Today - Tuesday, January 27, 2015
- Informatica (INFA +2.6%) is working with i-bank Qatalyst Partners and "has been in contact with some potential bidders," the WSJ reports. Sources think the company could get interest from other software vendors or P-E firms, but caution there's no formal sale process underway and that talks are preliminary.
- Shares are adding to the Monday gains they saw after Bloomberg reported activist Elliott Management had taken an ~8% stake (later confirmed), and was pushing for a sale. They're up 9% from Friday's close.
- Writing in his capacity as the controlling stockholder of Jersey Partners, a 36%+ owner of GFI Group (GFIG -2.6%), GFI Group founder and Executive Chairman Michael Gooch tells fellow owners they can opt for a "bird in the hand" - the CME/GFI offer - or hold out for "BGC in the bush."
- Full letter is here
- He notes the GFI management group will only be paid $4.44 for each of their shares sold through Jersey Partners (the CME/GFI offer is for $5.85 in stock and cash).
- BGC Partners' (BGCP -0.7%) $6.10 per share cash offer "remains highly conditional," says Gooch, and - even if BGC reaches the 45% tender threshold - there's no guarantee GFI owners will get $6.10 for their shares.
- Though Intel and several other PC-exposed names have been hammered by Microsoft's calendar Q4 Windows numbers, heavily-shorted AMD (AMD +4.6%) is adding to the Monday gains it saw on a rumor Chinese chipmaker BLX is looking to acquire the company.
- Analyst reactions to the rumor have been mixed. Bernstein is skeptical CEO Lisa Su would agree to a sale so quickly after taking over, and notes Intel's x86 instruction set license to AMD doesn't transfer under a change of control. MKM notes the Chinese government has been looking to grow its chip IP, but isn't sure "AMD’s product capabilities are worthwhile at the moment."
- Nomura observes AMD partnered with BLX back in 2003, and argues the company's IP and talent could appeal to a Chinese buyer. "We believe AMD's know-how in servers and GPU technology (for supercomputing and HPC) could be of great interest to China, which has been trying to develop these technologies internally for years."
- Shares +11% over the last two days. Any attempted acquisition of AMD by a Chinese firm would likely be closely scrutinized by U.S. regulators.
- At a special meeting held this morning, Orbital Sciences' (ORB -1.5%) stockholders voted to approve the proposed merger with the Aerospace and Defense Groups of Alliant Techsystems (ATK -1.2%).
- As a result of the merger, shares of Orbital common stock are expected to be delisted after the close of trading on Feb. 9. Each Orbital share will be converted into 0.449 shares of common stock of ATK, with cash paid in lieu of fractional shares.
- ATK will be renamed Orbital ATK and shares of the new entity will trade under the ticker symbol "OA" on the NYSE beginning Feb. 10.
- Courier (NASDAQ:CRRC) says it has received an unsolicited proposal from R.R. Donnelley & Sons (NASDAQ:RRD) to acquire the company for $23/share.
- Earlier this month, CRRC agreed to be bought by Quad/Graphics (NYSE:QUAD) in a cash and stock deal that valued CRRC at $20.50/share; Courier's board says it has not changed its recommendation in support of the merger with QUAD.
- CRRC is halted.
- Allete (NYSE:ALE) agrees to acquire U.S. Water Services, initially purchasing 87% of the industrial water management company for $168M with plans to buy the remaining 13% in the future for a contingent amount based on future earnings.
- ALE says the acquisition is consistent with its strategy of investing in energy infrastructure and related services to complement its core regulated utility, balance exposure to business cycles and changing demand, and provide long-term earnings growth.
- Lattice Semiconductor (NASDAQ:LSCC) agrees to acquire Silicon Image (NASDAQ:SIMG) for $7.30/share, representing an equity value of ~$600M and a 23.7% premium to SIMG's closing price on Jan. 26.
- LSCC believes the deal will expand its opportunities in consumer, communications and industrial markets, and expects $32M in synergies that are expected to be immediately accretive to earnings.
- LSCC says it has received a $350M financing commitment from Jefferies to help pay for the deal.
- SIMG +22.3% premarket.
- Aer Lingus (OTC:AIRXY) says its board of directors would be willing to recommend that shareholders accept the latest takeover bid from International Consolidated Airlines Group (OTCPK:ICAGY), the owner of British Airways and Iberia, if certain conditions were met.
- The Irish carrier previously rejected two takeover offers late last year.
- IAG needs to win the backing of budget airline Ryanair (NASDAQ:RYAAY), which holds a 29.8% stake in Aer Lingus, and the Irish government, which holds a 25.1% stake.
- Previously: Aer Lingus considering sweetened bid from IAG (Jan. 26 2015)
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.
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