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   Strategies & Market TrendsSpeculating in Takeover Targets

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From: richardred7/10/2015 8:25:09 AM
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Walgreens CEO Pessina Signals He’s Looking for Merger Targets

by Ryan Sachetta

July 9, 2015 — 5:45 PM EDT

Stefano Pessina, named permanent chief executive officer of Walgreens Boots Alliance Inc. on Thursday, wasted no time in signaling that he wants the largest U.S. drugstore chain to grow through acquisitions.

“I believe that the American market will go through a substantial wave of consolidation, horizontally and vertically,” Pessina said on a conference call to discuss the company’s latest quarterly earnings. While he wouldn’t identify potential targets, he said Walgreens wants “to be part of this at the right time with the right partner.”

The Deerfield, Illinois-based company could choose from U.S. and international options, including the acquisition of a pharmacy benefits manager, a drug distributor or pharmacies that operate within grocery chains, analysts said.

If Walgreens were to target a pharmacy benefits manager, Express Scripts Holding Co. or UnitedHealth Group’s OptumRx would be the “obvious choices,” according to Jon Wolfenbarger at Allianz Global Investors US. “The biggest idea seems like a PBM like Express Scripts, but it’s unlikely happening any time soon,” he said.

Walgreens also might consider buying pharmacies at regional grocery chains, Wolfenbarger said. These include Albertsons Cos., which operates Albertsons, Safeway, Vons, Jewel-Osco and other stores in 33 states and is preparing for an initial public offering. Other possible targets are Publix Super Markets Inc. and HEB Grocery Co., he said.

While Pessina told investors on a previous call that he was interested in acquisitions to deliver medicine more efficiently to patients, his comments Thursday on “horizontal” mergers implied he’d also be interested in other drugstore chains.

Drug DistributionWalgreens already has a foothold in the drug-distribution business after it signed a 10-year agreement with Amerisource Bergen Corp. in 2013 and became the company’s third-largest shareholder. When Pessina was asked on Thursday’s conference call if Walgreens wanted to increase its stake in Amerisource, he said “we did the deal of course to improve our profit but also for a strategical reason.”

The U.S. drugstore market is already in the midst of major consolidation. Last month, CVS Health Corp. agreed to pay $1.9 billion for Target Corp.’s in-store pharmacies and clinics with more than 1,660 locations. In February, Rite Aid Corp. struck a deal to buy Envision Pharmaceutical Services Inc. for about $2 billion, giving it a pharmacy benefits manager, a business where Walgreens is absent.

Today’s Walgreens is itself the product of an acquisition. Pessina built Bern, Switzerland-based Alliance Boots GmbH through more than three decades of mergers before selling it to Walgreen Co. last year. He’s now the company’s largest shareholder with a 13 percent stake.

Cosmetics DealOn the same day Walgreens reported third-quarter earnings that topped analysts’ estimates, the company also announced its own vertical acquisition, the $215 million purchase of Avon Products Inc.’s Liz Earle line of U.K. skin-care products. The botanic brand will be marketed alongside other Walgreens beauty products, including the in-house Boots No7 brand. It’s unlikely to be Pessina’s last deal.

“What we know about them is that they are very shrewd business operators and negotiators, and their acquisitions have shown to be accretive in the past,” said Tony Scherrer, director of research at Seattle-based Smead Capital Management, which oversees $1.5 billion including Walgreens stock

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To: richardred who wrote (3980)7/13/2015 10:02:10 AM
From: richardred
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Short Sellers Not Buying Into eBay & TwitterShort interest in this micro-blogging service provider retreated more than 9 percent during the period. The around 20.80 million shares short at month's end, the smallest number of shares short so far this year, was more than 4 percent of the float. It would take about a day to cover all short positions. Speculation about a potential buyout of Twitter continued during the period. The company has a market cap of around $23 billion. Note that the return on equity and the operating margin both remain in negative territory, but the long-term EPS growth forecast is about 69 percent.

Of the 39 analysts polled, 15 recommend buying Twitter shares, while only one rates the stock at Underperform. The analysts' mean price target is about 24 percent higher than the current share price. Note though that shares traded higher than that target before the sell-off in April.

Twitter's share price ended the two-week period more than 4 percent higher, though it has pulled back since. It is now down more than 2 percent year-to-date. Over the past six months, the stock has underperformed the likes of Facebook, Google and LinkedIn, as well as the broader markets.

