Closing Market Summary: Stocks Rally as Oil GainsThe stock market ended the Wednesday affair on a higher note as the S&P 500 (+0.7%) extended its May gain to 1.2%. Focal points for today's trade included a positive reading of the Department of Energy's stockpile data, leadership from the heavily-weighted financial (+1.0%) and technology (+0.7%) sectors, and Greece receiving approval for its next bailout tranche. The Dow Jones Industrial Average (+0.8%) finished ahead of the S&P 500 (+0.7%) and the Nasdaq Composite (+0.7%).
Equities gapped higher to begin their day, boosted by a positive bias in overseas trade. Global bourses ended higher, responding to yesterday's rally in U.S. markets, bullish API Inventory data, and a freshly minted agreement for Greece to unlock the next bailout tranche. Additionally, there was an underlying sense that markets are becoming more comfortable with increased U.S. rate hike expectations.
The major averages traded lockstep with oil as the energy component extended its gain. However, the pair briefly paused their advance as investors ruminated over the Department of Energy's latest stockpile data. The Energy Information Administration reported that crude oil inventories declined by 4.22 million barrels, compared to the estimated 2.45 million barrel draw. Furthermore, the report also showed that gasoline inventories rose by 2.04 million barrels, compared to the estimated 1.06 million barrel draw.
The broader market extended its gain through the afternoon as commodity-sensitive energy (+1.5%) and materials (+1.2%) led heavily-weighted financials (+1.0%) and technology (+0.7%). Conversely, countercyclical utilities (-0.3%) ended with the only loss.
The energy space (+1.5%) demonstrated broad-based strength as a rally in oil continued to add support. Independent oil and gas companies, pipeline names, and oilfield servicers each outperformed. Meanwhile, oil and gas refiners displayed relative weakness as the group weighed disappointing gasoline inventories. Phillips 66 (PSX 80.13, +0.43) gained 0.5%, but still ended behind the broader sector and market. For its part, WTI crude jumped 1.9% ($49.56), ending its day at the best level of 2016.
The economically-sensitive financial sector (+1.0%) outperformed as market participants digested more hawkish commentary from FOMC members. St. Louis Fed President and FOMC voter James Bullard commented last night that labor market strength appears to support more interest rate hikes. However, President Bullard did also say that a June or July hike is not set in stone. Money center banks finished in front of the sector on the anticipation that their earnings prospects and net interest margins will improve.
In the technology space (+0.7%), Dow component IBM (IBM 151.69, +3.38) outperformed, gaining 2.3%. Elsewhere, heavyweight constituent Microsoft (MSFT 52.12, +0.53) gained 1.0% after announcing that it would cut 1,850 jobs in order to streamline its smartphone division. Elsewhere, Hewlett Packard Enterprise (HPE 17.35, +1.10) reported above-consensus results for the quarter and announced a tax-free spin-off of its Enterprise Services business with Computer Sciences (CSC 50.65, +15.00).
In the consumer discretionary space (+0.5%), retail names continued their recent rebounds, evidenced by the 1.2% gain in the SPDR S&P Retail ETF (XRT 41.70, +0.50). In the sub-group, Tiffany & Co (TIF 63.89, +0.04) gained 0.1% despite disappointing investors with its quarterly results and guidance.
The U.S. Dollar Index (95.42, -0.15) ended off its low as commodity currencies and the euro gained against the greenback. The euro/dollar pair finished higher by 0.1% (1.1152) while the dollar lost 0.8% against the commodity-sensitive Canadian dollar (1.3025).
The Treasury complex finished on a flat note with the yield on the 10-yr note unchanged at 1.87%.
Today's participation was below the recent average as fewer than 891 million shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, April International Trade in Goods, and the March FHFA Housing Price Index:
- The weekly MBA Mortgage Index showed a seasonally adjusted increase of 2.3%
- April International Trade in Goods showed a deficit of $57.53 billion, compared to the March deficit of $56.90 billion.
- The FHFA Housing Price Index for March rose 0.7%, which followed an increase of 0.4% in February
Tomorrow's economic data will include weekly initial claims (consensus 275k) and April Durable Good Order (consensus 0.6%), both crossing the wires at 8:30 ET. Finally, Pending Home Sales for April (consensus 0.6%) will be released at 10:00 ET.
