PLASTIC OMNIUM PLOF.PA SAYS HAS HAD EXPRESSIONS OF INTEREST FOR ITS ENVIRONMENT UNIT
A. Schulman to be acquired by LyondellBasell (LYB) for $2.25 bln, or $42/share in cash + CVR (38.65)
Under the terms of the agreement, LyondellBasell will acquire A. Schulman for a total consideration of $2.25 billion. LyondellBasell will purchase 100 percent of A. Schulman common stock for $42 per share in cash and one contingent value right per share and assume outstanding debt and certain other obligations. In addition, the contingent value rights generally will provide a holder with an opportunity to receive certain net proceeds, if any are recovered, from certain ongoing litigation and government investigations relating to A. Schulman's Citadel and Lucent acquisitions.
- LyondellBasell is using cash-on-hand to finance the acquisition. LyondellBasell expects to achieve $150 million in run-rate cost synergies within two years, primarily by leveraging its well-established approach to cost discipline and productivity, as well as its culture of operational, business and commercial excellence. Further, the acquisition is expected to be accretive to earnings within the first full year following close.
- The combined businesses had revenues of $4.6 billion and adjusted EBITDA of $446 million over the last 12 months
TreeHouse Foods underperformance could lure suitors, sector advisors say
- Turnaround of business seen as doable
- Company could also draw an activist
Amid its declining stock price, weak valuation and an uptick in private label food M&A, TreeHouse Foods [NYSE:THS] could draw interest from potential buyers, said four sector advisors.
At least financial sponsors have been “sniffing around” the private label food company for several months, these sector advisors said. They said they were not aware of TreeHouse running an active sale process.
The Oak Brook, Illinois-based company, which trades at a low EBITDA valuation versus its food peers, shows up on private equity screens, one of the sector advisors said. Strategics may also have an appetite for the company, said this sector advisor and a second sector advisor.
TreeHouse currently trades at 7.5x EV/adjusted TTM EBITDA. The company is scheduled to announce its 4Q17 earnings results on 15 February.
Some of its peers like B&G Foods [NYSE:BGS] trade at 12.3x adjusted TTM EBITDA and Post Holdings [NYSE:POST] at 10.2x adjusted TTM EBITDA. In early January, Post announced it was reviewing strategic alternatives for its private brands business, which produces nut butter, dried fruit and nuts, pasta and granola products.
There is a good chance Treehouse could pique the interest of activist investors, two the advisors said, which could act as a catalyst for a sale of the company. In 3Q17, investment firm Blue Harbour Group, which typically works behind the scenes in activist campaigns, purchased a 1.5% stake in TreeHouse.
A TreeHouse shareholder agreed and said the company has been a poor performer in the context of a growing end market for private labels. “This has mostly been a margins issue and possibly if not probably poor cost analysis by management of some projects they got into,” he said. The company was a good case “for some external heat to be applied,” he said.
TreeHouse’s stock is down more than 50% from its 52-week high of USD 90.42. In afternoon trading, the company’s share price hovered at USD 43.50. It has USD 2.7bn in debt, with 17% gross profit margins and 10% EBITDA margins.
In August last year the company launched a long-term restructuring plan and in November it announced a USD 400m share buyback.
Last November, the company’s stock plunged to its lowest point in more than six years and new CEO Robert Aiken resigned. TreeHouse is currently searching for a new CEO. In the interim, chairman and former CEO Sam Reed, has taken over Aiken’s role.
The company accounted for the severe stock drop on its 3Q17 earnings call by highlighting the company’s divestiture of its Soup and Infant Feeding (SIP) business in conjunction with “unanticipated volume pressure, increased manufacturing complexity, and retail bid pricing compression in several segments.”
The TreeHouse management team is well-respected and has done a good job growing the business, two of the sector advisors said. But CEO Reed, who is deemed to be the “architect” of TreeHouse, is 70-years-old and it is unclear who will be the next person to lead TreeHouse and grow the company further, one of them said.
The other sector advisor said: “If you are thinking about what parts of food space is going to do well in the next 10-20 years, private labels is one of the good places to be in. It is not going to be super charge business like hot snacks brand but it is a good business.”
Despite its challenges, TreeHouse is considered a highly scalable business with strong brands, and is the largest player in the increasingly attractive private label space, three of the sector advisors said. Private label has been a hot sector overall, agreed a sector advisor, but some sellers of TreeHouse’s goods are moving to their own private labels, with companies like Amazon.com [NASDAQ:AMZN], through Whole Foods [NASDAQ:WFM], Costco [NASDAQ:COST] and Kroger [NYSE:KR] running their own private label brands. That pressure on TreeHouse should abate, however, the advisor added.