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From: The Ox7/13/2015 4:54:20 PM
1 Recommendation   of 6565
<span class="articleLocation">Auto parts maker BorgWarner Inc BWA.N agreed to buy Remy International Inc REMY.O, a maker of electric and hybrid motors, for about $950 million to better compete in the fast-growing market for electric and hybrid vehicles.

BorgWarner's offer of $29.50 per share represents a premium of 44 percent to Remy's closing price of $20.53 on Friday. Remy's shares were trading at $29.15 before the opening bell.

BorgWarner's shares were up 0.7 percent at $54.01.

BorgWarner is one of the biggest suppliers of turbocharging technology, increasingly used by automakers to boost fuel economy and meet stricter gas mileage and emission requirements.

"The hybrid motor portfolio (Remy has the largest hybrid motor production and testing facility in North America) should help BorgWarner benefit from the progression of hybrid technology," RBC Capital Markets LLC analyst Joseph Spak wrote in a client note on Monday.

The deal, which is expected to close in the fourth quarter, has an enterprise value of $1.2 billion, BorgWarner said.

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To: richardred who wrote (3676)7/14/2015 8:57:11 AM
From: richardred
   of 6565
China's Tsinghua Unigroup plans $23B bid for Micron Technology

China's state-owned Tsinghua Unigroup plans to submit an offer to buy U.S. chipmaker Micron Technology for $21 a share or $23 billion, according to Dow Jones.

If the deal goes through, it would be the biggest Chinese takeover of a U.S. company, dwarfing the $7 billion takeover of Smithfield Foods by Shuanghui International in May 2013.

Dow Jones, which initially said on Tuesday that the bid had been made, later reported Tsinghua had prepared an offer that, at $21 per share, represented a 19.3 percent premium to the Micron's close on Monday.

A Micron spokesman told Reuters that the Idaho-based firm had not received a takeover offer from Tsinghua. Meanwhile, Bloomberg reported an interview with Tsinghua chairman Zhao Weiguo, in which he said the Chinese company was "very interested in cooperation" with Micron.

Micron shares have performed poorly this year, down almost 50 percent since January 1, on concerns around demand for dynamic random access memory (DRAM) chips amid a slowdown in the PC market. The Idaho-based firm is the last remaining U.S. producer of DRAMs, Dow Jones said.

Beijing-based Tsinghua, the country's largest government-owned chip design company, has been on the hunt for opportunities in the U.S. technology sector. In May, the company purchased a $2.3 billion majority stake in Hewlett Packard's Chinese server, storage and technology unit.

Tsinghua's potential purchase of Micron is regarded as a strategic move to help the advancement of China's own chip sector. The country currently has no major home-grown memory makers, according to Reuters.

Song Myung-sup, an analyst at HI Investment and Securities, told the newswire: "China's aggressive investment can expand the rival company Micro's capex, if the deal is reached."

The prospect of a resurgent Micron caused shares in South Korean chipmaker SK Hynix to fall by almost 6 percent in response.

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To: richardred who wrote (3982)7/16/2015 4:04:55 AM
From: The Ox
1 Recommendation   of 6565

Health Care Law Spurs Merger Talks for Insurers
JUNE 22, 2015

President Obama signed the Affordable Care Act more than five years ago. At the time, members of the health care industry — hospitals, doctors and insurers — were anxious about what it would do to the business. Everyone had an opinion, but nobody knew for sure.

We’re now beginning to see the answer: consolidation on a huge scale.

Just in the last couple of weeks, the nation’s five largest health insurers began a round robin of merger talks — some still semiprivate, others now out in the open — that could whittle their number to three. Anthem made a bid for Cigna; Aetna approached Humana; and the UnitedHealth Group made overtures to Aetna.

Those potential deals come on the heels of a spate of hospital mergers over the last couple of years — and speculation about another round of such deals.

All of this deal-making is largely the result of the Affordable Care Act, which in effect constrains the amount of profit hospitals and insurers can generate, leading both to seek additional scale in hopes of generating higher margins by squeezing additional savings out of a broader customer base.

To some degree, consolidation among hospitals and insurers was part of the design of the law, which sought to provide health care for the uninsured and help push down health care costs. That led health care companies to find efficiencies. That, in turn, meant deals.

In 2011, the Aetna chief executive, Mark T. Bertolini, responded matter-of-factly to an analyst’s question about possible mergers: “I expect and we expect that consolidation will continue going forward here as health reform shakes out winners and losers in the process.”