- Dow Jones +2.5% YTD
- S&P 500 +2.3% YTD
- Russell 2000 +0.4% YTD
- Nasdaq Composite -2.3% YTD
Some Investors Have Limited Taste for Sweeter Bayer Bid for Monsanto
The company’s $62 billion takeover bid was rejected by Monsanto on Tuesday
FRANKFURT—While Bayer AG is considering how to respond to Monsanto Co.’s rejection of its $62 billion takeover bid, investors and analysts are questioning whether the German pharmaceutical and chemicals giant can up its offer.
Some of Bayer’s investors said Wednesday the all-cash, $122 a share bid for the U.S. agrochemicals company, confirmed on Monday, was already a stretch. These investors said Bayer isn’t in a position to increase its bid materially because its share price has plummeted more than 12% since news of a takeover surfaced last week.
Bayer’s shares closed at €87.15 on Wednesday.
The company now must formulate a slightly higher bid that pleases both Monsanto and its own skeptical investor base if it is to clinch a deal that would create the world’s largest agrochemical business, according to investors and analysts.
Monsanto, the world’s top seed producer, said Tuesday that Bayer’s proposal “significantly undervalues” the company and is “financially inadequate.” However, Monsanto Chief Executive Hugh Grant added that there could be “substantial benefits” to a tie-up with Bayer and the company was open to further discussions.
Bayer, a leader in crop chemicals, responded by reiterating its $62 billion bid, while expressing confidence it could address Monsanto’s financial and regulatory concerns to complete a transaction.
“Bayer remains committed to working together to complete this mutually compelling transaction,” Bayer Chief Executive Werner Baumann said in a brief statement Tuesday night.
Mr. Baumann, a 28-year Bayer veteran who stepped in as chief executive just over three weeks ago, has been trying to convince investors of the deal’s merits. Bayer’s shares rose to as much €87.91 Tuesday from a low of €84.
At a lunch meeting with several investors in London on Tuesday, Mr. Baumann characterized the deal as the last crucial step in the global consolidation of the agrochemical industry, which he said could solidify the sector for decades, according to people familiar with the matter.
These people said Mr. Baumann also responded to investors who would have preferred a large pharmaceutical-sector acquisition, saying most available targets wouldn’t significantly improve Bayer’s pipeline and cash profile.
Analysts and investors said Bayer might have to raise its offer to at least $135 a share to interest Monsanto, forcing the German company to enact a much higher capital increase than it initially suggested.
Such a move likely wouldn’t require Bayer to seek shareholder approval for a bid. Bayer’s Board of Management can issue up to 35% of Bayer’s outstanding capital to shareholders for cash without seeking approval from shareholders, according to a resolution at the company’s shareholder meeting last year. The company can additionally issue convertible bonds.
Bayer’s said it would finance its current bid, which values Monsanto at a 37% premium over its closing share price on May 9, with a combination of debt and equity, including a share sale worth around 25% of the total transaction value. That means the company would launch a capital increase of around $15.4 billion. Bayer’s market capitalization is $80 billion.
It is unclear whether Bayer would be able to secure shareholder approval, if ultimately needed. Since Bayer confirmed last week that it was pursuing an acquisition of Monsanto, investors have voiced skepticism not just about the price but also about whether such a move would pull the company too far away from its health-care roots in the interest of its crop-science business.
“It’s a concern that crop science would become a very large part of the company,” said Markus Manns, a portfolio manager at Union Investment, a Bayer shareholder. Mr. Manns said Bayer’s pharmaceutical and over-the-counter drug businesses were more attractive to investors because the agrochemical division tended to be more volatile.
Bayer investors, including Union, have acknowledged the strategic rationale for a tie-up with Monsanto, which would strengthen Bayer’s presence in the seed business, but most question the size of the target. “If Bayer were to find a ‘mini-Monsanto’ it would make more sense,” Mr. Manns said.
“Monsanto is a good company and the deal seems to be a good fit, as both companies have a strong position in different markets and different product ranges that complement one another,” said one Bayer investor, who declined to be identified. But, the person added, the current price is “quite high” and “Monsanto is so big that it might be hard to integrate the company.”
