Portfolio Commentary and Reports

  • Merger Environment

    Global M&A activity through the third quarter reached $2.4 trillion, an increase of 3% over the same period in 2016.

    Global deal activity increased 2% on a year over year basis through the first half of 2017 to total $1.6 trillion. We witnessed a larger average deal size, as the number of deals announced during the first half of 2017 decreased 4% from 2016 levels to 22,752. On the contrary, the number of deals valued at more than $1 billion increased 14% compared to the first half of 2016. On a sequential basis, deal activity accelerated in the second quarter, increasing 6% to $822.6 billion versus $775.8 billion in the first quarter. Year-over-year deal volumes fell 6% for the second quarter.

    Cross border merger and acquisition (M&A) activity totaled $630.9 billion in the first half of 2017, the highest level reached in the first half of a year since 2007. This surge in cross border transaction activity was driven by outbound U.S. acquirers and an increase in appetite for European assets. M&A activity in Europe totaled $449 billion in the first half of the year, up 33% on a year over year basis. Although U.S. acquirers breached their borders to search for assets, Chinese acquirers reduced their appetite for foreign assets, as China outbound M&A declined 49% compared to the first half of 2016.

  • For more detailed information please see Factsheets section.

    GMP Snapshot – September 2017

    GMP Snapshot – August 2017

  • Polaris Materials Corporation (PLS CN-C$3.36-Toronto) agreed to be acquired by U.S. Concrete, Inc. (USCR-$76.30-NASDAQ). Polaris Materials develops and operates construction aggregate quarries in Canada. Under terms of the agreement Polaris shareholders will receive $C3.40 cash per share, valuing the transaction at approximately C$400 million. Previously in August, Polaris agreed to be acquired by Vulcan Materials Company (VMC-$119.60-NYSE) for C$2.79 cash per share, but this transaction was terminated after Vulcan declined to increase its deal price. The transaction with U.S. Concrete is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 09/29/17

    Exa Corporation (EXA-$24.18-NASDAQ) agreed to be acquired by Dassault Systemes SE (DAST FP-€85.59-Paris). Exa develops simulation software that manufacturers use during the design and engineering processes. Under terms of the agreement Exa shareholders will receive $24.25 cash per share, valuing the transaction at approximately $400 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 09/28/17

    Nets A/S (NETS DC-DKK163.00-Copenhagen) agreed to be acquired by a consortium of private equity firms led by Hellman and Friedman. Nets provides payment technology and services that allow merchants and banks to process credit and debit transactions as well as online payments. Under terms of the agreement Nets shareholders will receive DKK165.00 cash per share, valuing the transaction at approximately DKK40 billion. The transaction is subject to the tender of at least 90% of shares outstanding, as well as regulatory approvals and is expected to close in first quarter of 2018. Announcement date: 09/25/17

    Imagination Technologies Group plc (IMG LN-£1.68-London) agreed to be acquired by Canyon Bridge Capital Partners, LLC. Imagination Technologies develops and licenses intellectual property for its semiconductor processors which are used in multimedia and communication applications. Under terms of the agreement Imagination Technologies shareholders will receive £1.82 cash per share, valuing the transaction at approximately £500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 09/22/17

    Calgon Carbon Corporation (CCC-$21.40-NYSE) agreed to be acquired by Kurary Co, Ltd. (3405 JP-¥2,104.00-Tokyo). Calgon Carbon manufactures activated carbon, which has applications in purification and treatment processes for liquids and gases. Under terms of the agreement Calgon shareholders will receive $21.50 cash per share, valuing the transaction at approximately $1.3 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close by the end of 2017. Announcement date: 09/21/17

    NYX Gaming Group Limited (NYX CN-C$2.36-Toronto) agreed to be acquired by Scientific Games Corporation (SGMS-$45.85-NASDAQ). NYX Gaming Group develops and provides digital games to casino operators globally. Under terms of the agreement NYX Gaming shareholders will receive $C2.40 cash per share, valuing the transaction at approximately C$600 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 09/20/17

    Bob Evans Farms, Inc. (BOBE-$77.51-NASDAQ) agreed to be acquired by Post Holdings, Inc. (POST-$88.27-NYSE). Bob Evans Farms produces and distributes a variety of refrigerated and frozen convenience food items including potatoes, pasta, pork sausage, and other vegetable-based side dishes. Under terms of the agreement Bob Evans shareholders will receive $77.00 cash per share, valuing the transaction at approximately $1.6 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the first quarter of 2018. Announcement date: 09/19/17

    Silver Spring Networks, Inc. (SSNI-$16.17-NYSE) agreed to be acquired by Itron, Inc. (ITRI-$77.45-NASDAQ). Silver Springs provides smart grid solutions which enable Internet of Things (IoT) applications for critical infrastructure. Under terms of the agreement Silver Springs shareholders will receive $16.25 cash per share, valuing the transaction at approximately $900 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the first quarter of 2018. Announcement date: 09/18/17