The question, of course, remains whether the savings that might come from consolidation will trickle down to the consumer or will simply wind up in the pocket of shareholders.

The prevailing view is not promising.

“Seldom does consolidation result in reduced costs for consumers. Bigger insurance companies mean increased leverage and unfair power over negotiating rates with hospitals and physicians,” the American Academy of Family Physicians wrote in a letter earlier this month to the Federal Trade Commission, urging that it block the latest series of deals. “More often than not, consolidation increases costs and reduces options for consumers, and we believe this would hold true in the health insurance market.”

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To: richardred who wrote (2993)7/16/2015 9:31:04 AM
From: richardred
   of 6565
Seems there has been a lot of acquisitions in the Auto parts related sector of late.

Magna International to Buy Getrag of Germany for $1.9 Billion

LONDON — The Canadian auto parts maker Magna International said on Thursday that it had agreed to acquire one of the world’s largest suppliers of automotive transmissions, the Getrag Group, for 1.75 billion euros, or about $1.9 billion.

The deal will bolster Magna’s powertrain and transmission business and increase its growth potential in the Chinese market.

Getrag is a joint venture partner with Ford and its customers include BMW, Daimler, Renault and Volvo. It also has joint venture relationships with Chinese automakers Jiangling and Dongfeng.

“As part of our ongoing product portfolio review, we have identified the expansion of our powertrain business as a strategic priority,” Donald J. Walker, the Magna chief executive, said in a news release.

“Getrag is an excellent fit with this strategy,” Mr. Walker said. “Getrag is a technology leader in a product area that we believe is well positioned to benefit from industry trends that are driving increased vehicle fuel-efficiency and reduced emissions.”

The transaction is expected to close near the end of 2015 and is subject to regulatory approval.

Founded in 1935, Getrag, based in Untergruppenbach, Germany, employs about 13,500 people at 13 manufacturing plants and 10 engineering centers in nine countries in Europe, Asia and North America. In 2014, the company posted €1.7 billion in sales, excluding €1.6 billion in sales from its joint ventures last year.

“We join forces with a reliable, experienced and well-performing global company,” Mihir Kotecha, the Getrag chief executive, said in a news release. “This move will bring both sides extraordinary benefits.”

The deal valued Getrag at about €2.45 billion, including debt and pension liabilities.

Magna, based in Aurora, Ontario, employs about 133,000 people at 316 manufacturing plant and 87 product development, engineering and sales centers in 29 countries. The company reported sales of $36.6 billion in 2014.

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To: richardred who wrote (3543)9/25/2015 9:29:37 AM
From: richardred
   of 6565
New re-entry of Olin-OLN and new buys of SLGD Scotts Liquid Gold over the last several days.

P.S. Ironic on my last Olin post on this board. Dow and Olin are merging their CA operations.

Message 30245146
Message 30134614

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To: Glenn Petersen who wrote (3787)9/26/2015 11:52:38 AM
From: Glenn Petersen
   of 6565
Posted September 22, 2014: Actually, there may be an opportunity for tax reform next year, particularly if the Republicans win the Senate and take Harry Reid out of the equation. Paul Ryan is expected to become the Chairman of the House Ways and Means Committee, Ground Zero for all tax legislation. He is on record as wanting to rewrite the tax code. Obama has previously stated that our corporate tax rates are too high and that he would accept lower rates in exchange for the closing of some loopholes. There may be an opportunity for compromise. The window closes, of course, when the 2016 presidential campaign begins.

Boy, was I naïve.

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To: richardred who wrote (3992)9/28/2015 11:11:53 AM
From: richardred
   of 6565
Added to OLN & TG today.

P.S. I still didn't see if the OLN/Dow transaction received regulatory approval yet,. I just saw OLN shareholder approval.

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To: Glenn Petersen who wrote (3993)9/29/2015 5:12:15 PM
From: The Ox
1 Recommendation   of 6565
Naïve is probably not the right way to look at it. I was also of the opinion that it would be a great time to visit tax reform when you posted your remarks.

Unfortunately, confrontation and blame is all these clowns in Washington seem to be able to accomplish. When compromise is a bad word, I'm not sure how anything substantial can get done. Very hard to understand, as one of the main purposes of being a Senator or Representative is to find a way to compromise for the good of the nation!

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