>>> Songa/Transocean new long-stop date to allow offer extension if needed – Son

MergerMarket
Songa/Transocean new long-stop date to allow offer extension if needed – Songa CFO


Bidder share price upturn could help offer acceptances - Songa CFO
Late SEC offer doc approval contributed to later long-stop date - source
Flowback risk seen reduced by lock-up, broad shareholder mandates

Songa Offshore [OSE:SONG] and Transocean [NYSE:RIG] extended the long-stop date on their proposed merger to allow for a potential extension of the offer period, if that becomes necessary, the target’s CFO Jan Rune Steinsland told this news service.

It remains too early in the offer period to say how many acceptances may come in until the closing date of 23 Jan, Steinsland and a source close to the situation said.

The Norwegian offshore driller and its US-based suitor late last month agreed to extend the long-stop date from 31 Jan to 15 Feb. The offer period runs from 21 Dec to 23 Jan according to the offer document. But Transocean aims for at least 90% acceptances, and the new long-stop date will allow for a longer expansion of the bid period if that should be necessary to reach the target, Steinsland explained.

According to the offer document, Transocean can waive the 90% minimum acceptance condition, but will then need to launch a mandatory cash offer for remaining shares if it ends up with a 30%-90% stake.

There is a good chance of reaching 90%, Steinsland argued. Transocean offers an attractive deal, and the terms have become even better for Songa’s shareholders thanks to the bidder’s share price increase since the deal announcement, he said.

As per the bid announcement, the offer is largely made up of equal parts shares and convertible bonds, with an option to instead receive up to NOK 125,000 (EUR 12,800) per shareholder in cash. Transocean stock is up about 30% as of today (3 Jan) from 14 Aug, the day before the offer announcement.

Transocean’s share price increase may be partly explained by investors taking an increasingly positive view on the Songa acquisition, a sector banker suggested. But it is likely also driven by improved sentiment in the wider oil service industry, he added, with many sector players hoping for a recovery. Market watchers have seen Transocean’s offer as rather rich but possibly motivated by cost synergies and strong strategic rationale, as reported previously.

The deal is also conditional on approvals at a 16 Jan Transocean EGM of proposals including share issuance for the bid consideration. So far, there have been no signs of any negative response ahead of the EGM vote, Steinsland said. It would be surprising to see Transocean’s shareholders voting down the deal, the sector banker argued, adding that the improving wider industry trends should help Songa’s prospects and thus make the target more attractive.

The parties expected to close the deal in late 2017 or early 2018 when they announced the transaction last summer. But the US Securities and Exchange Commission’s (SEC) approval of the offer document took a bit longer than expected to achieve, and this contributed to the extended long-stop date, the source said.

Songa investors representing around 77% of the share capital, including Perestroika, Asia Research & Capital Management (ARCM) and York Capital, have irrevocably pre-accepted the deal, as reported previously.

Provided the deal goes through, the risk of any flowback of Transocean shares should be limited, Steinsland, the source and the sector banker agreed. Perestroika has agreed a 12-months lock-up on the offer consideration shares as per the bid announcement, they all pointed out. ARCM and York Capital also have broad investment mandates and should be able to hold onto the US-based suitor’s stock, Steinsland added.

According to the offer document, Perestroika, ARCM and York Capital control respectively 45.4%, 23.4% and 7.6% of Songa’s shares. Songa’s shareholder base also includes various international institutional investors such as Goldman Sachs, Morgan Stanley and Danske Bank.

Songa’s market cap as of today is NOK 8.23bn (USD 1.02bn) compared with Transocean’s USD 4.28bn.

A Transocean spokesperson was not immediately available to comment.

(Oscar Gruss - Makor) SCG - D -- OG Risk ARB Initial Deal View 1-3-2018



From: elaumann@oscargruss.com At: 01/03/18 15:02:42
To: elaumann@oscargruss.com, lanreder@oscargruss.com
Subject: SCG - D -- OG Risk ARB Initial Deal View 1-3-2018

 

DISCLAIMER This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates. © 2017 Oscar Gruss & Son Incorporated. All rights reserved.