    Orbital ATK, Inc. (OA-$133.16-NYSE) agreed to be acquired by Northrop Grumman Corporation (NOC-$287.72-NYSE). Orbital ATK designs and manufactures space, defense and aviation systems as both a prime contractor and merchant supplier. Under terms of the agreement Orbital shareholders will receive $134.50 cash per share, valuing the transaction at approximately $9 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the first half of 2018. Announcement date: 09/18/17

    Richmont Mines Inc. (RIC CN-C$11.63-Toronto) agreed to be acquired by Alamos Gold Inc. (AGI CN-C$8.43-NASDAQ). Richmont Mines operates two gold producing mines located in Canadian provinces of Ontario and Quebec. Under terms of the agreement Richmont shareholders will receive 1.385 shares of Alamos Gold common stock per share, valuing the transaction at approximately C$900 million. . The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 09/11/17

    Landauer, Inc. (LDR-$67.30-NYSE) agreed to be acquired by Fortive Corporation (FTV-$70.79-NYSE). Landauer provides radiation monitoring products and services for the healthcare, education and energy industries. Under terms of the agreement Landauer shareholders will receive $67.25 cash per share, valuing the transaction at approximately $700 million. The transaction is subject to the tender of at least a majority of shares outstanding, as well as regulatory approvals and is expected to close in fourth quarter of 2017. Announcement date: 09/06/17

    Rockwell Collins, Inc. (COL-$130.71-NYSE) agreed to be acquired by United Technologies Corporation (UTX-$116.08-NYSE). Rockwell Collins provides avionics and information technology systems to government agencies and aircraft manufacturers. Under terms of the agreement Rockwell Collins shareholders will receive $140.00 cash and shares of United Technologies common stock per share, subject to a collar, valuing the transaction at approximately $30 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close by the third quarter of 2018. Announcement date: 09/04/17

    Kite Pharma, Inc. (KITE-$177.99-NASDAQ), a biopharmaceutical company that develops treatments that enable patients’ immune systems to fight cancer, agreed to be acquired by Gilead Sciences for $180 cash per share, or about $10 billion. Announcement date: 8/28/2017

    Calpine Corp. (CPN-$14.70-NYSE), an independent power producer that generates and sells electricity in 19 U.S. states and Canada, agreed to be acquired by a consortium led by Canada Pension Plan for $15.25 cash per share, or about $17 billion. Announcement date: 8/18/2017

    Guidance Software, Inc. (GUID-$7.10-NASDAQ) agreed to be acquired by Open Text Corp. (OTEX-$32.36-NASDAQ). Guidance Software provides mission critical security software applications for businesses. Under the terms of the agreement Guidance Software shareholders will receive $7.10 cash per share, valuing the transaction at approximately $250 million. The transaction is subject to the tender of at least a majority of shares outstanding, as well as regulatory approvals and is expected to close in third quarter of 2017. Announcement date: 7/26/2017

    Jimmy Choo plc (CHOO LN-£2.29-London) agreed to be acquired by Michael Kors Holdings Ltd (KORS-$42.12-NYSE). Jimmy Choo manufactures and markets luxury shoes, handbags and other fashion apparel. Under the terms of the transaction Jimmy Choo shareholders will receive £2.30 cash per share, valuing the transaction at approximately £1 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 7/25/2017

    NeuroDerm Ltd. (NDRM-$38.60-NASDAQ), which develops products to treat central nervous system (CNS) disorders, agreed to be acquired by Mitsubishi Tanabe Pharma Corp. for $39.00 cash per share, or about $1 billion. Announcement date: 7/24/2017

    Dominion Diamond Corporation (DDC-$14.15-NYSE) agreed to be acquired by The Washington Companies under an improved offer. Dominion Diamond owns interest in two major producing diamond mines in the Northwest Territories of Canada. Under the terms of the transaction Dominion Diamond shareholders will receive $14.25 cash per share, valuing the transaction at approximately $1.2 billion. In February, Washington made an unsolicited bid to acquire Dominion for $13.50 cash per share, which prompted DDC to pursue a sale process. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 7/17/2017

    Sandvine Corp (SVC CN-C$4.29-Toronto) agreed to be acquired by Francisco Partners Management LLC. Sandvine provides network policy control solutions for communications service providers. Under terms of the agreement Sandvine shareholders will receive C$4.40 cash per share, valuing the transaction at approximately C$600 million. Sandvine previously had an agreement to be acquired by Vector Capital for C$3.80 per share, which it terminated after deeming Francisco Partners’ offer superior. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 7/17/2017

    Westar Energy Inc. (WR – $53.02 – NYSE) is a Topeka, Kansas-based electric utility company. On May 31, 2016, Westar agreed to be acquired by Great Plains Energy for $60 per share — $51 in cash consideration and $9.00 in Great Plains Energy common stock, for a total value of $12.2 billion. The deal was subject to shareholder and regulatory approvals and was expected to close in the spring of 2017; however, the Kansas Corporation Commission blocked the deal. The companies reworked the merger in early July, such that it became an all-stock merger of equals that addressed many of the Commission’s concerns. Westar shareholders will now receive one share of the newly combined company, and Great Plains’ holders will receive 0.5981 of these shares. The newly crafted merger is expected to close in the first half of 2018. Announcement date: 7/10/2017