If a deal was completed, Bayer’s crop science business would comprise around half of the company’s total revenue, according to analysts. Bayer’s agrochemical division posted revenue of €10.37 billion last year, out of total group sales of €46.3 billion.
Analysts have suggested that a potential deal could signal a shift in Bayer’s investor base, which tends to be more focused on its lucrative pharmaceuticals business.
Former Bayer Chief Executive Marijn Dekkers, who stepped down at the end of April, built up the company’s health-care profile by presiding over the launch five new blockbuster drugs and the $14.2 billion acquisition of U.S.-based Merck & Co.’s consumer care business.
At the same time he sought to focus the company more squarely on its so-called life-science businesses, including health care and the agrochemicals business. As part of that effort, Mr. Dekkers late last year spun off part of the group’s specialty plastics business, now known as Covestro AG.
Bayer’s bid for Monsanto comes after major deals were struck in recent months by rival seed developers Syngenta AG, Dow Chemical Co. and DuPont Co. Analysts have concluded this would be Bayer’s last chance to participate in the agrochemical deal making frenzy.
Mossberg: Can Apple win the next tech war?
As phone sales slow, can the company pivot to artificial intelligence?
Fifteen years ago, when the time became ripe for post-PC devices that put a premium on integrating software and hardware, Apple was the best-positioned company to lead the charge — and it did. The company’s vertical integration, its attention to detail and innovation in both software and hardware and its willingness to make big bets gave it an edge. And it used that edge to reel off its now-familiar string of game-changing products like the iPod, the iPhone, the MacBook Air and the iPad.
Now, the iPod is essentially gone, and the other products are in mature or maturing markets, with either pretty flat or dropping sales.
And the tech industry is turning to a new battlefield: Artificial intelligence, spread across many devices.
After the success of Amazon’s Echo, and the plans laid out at recent Facebook and — especially — Google developer conferences, it seems that the tech industry is pivoting in a big way to artificial intelligence and proactive assistance. Apple has some chops in this area, but it will be challenged to match what its rivals are promising.
The company’s next opportunity to show what it has up its sleeve, if anything, will come at its annual Worldwide Developer Conference on June 13 in San Francisco. That’s the equivalent of Google’s event last week, where AI took center stage.
As I write this, I don’t know what Apple will have to say when its turn comes to talk about the next versions of its software platforms. It may be mind-blowing, as Apple announcements have often been in the past.
It’s also unfair to take Google and Facebook at their word that their voice-controlled AI and smart chatbots will be as great as they predict. After all, Google’s current voice-controlled assistant isn’t sensational, Facebook’s is just starting, Amazon’s is limited if growing, and Microsoft’s recent attempt at a chatbot was hijacked by racists.
But Apple could have a very hard time in the AI war that’s dawning — even though it actually pioneered the first widespread voice-controlled, cloud-based AI assistant, Siri, on the iPhone five years ago and is now rumored to be bringing Siri to the Mac. (In fact, former Apple CEO John Sculley pushed an AI-powered conversational assistant concept called Knowledge Navigator, complete with concept videos, way back in 1987. It envisioned a conversational digital helper with abilities far beyond any that exist now.)
There are three reasons for my doubts: First, Apple’s history with cloud-based services in general has been weak and inconsistent. Second, Apple has done shockingly little to capitalize on its lead with Siri. And third, Apple’s steadfast devotion to privacy and lack of a search service or social network means it doesn’t have the range and volume of data its competitors hope to use to power personalized, actionable AI capabilities.
Apple and the cloud: A match not made in heaven
As cloud-based services gradually grew in importance, Apple provided some of those to complement its devices, under a variety of sometimes confusing names and with a mixed record of success.
It was early to syncing contacts and calendar items among your Apple devices. It could keep track, across devices, of songs you purchased in iTunes. Its iMessage and FaceTime services have been big hits and have helped keep people in Apple’s world. And, in Apple’s biggest move of all, in 2011 it introduced the voice-controlled artificial intelligence service called Siri as a feature of the iPhone.
Along the way, however, Apple also acquired a reputation for being generally weak in the scope and reliability of its online services.