BGR : Apple will reportedly not use Samsung OLED screens in this year’s hottest

Apple will reportedly not use Samsung OLED screens in this year’s hottest iPhone X successor

Samsung is the only supplier of OLED screens for the iPhone X, and the South Korean giant is expected to ship up to 200 million units this year alone. Apple, meanwhile, wants to launch three iPhone X successors in 2018, reports said, two of which featuring OLED screens. The iPhone maker is also interested in diversifying its OLED screen supply chain to reduce its reliance on Samsung. Deals with other OLED display makers should help Apple secure better deals, and make iPhone X successors more affordable.

LG Display is one of the companies interested in Apple’s business, and a new report says that LG will provide 6.5-inch screens for the bigger iPhone X model supposed to launch this year.

LG said recently that it has not decided on a deal with Apple. But the Apple contract is a very lucrative one, and it’s likely that LG Display is very interested in obtaining iPhone X contracts.

According to The Investor, LG Display will start the first OLED shipment for iPhone in the second half of the year. LG is expected to ship 15-16 million units in 2018. Comparatively, Samsung can make more than 10 million screens each month.

Sources said that Samsung will focus on the 5.8-inch or 6-inch iPhone X displays, while LG will make the bigger 6.5-inch units. Production will start in the second quarter of 2018, at LG’s E6 plant in Paju, Gyeonggi Province. The facility has two OLED lines and a monthly capacity of 6 million units. However, yields are still low, which means production is expected to improve next year.

LG already makes the OLED screens inside the LG V30 and the Google Pixel 2 XL. The latter has been riddled by display issues soon after Google launched it. From the looks of it, the quality of LG’s screen may be to blame. The Samsung panels in the smaller Pixel 2 did not present similar issues.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • N/A.
M&A news:
  • D -4.7% (Dominion Energy and SCANA Corporation (SCG) announce a stock-for-stock merger in which SCANA shareholders would receive 0.6690 shares of Dominion Energy common stock for each share of SCANA common stock, the equivalent of $55.35/per share; accretive)
  • MGI -6.8% (Moneygram and Alibaba's (BABA) Ant Financial Services Group mutually agreed to terminate merger )
Other news:
  • ATRA -4.1% (commences underwritten offering of $100 mln of common stock)
  • HHC -2.9% (Howard Hughes announces that Pershing Square (PSHZF) intends to offer for sale in underwritten public secondary offering 2.5 mln shares of common stock), CCIH -2.4% (after seeing afternoon surge higher)
  • GNW -1.9% (weakness on CFIUS news)
  • SRE -1.8% (announced proposed public offerings of common stock and mandatory convertible; details recent U.S. tax legislation that may materially adversely affect financial condition)
  • MTP -1.4% (after 75% jump in stock price today)
  • JNP -1% (Juniper Pharma sees Continued strong double-digit revenue growth for CRINONE and JPS in 2018; Preclinical data supports advancement of Intravaginal Ring technology platform)
Analyst comments:
  • CYH -7.6% (initiated with a Sell at Goldman)
  • W -3.1% (downgraded to Neutral from Buy at BofA/Merrill)
  • HOG -2.8% (downgraded to Underperform from Neutral at Longbow)
  • TEVA -1.5% (initiated with a Underperform at Leerink Partners)
  • CPE -1.5% (downgraded to Neutral from Buy at Citigroup)
  • AMG -1% (downgraded to Neutral from Outperform at Credit Suisse)
  • IVZ -1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • CMC +8.9%
Select chip related names showing strength:
  • AMD +5.7%, NVDA +2.1%, MU +1.6%
Other news:
  • TRVN +21.1% (announces FDA acceptance for review of New Drug Application for Olinvo injection )
  • PTN +8.3% (FDA has notified Palatin that it may proceed with its clinical investigation of subcutaneous injection PL-8177)
  • EGLT +6.8% (partners with OraPharma to co-promote SPRIX nasal spray)
  • TTPH +6.6% (Tetraphase Pharmaceuticals submitted New Drug Application for intravenous eravacycline for the treatment of complicated intra-abdominal infections and promotes Larry Tsai, M.D. to Chief Medical Officer)
  • ARDX +6.4% (completes T3MPO-3 safety extension study of Tenapanor for IBS-C )
  • SGMO +5.4% (Sangamo Therapeutics and Pfizer (PFE) announce collaboration for development of zinc finger protein gene therapy for ALS )
  • BB +4.1% (BlackBerry and Baidu (BIDU) announce they will collaborate to accelerate the deployment of connected and autonomous vehicle technology for automotive OEMs and suppliers worldwide)
  • JCP +4% (following 10% move higher on the day)
  • SSKN +4% (ticking higher after Sabby Management discloses increased active stake and letter expressing dissatisfaction with recent actions ), EEFT +3.9% (following MGI / BABA's Ant news)
  • GLPG +3% (Galapagos NV updates progress with cystic fibrosis programs; started three new clinical studies, concluded the FLAMINGO study in CF patients, and expects to report patient data with a first proprietary investigational triple combination therapy in mid-2018; start of Phase 1 study triggers $10 mln milestone payment from AbbVie)
  • PAH +3% (slightly higher after Elliott Associates discloses increased passive stake)
  • KTOS +2.6% (awarded $14 mln Air Force contract - expected completion date Sept. 30, 2018)
Analyst comments:
  • DKS +3.1% (upgraded to Outperform from Market Perform at Wells Fargo)
  • ETFC +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • EXPE +2.3% (upgraded to Buy from Neutral at BofA/Merrill)
  • ACM +2.1% (upgraded to Outperform from Neutral at Robert W. Baird)
  • ORCL +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • CHTR +1.4% (upgraded to Buy from Neutral at Guggenheim)
  • IBM +1.4% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
  • UTX +1.4% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
  • ULTA +1.3% (upgraded to Outperform from Market Perform at Wells Fargo)
  • APO +1.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • ZNGA +1% (initiated with an Overweight at Consumer Edge Research)
  • DIS +0.5% (upgraded to Buy from Neutral at Rosenblatt)