    ClubCorp Holdings Inc. (MYCC-$17.00-NYSE) agreed to be acquired by Apollo Global Management, LLC (APO-$29.46-NYSE). ClubCorp owns and operates private golf and country clubs throughout the United States. Under the terms of the agreement ClubCorp shareholders will receive $17.12 cash per share, valuing the transaction at approximately $2.2 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 7/09/2017

    Novae Group plc (NVA LN-£7.10-London) agreed to be acquired by Axis Capital Holdings (AXS-$64.58-NYSE). Novae Group underwrites property and casualty insurance policies in various risk markets. Under the terms of the agreement Novae Group shareholders will receive £7.00 cash per share, valuing the transaction at approximately £500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 7/05/2017

    Worldpay Group plc (WPG LN-£4.12-London), which provides payments processing technology to merchants, reached a preliminary agreement to be acquired by Vantiv for £0.55 cash and 0.0672 shares of Vantiv common stock per share, or about £9 billion. Announcement date: 7/05/2017

    Monogram Residential Trust, Inc. (MORE-$11.96-NYSE) agreed to be acquired by Greystar Growth and Income Fund. Monogram Residential Trust owns, operates, and develops luxury apartment communities with a significant presence in select coastal markets. Under terms of the agreement Monogram shareholders will receive $12.00 cash per share, valuing the transaction at approximately $3.4 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 7/04/2017

    WebMD Health Corp. (WBMD-$66.47-NASDAQ), which provides health information services through its online portals, agreed to be acquired by KKR for $66.50 cash, or about $2.8 billion. Announcement date: 7/04/2017

    Bankrate Inc. (RATE-$13.90-NYSE) agreed to be acquired by Red Ventures LLC. Bankrate aggregates and distributes personal finance content through its online platform. Under the terms of the agreement Bankrate shareholders will receive $14.00 cash per share, valuing the transaction at approximately $1.4 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 7/03/2017

    Parkway, Inc. (PKY-$22.89-NASDAQ) agreed to be acquired by Canada Pension Plan Investment Board. Parkway is a REIT that owns and operates office properties in Houston, Texas. Under terms of the agreement Parkway shareholders will receive $23.05 cash per share, valuing the transaction at approximately $1.5 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 6/30/2017

    PrivateBancorp, Inc. (PVTB-$59.59-NASDAQ) agreed to be acquired by Canadian Imperial Bank of Commerce (CM-$78.07-NYSE) under improved terms. PrivateBancorp provides commercial and personal banking, as well as investment management services. Under terms of the agreement PrivateBancorp shareholders will receive $27.20 cash and 0.4176 shares of CIBC common stock per share, valuing the transaction at approximately $5 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second quarter of 2017. Announcement date: 06/29/2017

    West Marine, Inc. (WMAR-$12.85-NASDAQ) agreed to be acquired by Monomoy Capital Partners. West Marine is a retailer of boating, fishing, and watersports equipment and apparel through its 250+ stores and ecommerce platform. Under terms of the agreement West Marine shareholders will receive $12.97 cash per share, valuing the transaction at approximately $300 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 6/29/2017

    Spectranetics Corporation (SPNC-$38.40-NASDAQ) agreed to be acquired by Royal Philips (PHG-$35.82-NYSE). Spectranetics develops, manufactures and markets medical devices used in minimally invasive procedures within the cardiovascular space. Under terms of the agreement Spectranetics shareholders will receive $38.50 cash per shares, valuing the transaction at approximately $2 billion. The transaction is subject to the tender of at least a majority of shares outstanding, as well as regulatory approvals and is expected to close in third quarter of 2017. Announcement date: 6/28/2017

    Staples, Inc. (SPLS-$10.07-NASDAQ) agreed to be acquired by Sycamore Capital Partners. Staples provides products and services for business customers and consumers. Under terms of the agreement Staples shareholders will receive $10.25 cash per share, valuing the transaction at approximately $6.5 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 6/28/2017

    EnerNOC, Inc. (ENOC-$7.75-NASDAQ) agreed to be acquired by Enel SpA (ENEI IT-€4.69-Milan). EnerNOC develops cloud-based energy intelligence software used by companies to manage the budgeting, procurement, and optimization of energy. Under terms of the agreement EnerNOC shareholders will receive $7.67 cash per share, valuing the transaction at approximately $300 million. The transaction is subject to the tender of at least a majority of shares outstanding, as well as regulatory approvals and is expected to close in third quarter of 2017. Announcement date: 6/21/2017

