- The deal is the largest in the paper industry since 2005.
- MeadWestvaco has been under pressure from Starboard Value over its operating structure and strategy. It will be interesting to see if Starboard with its +6% stake will weigh in on the transaction.
- Starboard letter to MeadWestvaco from last summer (.pdf)
- Previously: Rock Tenn beats by $0.06, beats on revenue
- Previously: MeadWestvaco beats by $0.01, beats on revenue
- Previously: Rock-Tenn and MeadWestvaco to merge
- RKT +5.6% premarket to $66.50 and MWV +13.9% to $51.30.
- Energy Transfer Partners (NYSE:ETP) agrees to acquire Regency Energy Partners (NYSE:RGP) for ~$18B, including the assumption of $6.8B in debt.
- RGP unitholders will receive 0.4066 ETP common units and $0.32/unit, implying an all-in price for RGP of $26.89/unit, representing a ~13% premium to RGP's Friday closing price.
- The merger bringing together two companies both controlled by parent company Energy Transfer Equity (NYSE:ETE) would make ETP the second largest MLP, with operations in substantially all major producing areas in the U.S.,
- RGP +13.4% premarket.
8:09 AM| Comment!
7:54 AM| Comment!
- Healthways (NASDAQ:HWAY) hires J.P. Morgan Securities to assist it in evaluating strategic alternatives to enhance shareholder value.
- The company is due to report Q4 and full-year results on February 24. Consensus view for Q4 is EPS of $0.19 on revenues of $197.8M.
- Shares are up 13% premarket on light volume.
- AT&T (NYSE:T) agrees to acquire Nextel Mexico from NII Holdings and its network of ~76M people in the Mexican wireless network for $1.875B.
- AT&T plans to integrate Nextel Mexico with Iusacell, which AT&T agreed to buy last year in a deal valued at $2.5B at the time.
- The acquisition is subject to a bankruptcy auction and approvals by the U.S. Bankruptcy Court for the Southern District of New York, which is currently overseeing the restructuring of NII Holdings; the deal also is subject to regulatory approval by Mexico's telecom regulator.
- Rock-Tenn (NYSE:RKT) and MeadWestvaco (NYSE:MWV) announce they will merge in a transaction with an equity value of close to $16B.
- The transaction gives MeadWestvaco shareholders 0.78 shares in the newly-created company, while RockTenn shareholders can land one share in the new company or a cash equivalent.
- A targeted ownership ratio sees MWV shareholders hold 50.1% of the new company to help facilitate tax advantages connected to the spinoff of MWV's specialty chemicals business.
- The deal is expected to create $300M in annual synergies and close in Q2.
- Amid accelerating consolidation in the industry, Axis Capital Holdings (NYSE:AXS) and PartnerRe (NYSE:PRE) have agreed to merge, forming a firm with a total market value of almost $11B.
- The new company will be in the top five of reinsurers globally, with more than $10B in combined policy sales.
- PartnerRe shareholders will own 51.6% of the combined business after the “merger of equals,” while Axis investors hold 48.4%.
- Aer Lingus (OTC:AIRXY) is considering an improved €1.36B takeover proposal from International Consolidated Airlines Group (OTCPK:ICAGY), the third attempt by the owner of British Airways and Iberia to buy its Irish rival.
- The proposal includes a cash offer of €2.50 per share and a cash dividend of €0.05 per share.
- Buying Aer Lingus would give IAG more take-off and landing slots at London Heathrow Airport, the main hub of British Airways.
- Previously: IAG returns with new bid for Aer Lingus (Jan. 25 2015)
- Reynolds (NYSE:RAI) Chief Executive Susan Cameron is confident shareholders will approve the Reynolds American and Lorillard (NYSE:LO) deal this Wednesday, which will combines the two to create a more formidable rival against Marlboro (NYSE:MO).
- Shareholders of Imperial Tobacco (OTCQX:ITYBY) (the third party which is expected to buy several brands of Reynolds American as part of the deal) are also expected to approve the transaction because it turns Imperial into the No. 3 player in the U.S.
- However, the real test for the merger and the related divestiture of brands will come later this quarter, when the FTC weighs in on deal.
- Previously: The FTC asks Reynolds American and Lorillard for more info on merger (Aug. 29 2014)
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