Tuesday, November 24, 2015
- Liberty Global (LBTYA -1.8%) can see more expansion coming in Europe, but the company won't pursue growth for growth's sake, says chief Mike Fries.
- “We’re not motivated by building empires,” Fries says. “We’re motivated by creating value.”
- Yet as empire-building goes, the company is taking on Caribbean-focused Cable & Wireless (OTCPK:CWIXF) for $8B (including debt), one of well over a dozen $1B-plus acquisitions the company has completed over the past 20 years, with an accumulation of debt to go with that.
- Its equation could have changed entirely with talks over a massive combination with Vodafone (NASDAQ:VOD) -- before they turned into talks over an asset swap and ultimately fizzled. "We never say never," says Fries, "but there is nothing happening at the moment."
- And while John Malone (who holds 24% of voting rights) is known for big dealings, Fries says he leaves the company to pursue its course: “I’ve been chief executive for 10 years and everything we’ve done has been self-created. We have the benefit of [Malone’s] strategic insight and guidance but he is not a puppeteer.”
- Previously: Liberty Global unit selling customers to pursue OK for Belgian takeover (Nov. 20 2015)
- Previously: Malone tripling stake in Lions Gate through Discovery, Liberty Global (Nov. 10 2015)
- Less than two months after stating it has entered talks to buy Australian IT services firm UXC (OTC:UXCLF), Computer Sciences (NYSE:CSC) has confirmed it will do so.
- CSC is paying A$1.22/share, or A$427.6M ($307.9M), in cash. The deal is expected to close by February. UXC had FY15 revenue of $493.9M, and employs nearly 3K workers. CSC declares the company to be "a regional leader in enterprise application capabilities, including Microsoft Dynamics, SAP, Oracle and ServiceNow implementations."
- The announcement comes three days before CSC's breakup into a commercial IT services firm (will include UXC) and a U.S. public sector IT services firm (to be known as CSRA) goes into effect.
- Yesterday: CSRA joining S&P 500; CSC entering S&P 400
- Taiwanese regulators have approved the restructuring of Integrated Silicon's (NASDAQ:ISSI) local ops, clearing the way for the company to be sold to Chinese investor group Uphill for $23/share.
- Chinese regulators have also (as expected) approved the deal, which is now expected to close "on or prior to" Dec. 10.
- ISSI closed today at $22.76. Two months ago, the company sold its Taiwanese Chingis subsidiary to MediaTek for $27.1M to pave the way for regulatory approval.
- It was about four months ago when Baxalta (NYSE:BXLT) rejected an unsolicited $30B offer from Shire (NASDAQ:SHPG), and now Reuters reports a new proposal is being prepped.
- The earlier bid on Aug. 3 valued Baxalta at $45.23 per share, but the stock has dropped since, trading today at $33.08 prior to this news being leaked late in the session.
- Shire, of course, three weeks ago agreed to purchase Dyax for $5.9B, but management said that wouldn't stand in the way of another run at Baxalta.
- "He's never given up," says a source, talking about CEO Flemming Ornskov's designs on Baxalta.
- BXLT jumped late in the session after the news hit, closing higher by 6.4% to $35.66. Shire dipped 1.9% to $209.
- Reuters reports EMC (EMC +0.9%) now plans to keep a majority stake in enterprise cloud services/software provider Virtustream, and thus backtrack on plans to put Virtustream's services ops (along with VMware's vCloud Air and other cloud services assets) in a JV with VMware (VMW +4%).
- VMware would have a minority stake in Virtustream under the new plan, which may be announced "as early as December."
- The report shortly follows one from Re/code stating EMC and VMware shareholders are pushing for changes to Dell's planned acquisition of EMC, including an unwinding of the Virtustream JV.
- VMware remains up strongly. On its Q3 earnings call (transcript), the company forecast the Virtustream JV would have a $200M-$300M 2016 op. loss while generating "multiple hundreds of millions of dollars of revenue in 2016 with a strong double-digit growth rate." Virtustream's services ops face competition from Amazon (still the dominant player in public cloud infrastructure services), Microsoft, IBM, and others.
- Silicon Labs (SLAB +2.5%) has acquired Telegisis, a London-based provider of radio modules for the low-power ZigBee protocol (used to create short-range networks with speeds of 250kbps and a range of 10-100 meters), for $20M in cash. Telegesis is expected to contribute 2016 revenue of $8M-$10M.
- Telegesis already uses SLAB's chips within its modules. SLAB declares the purchase accelerates its "roadmap for ZigBee and Thread-ready modules and enhances the companys ability to support customer needs with comprehensive mesh networking solutions ranging from wireless system-on-chip (SoC) devices to plug-and-play modules backed by best-in-class 802.15.4 software stacks and development tools."
- ZigBee modules are used in USB adapter, as well as for IoT-related applications such as smart meters, connected lighting, and home/industrial automation. IHS estimates ZigBee module shipments will see a 24.6% CAGR until 2019.
- Separately, Stifel has hiked its SLAB target by $2 to $60, while reiterating a Buy. Shares are near 4-month highs.
- Potash Corp. (POT +1.5%) is preparing a new takeover approach for K+S (OTCQX:KPLUY), which likely would come next spring, Reuters reports, citing German investor newsletter Platow Brief.
- POT on Oct. 5 withdrew its €7.9B takeover proposal for K+S, citing the decline in global commodity markets and a lack of engagement by K+S management.
- Also: AGU +1.7%, MOS +1.8%, IPI -1%.