    PAREXEL International Corporation (PRXL-$86.91-NASDAQ) agreed to be acquired by Pamplona Capital Management, LLP. PAREXEL provides research, consulting and technology solutions and services to the pharmaceutical, biotechnology, and medical device industries. Under terms of the agreement PAREXEL shareholders will receive $88.10 cash per share, valuing the transaction at approximately $5 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 6/20/2017

    NOVADAQ Technologies Inc. (NVDQ-$11.72-NASDAQ) agreed to be acquired by Stryker Corporation (SYK-$138.78-NYSE). NOVADAQ Technologies develops and manufactures point of care imaging solutions used by physicians and surgeons. Under terms of the agreement NOVADAQ shareholders will receive $11.75 cash per share, valuing the transaction at approximately $700 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 06/19/2017

    Whole Foods Market Inc.(WFM – $42.11 – NASDAQ) is an Austin, Texas based supermarket chain that offers organic food products. WFM agreed to be acquired by Amazon on June 16, 2017, for $42 per share in cash, which valued the company at $13.7 billion. The transaction requires shareholder and regulatory approvals, and is expected to close in the second half of 2017. Announcement date: 6/16/2017

    Rice Energy Inc. (RICE-$26.63-NYSE) agreed to be acquired by EQT Corporation (EQT-$58.59-NYSE). Rice Energy explores and develops natural gas and oil properties in the Appalachian Basin. Under terms of the agreement Rice Energy shareholders will receive $5.30 cash and 0.37 shares of EQT common stock per share, valuing the transaction at approximately $7 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 6/19/2017

    Rightside Group, Ltd. (NAME-$10.62-NASDAQ) agreed to be acquired by Donuts Inc. Rightside Group offers a platform for the discovery, registration, and usage of domain names. Under terms of the agreement Rightside Group shareholders will receive $10.60 cash per shares, valuing the transaction at approximately $200 million. The transaction is subject to the tender of at least a majority of shares outstanding, as well as regulatory approvals and is expected to close in third quarter of 2017. Announcement date: 6/14/2017

    DuPont Fabros Technology, Inc. (DFT-$61.16-NYSE) agreed to be acquired by Digital Realty Trust Inc. (DLR-$112.95-NYSE). DuPont Fabros is a REIT that owns, operates, and develops data center properties. Under terms of the agreement DuPont Fabros shareholders will receive 0.545 shares of Digital Realty common stock per share, valuing the transaction at approximately $6 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 6/09/2017

    Albany Molecular Research, Inc. (AMRI-$21.70-NASDAQ) agreed to be acquired by The Carlyle Group and GTCR LLC. Albany Molecular Research provides outsourced research and manufacturing services to the life sciences industry. Under terms of the agreement Albany Molecular shareholders will receive $21.75 cash per share, valuing the transaction at approximately $1.5 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 6/06/2017

    Covisint Corporation (COVS-$2.45-NASDAQ) agreed to be acquired by Open Text Corporation (OTEX-$31.54-NASDAQ). Covisint provides cloud-based Internet of Things and Identity Management-centric enterprise solutions to companies across various industries. Under terms of the agreement Covisint shareholders will receive $2.45 cash per share, valuing the transaction at approximately $100 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 6/05/2017

    Forestar Group Inc. (FOR-$17.15-NYSE) agreed to sell 75% of the company to D.R. Horton, Inc. (DHI-$34.57-NYSE). Forestar Group develops real estate properties across the United States with interest in approximately 50 residential and mixed-use projects. Under terms of the agreement Forestar Group shareholders will receive $17.75 cash per share, valuing the transaction at approximately $700 million. The deal was the result of a bidding war that began with a $14.25 cash per share offer from Starwood Capital Group for 100% of the company. After increased bids from each party, D.R. Horton’s bid was deemed superior. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 6/05/2017

    Linde AG (LIN GR-€165.80-Frankfurt) agreed to be acquired by Praxair Inc. (PX-$132.55-NYSE). Linde is a global supplier of industrial, process and specialty gases. Under terms of the agreement Linde shareholders will receive 1.54 shares of Praxair common stock per share, valuing the transaction at approximately €42 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close by the end of 2017. Announcement date: 6/02/2017

    Atwood Oceanics, Inc. (ATW-$10.04-NYSE) agreed to be acquired by Ensco plc (ESV-$6.24-NYSE). Atwood Oceanics drills and completes exploration and development wells for the global oil and gas industry. Under terms of the agreement Atwood shareholders will receive 1.6 shares of Ensco common stock per share, valuing the transaction at approximately $1.7 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 5/30/2017

    Xactly Corporation (XTLY-$15.70-NYSE) agreed to be acquired by Vista Equity Partners. Xactly provides cloud-based, enterprise software solutions focused on employee and sales performance management. Under terms of the agreement Xactly shareholders will receive $15.65 cash per share, valuing the transaction at approximately $500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 5/30/2017