Alternatively, financial sponsors could likely target specific, “easily separate-able” assets such as TreeHouse’s healthy snack brand Flagstone Foods, which it acquired for USD 860m in 2014, one of the sector advisors said.
Two of the sector advisors countered that a full sale of TreeHouse is more likely, given that the company is still in the process of integrating private label pasta producer Ralcorp, which would make carve-outs complicated. TreeHouse acquired Ralcorp in 2015 for USD 2.7bn from ConAgra Brands’[NYSE:CAG].
Two of the sector advisors countered that a full sale of TreeHouse is more likely, given that the company is still in the process of integrating private label pasta producer Ralcorp, which would make carve-outs complicated. TreeHouse acquired Ralcorp in 2015 for USD 2.7bn from ConAgra Brands’[NYSE:CAG].
The company could likewise conclude the company is better off pursuing a turnaround as an independent company and not pursue a sale, one of the sector advisors said.
Treehouse declined to comment.
Wix.com target raised to $90 at Needham; Remains Top Pick for FY18
Needham raises their WIX tgt to $90 from $70. Importantly, firm believes the FY18 growth guidance is a base case with numerous growth levers, such as Artificial Design Intelligence (ADI) geographic roll-out, WixCode, and DeviantArt, that could drive revenue growth towards 40% y/y. Firm is incrementally more positive on WixCode given the early adoption and large addressable market, which could be a key upside rev driver in FY18. While Wix should remain an aggressive marketer, they also expect the company to continue to gain operating leverage, nearly doubling free cash flow in FY18 to ~$100M
Arrowhead receives regulatory clearance to begin Phase 1/2 study of ARO=HBV for treatment of Hepatitis B (5.47)
- The company anticipates that dosing will begin around the end of March.
- The study, AROHBV1001 (NCT03365947), is a Phase 1/2 study to evaluate the safety, tolerability, and pharmacokinetic effects of single-ascending doses (SAD) of ARO-HBV in healthy adult volunteers, and to evaluate the safety, tolerability, and pharmacodynamic effects of multiple-ascending doses (MAD) of ARO-HBV in patients with chronic HBV.
Uber’s Dara Khosrowshahi perfectly sums up how CEOs feel about taking money from SoftBank
“I’d rather have their capital cannon behind me.”
Silicon Valley CEOs mulling whether to accept at an investment offer from SoftBank’s VIsion Fund always seem to have one alternate history in the backs of their minds:
What happens if I decline, and SoftBank funds my rival instead?
Uber CEO Dara Khosrowshahi, whose company just stared down that same question late last year as it negotiated a high-stakes deal with the $100 billion fund, gave voice to that intellectual exercise today as he offered an overview of his business to Goldman Sachs clients and investors.
“Rather than having their capital cannon facing me, I’d rather have their capital cannon behind me, all right?” Khosrowshahi said today at Goldman’s tech conference.
SoftBank insisted during the negotiations that it was perfectly willing to go invest in Lyft instead if the Uber deal fell through. SoftBank has at times negotiated with multiple competitors in order to locate the best deal — and retain leverage.
Uber’s CEO offered an amibitous vision for the company, saying he didn’t want it to be seen as purely a car-for-hire company — but one that would take any person on any transit system — “from point A to point B, whatever the best way.”
“I want to run the bus systems for a city,” Khosrowshahi said. “I want you to be able to take an Uber and get into the subway — if the trains are running on time, you’ve got real-time data — get in the subway, get out and have an Uber waiting for you for right now. Or know that there’s a bike right there for you that gets you where you’re going in the fastest manner.”
Khosrowshahi also offered more of an explanation on Wednesday on last week’s decision to settle the lawsuit filed by Alphabet over whether Uber stole self-driving technology secrets from Waymo, Alphabet’s subsidiary.
Khosrowshahi called the suit “a personal affront” to Uber scientists because it “put their really good work under a question mark.” But he said the deal was intended mostly to remove the distraction and allow the company to focus more on its core business.
The Uber CEO portrayed the company he inherited as a very strong business — “a better business than I thought” when he took the job — but one with a damaged brand that he plans to try repair.