FT : Dominion Energy to buy US utility group Scana in $14.6bn deal

Scana, the South Carolina-based utility that last year abandoned its attempt to build two new nuclear reactors, has accepted a takeover offer from Virginia-based Dominion Energy worth $14.6bn including debt.

Dominion, one of the largest US utility groups with a market capitalisation of about $52bn, has agreed to pay shares worth about $7.9bn for Scana’s equity, and is also taking on about $6.7bn in net debt.

The terms of the deal offer 0.6690 Dominion shares, valued at $55.35, for every Scana share. That represents a 42 per cent premium to Scana’s closing share price on Tuesday of $38.87. Scana shares have fallen by 50 per cent over the past 12 months.

Thomas Farrell, Dominion’s chief executive, said in a statement that for the deal to go ahead, South Carolina regulators needed to resolve the aftermath of Scana’s failed attempt to build two new Westinghouse reactors at its VC Summer plant.

Scana owns 55 per cent of the VC Summer plant, and of the abandoned new nuclear project.

Scana decided not to go ahead with the project, which had been hit by long delays and large cost overruns, following Westinghouse’s bankruptcy.

Mr Farrell said: “We believe it is in the best interests of all parties to reach an agreement on this critical issue. Having certainty on this issue can act as a catalyst for economic development and it is essential for the Dominion Energy-SCANA merger to move forward. The availability, reliability and cost of energy are often the deciding factors when businesses consider investing – and we want businesses to have every reason to continue investing in Scana’s communities.”

Jimmy Addison, chief executive of Scana, said joining Dominion “strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers”.

As part of the deal, Dominion is proposing a $1.3bn cash payment to Scana customers, worth about $1,000 per household, and a 5 per cent rate reduction from current levels, in part reflecting savings expected from the corporate tax rate cut signed into law just before Christmas.

It would also write off more than $1.7bn in assets at the VC Summer nuclear projects, and spend $180m to buy a gas-fired power plant to meet the need for additional generation.

Mr Farrell said Scana was a natural fit for Dominion, which already has gas pipelines in the region and a business in neighbouring North Carolina.

Once the merger is completed, which the companies hope will be by the end of 2018, Dominion would operate in 18 states and have about 6.5m regulated customer accounts.