    CardConnect Corp. (CCN-$15.00-NASDAQ) agreed to be acquired by First Data Corporation (FDC-$17.13-NYSE). CardConnect provides payment processing and technology solutions with offerings for businesses of all sizes. Under terms of the agreement CardConnect shareholders will receive $15.00 cash per shares, valuing the transaction at approximately $800 million.. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 05/29/2017

    Tembec, Inc. (TMB CN-C$4.47-Toronto) agreed to be acquired by Rayonier Advanced Materials Inc. (RYAM-$17.39-NYSE). Tembec manufactures lumber, paper and other forest products. Under terms of the agreement Tembec shareholders will receive C$4.05 cash per share or 2.302 shares of Rayonier common stock per share, subject to proration, valuing the transaction at approximately C$800 million.. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 5/25/2017

    Fidelity & Guarantee Life (FGL-$30.85-NYSE) agreed to be acquired by CF Corporation (CFCO-$11.12-NASDAQ). Fidelity & Guarantee Life offers fixed annuity and life insurance products, which are distributed through a network of independent agents. Under terms of the agreement Fidelity & Guarantee shareholders will receive $31.10 cash per shares, valuing the transaction at approximately $2.2 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 05/24/2017

    Global Sources Ltd. (GSOL-$20.90-NASDAQ) agreed to be acquired by Expo Holdings Ltd. Global Sources provides integrated marketing services that allow global buyers to identify products and enable suppliers to market those products, predominately between China and the rest of the world. Under terms of the agreement Global Sources shareholders will receive $20.00 cash per shares, valuing the transaction at approximately $500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in June 2017. Announcement date: 05/23/2017

    Huntsman Corporation (HUN-$23.90-NYSE) agreed to be acquired by Clariant AG (CLN VX-€21.05-Zurich). Huntsman manufactures and markets thousands of chemical products for a variety of consumers and end markets. Under terms of the agreement Huntsman shareholders will receive 1.2196 shares of Clariant common stock per share, valuing the transaction at approximately $10 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close by the end of 2017. Announcement date: 5/22/2017

    Nutraceutical International Corporation (NUTR-$41.75-NASDAQ) agreed to be acquired by HGGC, LLC. Nutraceutical markets and distributes branded nutritional supplements and other natural products. Under terms of the agreement Nutraceutical shareholders will receive $41.80 cash per shares, valuing the transaction at approximately $500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 5/22/2017

    Berendsen plc (BRSN FP-£12.30-London) agreed to be acquired by Elis SA (ELIS FP-€20.06-Paris) under improved terms. Berendsen provides outsourced uniform, hygiene, and safety solutions across Europe. Under terms of the agreement Berendsen shareholders will receive €5.40 cash and 0.403 shares of Elis common stock per share, valuing the transaction at approximately €2.2 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 5/16/2017

    Abertis Infraestructuras SA (ABE SM-€16.29-Madrid) agreed to be acquired by Atlantia SpA (ATL IM-€24.78-Milan). Abertis manages the construction, maintenance and operation of highways across Europe, South America and North America. Under terms of the agreement Abertis shareholders will receive €16.50 common stock per share, valuing the transaction at approximately €30 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close by the end of 2017. Announcement date: 5/15/2017

    Patheon N.V. (PTHN-$34.71-NYSE) agreed to be acquired by Thermo Fisher Scientific Inc. (TMO-$172.79-NYSE). Patheon provides outsourced pharmaceutical development and manufacturing services. Under terms of the agreement Patheon shareholders will receive $35.00 cash per shares, valuing the transaction at approximately $7 billion. . The transaction is subject to the tender of at least 95% of shares outstanding, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 5/15/2017

    West Corporation (WSTC-$23.17-NASDAQ) agreed to be acquired by Apollo Global Management, LLC (APO-$27.03-NYSE). West Corporation provides communication and network infrastructure services. Under terms of the agreement West Corporation shareholders will receive $23.50 cash per share, valuing the transaction at approximately $5.1 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 5/10/2017

    Kate Spade & Co. (KATE – $18.49 – NYSE) is a New York, New York based apparel and accessories retailer. On May 8, 2017 KATE agreed to be acquired by Coach, Inc. for $18.50 per share in cash representing a $2.4 billion enterprise value. The deal is contingent upon KATE shareholders meeting the minimum tender condition and it requires regulatory approval. The companies expect to close the transaction in the third quarter of 2017. Announcement date: 5/08/2017

    Care Capital Properties, Inc. (CCP-$26.29-NYSE) agreed to be acquired by Sabra Health Care REIT, Inc. (SBRA-$23.43-NASDAQ). Care Capital is a healthcare REIT with a portfolio of properties focused on post-acute care. Under terms of the agreement Care Capital shareholders will receive 1.123 shares of Sabra common stock per share, valuing the transaction at approximately $2.5 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the third quarter of 2017. Announcement date: 5/08/2017