“Getting the love back is a very, very important priority for us,” he said
Early premarket gappers
Gapping up:
- ATRS +20.7%, AMAG +19.8%, TRIP +17.9%, COOL +17.6%, SEDG +16%, PKD +15.5%, SDPI+14.2%, CTL +8.1%, TEVA +7.8%, CSCO +7.4%, DRD +6.8%, YNDX +5.9%, AVP +5.7%,AVP +5.7%, ACOR +5.5%, CVG +5.2%, VNDA +5%, SBCF +4.9%, SHOP +4.8%, ARRS +4.2%,CC +4.2%, OSTK +4.1%, AEG +3.6%, MMLP +3.5%, LPI +3.4%, BLDP +3.2%, MRO +3.2%,INCY +3.2%, NBIX +3.1%, COMM +2.9%, HII +2.6%, GG +2.5%, GEL +2.5%, BHF +2.3%,TRVG +2.2%, CF +2.2%, A +2.1%, BEN +2%, GROW +2%, CVE +1.8%, PCLN +1.7%, RMBS+1.5%, SHPG +1.5%, ABX +1.5%, NOK +1.4%, AMAT +1.4%, SB +1.4%, BAC +1.3%, GPN+1.3%, NFLX +1.2%, PDS +1.2%, NLY +1.1%, ZTS +1.1%, AMGN +0.9%
Gapping down:
- INPX -32.4%, CDMO -26.5%, FORD -12.1%, SPWR -10.2%, NTAP -9.1%, LIVE -7.8%, KGC-7.5%, NEPT -5.1%, CAI -4.8%, QTWO -4%, EQIX -3.9%, MAR -3.4%, DSKE -2.8%, FOLD-2.7%, HCC -2.5%, HL -2.5%, ALSN -2.2%, ATKR -2.1%, WCN -2%, SON -1.8%, AEM -1.2%,CMP -1.1%, OMF -1.1%, RUN -0.9%, ARR -0.7%, XEC -0.7
Tech Luminary Peter Thiel Parts Ways With Silicon Valley
Billionaire investor frustrated with what he sees as intolerance of conservatism in tech industry; has discussed resigning from Facebook board
Billionaire investor Peter Thiel is relocating his home and personal investment firms to Los Angeles from San Francisco and scaling back his involvement in the tech industry, people familiar with his thinking said, marking a rupture between Silicon Valley and its most prominent conservative.
Mr. Thiel has also discussed with people close to him the possibility of resigning from the board of Facebook Inc., FB 3.68% the people familiar with his thinking said. His relationship with the social-networking company—where he has been a director since 2005, the year after its founding—came under strain after a dispute with a fellow director over Mr. Thiel’s support for Donald Trump’s presidential campaign, and a related confrontation over boardroom leaks with Chief Executive Mark Zuckerberg last summer, the people said.
However, Mr. Thiel feels he can still help the company and is likely to remain on the board at least for now, one of the people said.
Mr. Thiel’s plans are part of a broad move by the venture capitalist, who has ties to dozens of top startups, to reduce his direct role in the Silicon Valley tech industry that he helped to shape, the people said. Mr. Thiel has grown more disaffected by what he sees as the intolerant, left-leaning politics of the San Francisco Bay Area, and increasingly pessimistic about the prospects for tech businesses amid greater risk of regulation, they said.
As a result, after spending most of the past four decades in the Bay Area, the 50-year-old plans to permanently move into the 7,000-square foot home overlooking the Sunset Strip that he bought six years ago, a person familiar with the matter said. He also will move Thiel Capital and Thiel Foundation, two firms that oversee his investments, into new L.A. headquarters this year, the person said.
Mr. Thiel has long stood out in Silicon Valley for his vocal libertarianism, but he drew heavy criticism from many tech-industry peers—including fellow Facebook board member Reed Hastings, CEO of Netflix Inc.—when he backed Mr. Trump’s presidential campaign and later served as an adviser on his White House transition team.
Mr. Thiel has recently said tech culture has become increasingly intolerant of conservative political views since Mr. Trump’s election, an attitude he has said is intellectually and politically fraught.
“Silicon Valley is a one-party state,” Mr. Thiel said last month at a debate about tech and politics at Stanford University. “That’s when you get in trouble politically in our society, when you’re all in one side.”
His concerns are echoed by other conservatives in tech who say they feel alienated by the industry’s broad embrace of liberal values. A majority of the tech workers who responded to a recent survey by Lincoln Network, an advocacy group for conservatives and libertarians in the tech sector, described the cultural norms of their workplace as liberal. More than one-third of workers who identified as conservative said the clash between their views and those of those of colleagues kept them from doing their best work.
Mr. Thiel has bucked Silicon Valley conventions since his days as a Stanford University student in the 1980s, when he helped start a student newspaper to promote conservative views. He co-founded PayPal in 1998 and placed an early bet on Elon Musk’s rocket startup, Space Exploration Technologies Inc., in 2008. He also has backed more unusual initiatives such as an institute that advocates creating ocean-based cities outside the reach of governments.
His involvement with Facebook has been among Mr. Thiel’s biggest triumphs. He made the first outside investment in the fledgling social network, paying $500,000 for a 10% stake in 2004. Today, Facebook is valued at over $500 billion and used by more than two billion people a month. Mr. Thiel has made more than $1 billion from the investment.