- Re/code reports EMC (EMC +0.7%) and VMware (VMW +5.8%) shareholders are pushing for a series of moves meant to make Dell's planned acquisition of EMC more palatable.
- Specifically, they want VMware to buy back up to $3B worth of shares, EMC and VMware to unwind their Virtustream public cloud services JV (believed to be hurting VMware's shares due to Virtustream's expected losses), and shareholder rights and protections for the proposed VMware tracking stock (part of Dell's payout) that more closely match those of VMware's common shares.
- "They have to improve the deal, and if they don’t, we’re going to vote against it — and a lot of other people are going to vote against it," says a shareholder whose firm is said to own several million EMC shares. A source "familiar with Dell and Silver Lake's thinking" states the tracking stock demand is the one least likely to be met. By contrast, Bernstein thinks the Virtustream JV could soon unravel.
- VMware, battered this fall due to soft Q4/2016 guidance and the impact of a tracking stock on its public share supply, has risen following the report. Re/code reported two weeks ago IRS tax issues related to the tracking stock plans could derail the Dell deal.
- As states dig in to the details of Charter Communications' (CHTR -0.4%) $56.7B plan to buy Time Warner Cable (TWC -0.4%), a deal that was delayed into Q1 could slip toward June -- maybe largely due to California.
- State regulators are taking a bigger role in this merger, says RBC Capital's Jonathan Atkin, and a California administrative law judge has a decision set for May with a PUC vote set for June 16.
- "This delay of approximately two months vs. the original timeline reflects the (law judge) acceptance of public interest group arguments to introduce evidentiary hearings," Atkin writes. Dish Network has gone on the record with its opposition to the deal, saying it would establish a "suffocating duopoly."
- "We continue to work with the California PUC and their staff and remain confident we will obtain all of the approvals necessary for closing in due course," Charter told IBD in response.
- The Committee on Foreign Investment in the United States (CFIUS) has signed off on the $1.8B sale of NXP's (NASDAQ:NXPI) base station RF amplifier unit to China's JAC Capital.
- The sale, announced in May, is now expected to close on Dec. 7. It's meant to address antitrust concerns about NXP and Freescale's (NYSE:FSL) combined base station amplifier share following their planned merger.
- NXP and Freescale have jumped in response to the news. The companies are still targeting a 2H15 close for the merger; EU regulators approved it in September.
- Halliburton (HAL +1.8%) will do “whatever is necessary" to win antitrust approval to buy Baker Hughes (BHI +1.1%), including selling additional assets to satisfy regulators, according to ValueAct Capital Management, which owns stakes in both companies.
- Bloomberg reports the activist fund said in a letter to its investors that, after discussions with the two oil field services companies, it is confident the deal is on track and will close.
- The letter may help ease concerns about the deal’s prospects among investors, who have grown increasingly worried that the tie-up could be in trouble with regulators.
- One of the major milestones in the merger of comScore (SCOR -2.5%) and Rentrak (RENT -1.9%) has passed as the Hart-Scott-Rodino antitrust waiting period has expired on the deal.
- The merger -- a stock-for-stock deal that will leave comScore with about two-thirds of the combination -- still remains subject to the approval of both companies' shareholders. Both boards approved the transaction.
- The companies expect the deal to close in January.
- Previously: Wunderlich: ComScore/Rentrak a compelling measurement combo (Sep. 30 2015)
- Rockhopper Exploration (OTCPK:RCKHF) agrees to acquire Falkland Oil & Gas (OTCPK:FLKOF) in an all-share deal valued at £57M ($87M) that combines two of the biggest oil and gas explorers in the Falklands Islands.
- The companies say the combination's enhanced scale would make it more competitive in the current market, as they battle falling oil prices and high costs.
- The merger, which needs approval from shareholders, will result in Rockholder shareholders owning 65% of the company and Falkland Oil investors the remaining 35%.
- Pinnacle Foods (NYSE:PF) announces it will acquire Boulder Brands (NASDAQ:BDBD) for $11.00 per share. The deal amount is ~$975M when debt is factored in.
- The transction is expected to close in Q1 of 2016 and be accretive to EPS next year.
- BDBD +8.34% premarket to $10.91. A sale was anticipated after Boulder Brands announced it was exploring strategic alternatives earlier this year.
- Microsemi (NASDAQ:MSCC) has agreed to buy PMC-Sierra (NASDAQ:PMCS) for about $2.5B just hours after Skyworks Solutions (NASDAQ:SWKS) said it won't modify its bid.
- The deal will see Microsemi pay $9.22 in cash and 0.0771 of a company share for each PMC common share, representing a 77.4% premium to PMC's closing stock price as of Sept. 30.
- Microsemi anticipates the transaction to achieve more than $100M in annual cost synergies and estimates approximately $0.60 of non-GAAP EPS accretion in the first full year after closing.
- PMCS +0.7% premarket
- Previously: Skyworks abandons deal for PMC (Nov. 24 2015)
- Skyworks Solutions (NASDAQ:SWKS) has withdrawn its agreed takeover bid for PMC-Sierra (NASDAQ:PMCS) after an increased offer of $2.3B from Microsemi (NASDAQ:MSCC) gained the backing of the target's board.
- Skyworks said it won't modify its bid and that the company is entitled to a $88.5M termination fee from PMC.
- Semiconductor makers have pursued mergers at a record pace this year as surging costs for design and manufacturing, coupled with a shrinking customer base, have created a need to bulk up.
- Previously: PMC-Sierra board gives thumbs up to latest Microsemi bid (Nov. 19 2015)
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