    Tribune Media Co. (TRCO-$38.20-NYSE) agreed to be acquired by Sinclair Broadcast Group, Inc. (SBGI-$32.40-NASDAQ). Tribune Media owns a diverse portfolio of television and digital assets, including over forty owned local television stations, national cable network WGN America, Tribune Studios and other digital properties. Under terms of the agreement Tribune Media shareholders will receive $35.00 cash and 0.23 shares of Sinclair common stock per share, valuing the transaction at approximately $7 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 5/08/2017

    VWR Corporation (VWR-$33.06-NASDAQ) agreed to be acquired by Avantor. VWR provides laboratory products and services to life science customers and general research markets. Under terms of the agreement VWR shareholders will receive $33.25 cash per share, valuing the transaction at approximately $6.4 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the third quarter of 2017. VWR is also permitted to solicit superior bids during a 30-day “go-shop” period. Announcement date: 5/05/2017

     

    Capital Bank Financial (CBF-$37.10-NASDAQ) agreed to be acquired by First Horizon National Corporation (FHN-$16.94-NYSE). Capital Bank is a bank holding company with $10 billion in assets that provides commercial and personal banking services in the Florida, North Carolina, South Carolina, and Tennessee. Under terms of the agreement Capital Bank shareholders will receive $7.90 cash and 1.75 shares of First Horizon common stock per share, subject to proration, valuing the transaction at approximately $2 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 05/04/2017

    OneBeacon Insurance Group, Ltd. (OB-$18.35-NYSE) agreed to be acquired by Intact Financial Corporation (IFC CN-$92.78-Toronto). OneBeacon Insurance underwrites a range of specialty insurance products sold through independent agencies, brokers, and wholesalers. Under terms of the agreement OneBeacon shareholders will receive $18.10 cash per shares, valuing the transaction at approximately $1.7 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 5/02/2017

    Jive Software, Inc. (JIVE-$5.28-NASDAQ) agreed to be acquired by ESW Capital, LLC. Jive provides subscription based communication and collaboration software for businesses. Under terms of the agreement Jive shareholders received $5.25 cash per shares, valuing the transaction at approximately $500 million. The transaction was subject to shareholder, as well as regulatory approvals and closed in June 2017. Announcement date: 5/01/2017

    Veresen Inc. (VSN CN-C$18.36-Toronto) agreed to be acquired by Pembina Pipeline Corporation (PPL CN-C$43.02-Toronto). Veresen owns and operates energy infrastructure assets across North America. Under terms of the agreement Versen shareholders will receive C$18.65 cash per share or 0.4287 shares of Pembina common stock per share, subject to proration, valuing the transaction at approximately C$10 billion. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the second half of 2017. Announcement date: 5/01/2017

    Angie’s List, Inc. (ANGI-$12.04-NASDAQ) agreed to be acquired by IAC/INTERACTIVECORP (IAC-$106.34-NASDAQ). Angie’s List provides its members with reviews, offers and information on various home improvement services. Under terms of the agreement Angie’s List shareholders will receive $8.50 cash per share or one share of Newco, valuing the transaction at approximately $500 million. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the fourth quarter of 2017. Announcement date: 5/01/2017

    C.R. Bard Inc. (BCR – $320.04 – NYSE) is a New Providence, New Jersey-based medical equipment company that distributes diagnostic and patient care products. BCR agreed to be acquired by Becton Dickinson and Co. on April 23, 2017 for $222.93 cash + 0.5077 BDX per share. The transaction requires regulatory and shareholder approval and is expected to close in the fall of 2017. Announcement date: 4/23/2017

    Straight Path Communications Inc. (STRP-$128.86-NYSE) agreed to be acquired by Verizon Communications Inc. (VZ-$45.91-NYSE). Straight Path holds an extensive portfolio of 39 GHz and 28GHz wireless spectrum licenses. Under terms of the agreement Straight Path shareholders will receive $184.00 cash per share, valuing the transaction at approximately $3 billion. The agreed upon terms were the result of a bidding war between AT&T and Verizon. The transaction is subject to shareholder, as well as regulatory approvals and is expected to close in the first quarter of 2018. Announcement date: 4/20/2017

    Panera Bread Co. (PNRA – $314.64 – NASDAQ) is a St. Louis, Missouri-based restaurant services company that operates over 2,000 locations in forty-six states. On April 5, 2017, PNRA agreed to be acquired by JAB for $315 cash per share, representing $7.5 billion in enterprise value. The deal requires regulatory approval and a shareholder vote, and is expected to close during the third quarter of this year. Announcement date: 4/05/2017

    UNIWHEELS AG (UNW PW-PLN248.95-Warsaw) agreed to be acquired by Superior Industries International, Inc. (SUP-$19.50-NYSE) under improved terms. UNIWHEELS manufactures original equipment and aftermarket alloy wheels for automobiles. Under terms of the agreement UNIWHEELS shareholders will receive PLN247.87 cash per share, valuing the transaction at approximately PLN3.4 billion. The transaction is subject to the tender of 75% of shares outstanding, as well as regulatory approvals and is expected to close in the second quarter of 2017. Announcement date: 3/23/2017