Mr. Thiel also has been an emissary for Facebook to its large population of right-leaning users. In May 2016, after media reports that curators of Facebook’s “trending topics” feature suppressed news about conservative events and from conservative sources, he helped Facebook convene a closed-door meeting to smooth things over with a group of prominent conservatives.
Mr. Thiel’s support for Mr. Trump that year drew criticism within Facebook, from rank-and-file workers commenting on employee message boards to Mr. Hastings. In a 2016 email to Mr. Thiel, Mr. Hastings called his support of Mr. Trump “catastrophically bad judgment” and questioned his fitness to remain on the board, according to a copy of the message reviewed by The Wall Street Journal. The contents of the email were reported last year by the New York Times.
Mr. Zuckerberg publicly deflected the criticism of Mr. Thiel, saying in March 2017 that demands for his removal were “crazy” and that “ideological diversity” had become a necessary component of diversity in the workplace and boardroom.
Late last summer, the Facebook CEO, concerned about board discussions becoming public, confronted Messrs. Thiel and Hastings over whether they had leaked Mr. Hastings’s email to the press, people familiar with the matter said.
In a phone conversation, Mr. Zuckerberg discussed with Mr. Thiel whether he should remain on the board, the people said. The Facebook CEO didn’t explicitly ask Mr. Thiel to resign, someone familiar with the situation said, and Mr. Thiel said he wouldn’t leave the Facebook board voluntarily.
Mr. Hastings offered to resign if his disagreement with Mr. Thiel was a distraction, and Mr. Zuckerberg said no, according to someone familiar with the matter.
Mr. Thiel has remained a director. In November, he sold 73%, or almost $30 million, of his remaining stake in Facebook, according to securities filings.
Mr. Thiel has courted controversy unrelated to his politics. He secretly financed wrestler Hulk Hogan’s lawsuit against online publisher Gawker Media, which resulted in a $32 million judgment that ultimately forced the company out of business. He later said the move was motivated by a Gawker story in 2007 that identified Mr. Thiel as gay, which he said violated his privacy.
Last November, Mr. Thiel demanded that a U.S. Bankruptcy Court in New York allow him to participate in a continuing sale process for Gawker.com. Mr. Thiel’s lawyers have argued that he is the “the most able and logical purchaser” for Gawker but that, so far, his requests to participate in the sale process have been rebuffed.
The investor’s new projects in L.A. will include the creation of a new media endeavor, one of the people said. Mr. Thiel sees an opportunity to build a right-leaning media outlet to foster discussion and community around conservative topics, the person said.
Thiel Capital and Thiel Foundation plan to move their dedicated staff of about 50 employees to L.A., where they will continue to oversee Mr. Thiel’s personal holdings, one of the people familiar with his thinking said. Other investment firms associated with Mr. Thiel, including Founders Fund and Mithril Capital, will remain in San Francisco, the person said.
In the past two years, Mr. Thiel has exited the boards of Zenefits and Asana Inc., cut ties with startup incubator Y Combinator and sold off the majority of his stakes in Twilio Inc. He still serves on the boards of several companies, including Palo Alto, Calif.-based data-mining firm Palantir Technologies Inc.
Mr. Thiel paid $11.5 million for his Los Angeles home in 2012, according to real-estate data website Property Shark. He also has a home in New Zealand, where he was granted citizenship in 2011.
Incyte beats by $0.46, beats on revs; guides FY18; initial ECHO-301 data out in 1H18 (88.17)
- Reports Q4 (Dec) earnings of $0.02 per share, excluding non-recurring items, $0.46 better than the Capital IQ Consensus of ($0.44); revenues rose 36.0% year/year to $444.2 mln vs the $435.23 mln Capital IQ Consensus. Jakafi (ruxolitinib) revenues $302 million (+27%) in Q4 2017.
- Sees GAAP and Non-GAAP Jakafi net product revenues $1,350 - $1,400 million; GAAP and Non-GAAP Iclusig net product revenues $80 - $85 million.
- The pivotal REACH1 trial evaluating ruxolitinib in patients with steroid-refractory acute graft-versus-host disease (GVHD) has completed enrollment and results are expected in the first half of 2018. If successful, Incyte expects to submit an sNDA seeking approval of ruxolitinib in this indication.
- Initial results, based on progression-free survival, from the pivotal ECHO-301 trial of epacadostat plus pembrolizumab in patients with unresectable or metastatic melanoma are expected in the first half of 2018. In collaboration with both Merck and Bristol-Myers Squibb, we have recently opened eight new pivotal trials of epacadostat plus PD-1 antagonists.
- Initial data from the trial evaluating INCB54828 in patients with cholangiocarcinoma are expected in 2018.