    Zodiac Aerospace SA (ZODC FP-€23.58-Paris) agreed to be acquired by Safran SA (SAF FP-€78.80-Paris) under restructured terms. Zodiac develops interior seating for aircrafts as well as other aerospace equipment and systems. Under terms of the agreement Zodiac shareholders will receive €25.00 cash per share, valuing the transaction at approximately €8 billion. The transaction is subject to the tender of at least 50% of shares outstanding, as well as regulatory approvals and is expected to close by the first quarter of 2018. Announcement date: 1/19/2017

    Time Warner Inc. (TWX – $101.60 – NYSE) is an entertainment company based in New York, New York. Through a variety of brands, including HBO, Turner, and Warner Bros, the company produces and distributes a wide array of entertainment and media products. On October 22, 2016, AT&T agreed to acquire Time Warner for $53.75 cash plus $53.75 worth of AT&T stock, subject to a collar. The deal requires both shareholder and regulatory approvals, and values Time Warner at $108.7 billion. It should close prior to year-end 2017. Announcement date: 10/24/2016

    Rite Aid Corp. (RAD – $2.95 – NYSE) is a Camp Hill, Pennsylvania based retail drugstore chain. The company originally entered into a $17.2 billion merger with Walgreens Boots Alliance Inc, another international pharmacy operator, during October of 2015. The deal was marked by a lengthy and complex regulatory review which lengthened the timeline past its January 30, 2017 termination date. At that point, the deal was subsequently extended to June 30, 2017 and the price revised to $14.2 billion. Approaching this second termination date and due to opposition by the Federal Trade Commission, the parties restructured the deal to an asset sale whereby Walgreens Boots Alliance will acquire 2,186 Rite Aid Corp. stores across the country for a price of $5.175 billion and the payment of a $325 million termination fee associated with the original deal. The asset sale is expected to face a simpler antitrust approval process and reach its conclusion by the end of the year. Announcement date: 10/27/2015

     

  • The attached research reports are examples of typical research produced by G.research, Inc., an affiliated broker-dealer of the funds. These reports are not intended as an example of the performance of any security purchased or sold by any of the funds, or any recommendation of any investment adviser to the funds. They are included to show how the advisers leverage the resources of a world class research organization.

    This is not and should not be construed as recommendation, an endorsement, investment advice, an offer or acceptance of an offer to sell or buy, a solicitation of an offer to purchase or subscribe or sell or redeem any investments.

    Manchester United (MANU – $15.86) The Team To Beat  We are initiating coverage of Manchester United with a Buy recommendation and a PMV £19/$23.40 per share based on 19x F17 EBITDA, the same multiple paid to acquire the club by the Glazer family. We believe that investors are re-rating sports as premium content due to sports being primarily watched live. Manchester United is ranked the third-most valuable soccer team by Forbes at $3.3 billion /£2.7 billion. United’s stock is trading at a 12% discount to the Forbes valuation. The club’s economic model is attractive as broadcast revenues are growing rapidly even though they have to be shared with the league and effectively the players. The primary attraction is that United has exclusive ownership of its high margin domestic and global sponsorship rights which now generate over half the revenue. We believe the main driver to our valuation is China. Earlier this year, the Chinese bought a minority position in Manchester City (#6 by Forbes), control of West Bromwich Albion, Aston Villa, and Wolverhampton Wanderers and is speculated to be negotiating with Liverpool FC (#8).

     

    CST Brands (CST – $47.51) Done Deal  Monday, before the market opened, CST Brands announced it reached a deal to be acquired by Alimentation Couche-Tard for $48.53 per share in cash. On a fully diluted basis, and including the value of CAPL units marked-to-market ($165 million), the GP interest at cost ($85 million), as well as the $390 million in net proceeds from the recently closed CA and WY stores sale, the $48.53 per share purchase price translates to about $4.2 billion or 9.7x TTM EBITDA of $430 million. The transaction is expected to close in early 2017, and includes Couche-Tard selling part of CST’s Canadian operations to Parkland Fuel Corp (TSE: PKI), we believe in order to appease the Canadian Competition Bureau. We are changing our recommendation to Hold from Buy based on valuation. Despite the purchase price being below our 2016 $55 per share PMV, at this time we believe it is unlikely that another bidder will come forth.

     

    International Gaming Technologies (IGT $16.97) Catalyst Surfaces – Moving to Hold We spoke with Scientific Games (SGMS) IR regarding the IGT/GTECH deal in which he mentioned that other potential bidders (mostly PE) do not have experience in gaming equipment and would not have a long term view of the industry recovery. As well, a financial buyer would not be able to harvest any synergies. SGMS IR described how the current weak state of the gaming market plays a significant role in valuation, and that although there may be near term pressure on fundamentals, he does not believe this is a long term-term state of the industry. Given this current state, GTECH likely has the longest-term view of the business and hence was the most likely bidder/winner.

     

    Hillshire Brands Company (HSH $35.78) Alternatives to a Pinnacle Acquisition On the heels of Hillshire’s May 12th announcement to acquire Pinnacle Foods, we consider JBS SA, the Brazilian protein company, as a potential strategic buyer of HSH following JBS’s requested registration of primary and secondary common shares for a public offering of its subsidiary, JBS Foods. As recently as September 2013, in a Bloomberg Business Week article when asked about possibly acquiring Hillshire, CEO Wesley Mendonça Battista commented, “Maybe at the right time, at the right price.

     

    International Game Technology (IGT – $14.07) Earnings Update Reported Q2 FY 2014 results, with adj. EPS of $0.20 vs. $0.36  last year, EBITDA -33% to $149.3M and revenues -15% to $512.8M. Given a tepid replacement cycle and anemic US gross gaming revenue trends, we believe FY 2014 will be challenging for IGT. However, we believe IGT’s earnings growth 2015 onward will be driven by increased momentum from leveraging its core business while broadening the distribution of its premier content. FY 2014 we expect IGT to generate $2.1 billion in revenue, $695 million in EBITDA and earnings per share of $1.00. IGT is trading at 21% discount to our FY 2015 PMV of $18.

    Investment AB Kinnevik (KINV’B – SEK 238.00) Online Takes Center Stage Over the last 12-18 months, Kinnevik’s online portfolio has arguably become the primary source of investor interest in the name. The stock is down ~20% year-to-date, mainly due to investor concerns about slowdown in traffic growth to Zalando sites and some disappointment around the lack of progress on the margin improvement front at the online retailer. However, we believe that Zalando’s long-term fundamentals are intact, helped by a strong secular growth trend (offline to online shift in retail).            Kinnevik is trading at a 26% discount to its NAV, on a marked-to-market basis (SEK 319), and a 32% discount to our marked-to-model NAV estimate (SEK 350). We believe the recent sell-off has improved the stock’s risk/reward profile and provides an attractive entry point for longer-term investors.

     

    Hillshire Brands Company (HSH – $37.32) Go Meat & More! We expect HSH to generate industry-leading growth over the next two years as it strives to attain its medium-term financial objectives of 10% operating margin from operating leverage, higher margin products, and $105 million of cost savings. HSH may be an attractive acquisition target, as protein competitors look to develop a portfolio of leading brands and shift its offering to more value-added products with higher and more stable margins. Valuation is attractive as shares trade at 9.5x June 2015 projected EBITDA and 18.7x earnings. We calculate a PMV of $50 based on 2015 estimates, a 25% discount to the current market price.

     

    The WOOF Pack: Consolidation in US Pet Care (HSIC, HSKA, PDCO, ZTS) Consolidation in US Pet Care Kevin Kedra & Jennie Tsai Review Consolidation in the US Pet Care Market. The US pet care market totaled $62.8B in 2016, +4.1% from $60.3B in 2015 according to the APPA. Healthcare for pets is being driven by improving standards for animal health & new technologies. Consolidation within the US pet care market remains active with seven large (>$2B) deals totaling $46B over the past 3-years. The most recent deal is Mars Inc.’s announced acquisition of VCA Inc. (WOOF), a leading operator of veterinary hospitals& clinics, for $9.1B. Among veterinary pharmaceutical manufacturers, we continue to recommend market leader ZTS as our favorite name. For the distributors, we recommend both PDCO and HSIC as opportunities to gain exposure to both the veterinary & dental markets. Among the diagnostic companies, we have a Hold recommendation on HSKA due to valuation.

     

    FORTUNE BRANDS (FO – $61.80 – NYSE) SPLIT! On December 8, 2010, the company announced that its Board of Directors approved in principle a separation of the company’s three businesses as follows: – Fortune Brands will continue as an independent, publicly-traded company focused solely on distilled spirits – The home & security business will be spun off to shareholders in a tax-free transaction and become an independent, publicly-traded company – The golf business will either be spun-off to shareholders or sold. We view the proposed business separation as the culmination of a long history of using financial engineering to the benefit of shareholders. We believe the plan has the potential to unlock value for shareholders, as one or more of the businesses may ultimately be attractive to strategic acquirors. With shares trading at a 22% discount to our 2012 PMV of $79 per share, we recommend Buying FO shares.

     

    FASTWEB (FWB MI – €18.89 – Milan Stock Exchange) Italian Connections Gaining market share in all segments of the under-penetrated (43% vs. >50% in EU) Italian broadband market – Trading at 4.4x 2010 EBITDA – Generating increasing free cash flow, having turned positive in 2008. The Italian broadband market remains attractive as the fourth-largest in Europe, with end user customer revenues of €16 billion in 2008. There are seven key national broadband players, with Telecom Italia holding more than a 60% share of total lines. From a below-average penetration level of 43%, Italian market is expected to surpass 60% broadband penetration by the end of 2012, with FASTWEB poised to take a disproportionate share of that growth.

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