Its MobileMe suite of cloud-based services was a famous flop, and the name was dropped. So was its Ping music-centric social network. And the cloud- and data-based Apple Maps service, out since 2012, was the butt of jokes and is still inferior to Google Maps, even on the iPhone — though it’s improving and is now more popular than Google’s app on iOS.
iTunes Match and the iCloud Photo Library perform inconsistently, to say the least. The cloud-based Apple Music, which should have been a strength for the digital music titan, is a cluttered mess, and hard to figure out how to use. The most recent news around Apple’s music service has been about users believing it deletes files, not about any of its artist exclusives. Until recently, with the relatively obscure iCloud Drive, Apple even resisted offering a simple and common cloud-based virtual hard disk for storing documents, like Google Drive, Dropbox or Microsoft’s OneDrive. The result, I suspect, is that most Apple users don’t rely on it.
Hey, Siri: When will you become smarter?
But perhaps the biggest disappointment among Apple’s cloud-based services is the one it needs most today, right now: Siri. Before Apple bought it, Siri was on the road to being a robust digital assistant that could do many things and integrate with many services — even though it was being built by a startup with limited funds and people.
After Apple bought Siri, the giant company seemed to treat it as a backwater, restricting it to doing only a few, slowly increasing number of tasks, like telling you the weather, sports scores and movie and restaurant listings or controlling the device’s functions. Its unhappy founders have left Apple to build a new AI service called Viv.
And, on too many occasions, Siri either gets things wrong, doesn’t know the answer, or can’t verbalize it. Instead, it shows you a web search result, even when you’re not in a position to read it.
Last year, Apple added a Siri feature called “Proactive” — a sort of catch-up to Google Now, which shows recent apps, recent contacts, nearby retail services and a few headlines. Proactive also remembers music you were in the middle of playing, suggests people to include in an email and tries to identify phone numbers in email, among a few other things. But it isn’t a full-bodied smart assistant or the type of natural-language helper the industry is aiming to build now.
And unlike Google’s current voice assistant, Siri — at least in my experience — can’t recall what you were talking about when you try to ask a follow-up question.
I’ll be looking for Apple to show a greatly expanded Siri at WWDC in a couple of weeks, and to maybe even open it to third-party developers. In fact, there’s a report that Apple plans to do just that and is also working on a Siri-powered home speaker.
Unless Apple really does these things — and keeps doing more — I will regard Siri as one of the tech world’s biggest wasted opportunities.
Do I know you?
If a company knows a lot about you, there’s reason to worry that it’s invading your privacy. But if a company knows too little about you, there’s reason to question its ability to build highly useful artificial intelligence into its products.
Google and Facebook know — or can infer — a lot about you, from your favorite films to your age and family size to your job and hobbies. But because it is so wedded to privacy, Apple says it can’t access your cloud-based information. It’s so dedicated to privacy, in fact, that it has taken on the FBI over encryption.
At last year’s WWDC, when it introduced Proactive, Apple made a big point of saying that it doesn’t need to scoop up cloud-based data to make Siri smarter — it can just use what’s local on the phone, with your okay.
Maybe so. But I’m skeptical that Apple will be able to customize a chatbot or sophisticated Siri request with just what’s locally stored on my phone. Already, most of my music, photos and emails aren’t stored locally. So that leaves Apple less to work with.
If I ask Facebook or Google to recommend a restaurant I’d like in, say, Milwaukee, with no further information, Google might know my tastes and price ranges from restaurant searches I did in another city. Facebook might know them from posts I liked or from what my close friends posted. Apple won’t have those kinds of sources to draw upon.
Bottom Line
I’m rooting for Apple to succeed in this game, because more competition is better for everyone. But I have my doubts. So I’ll be watching closely in 19 days to see what the company has to say about AI. You should too.
Facebook Planning to Shut Down its Ad Exchange
Social network focusing on its own ad network and mobile ad inventory
Facebook is planning to shut down its ad exchange, FBX, which enables third party ad technology companies to purchase ads on the social network.
The company confirmed the move to CMO Today on Wednesday.
Officials from Facebook began alerting a group of FBX partners earlier this week that the exchange product would be shuttered by November.
Ad tech companies such as Criteo, DataXu, MediaMath and AppNexus have been buying ads on behalf of marketers through the ad exchange over the past few years.
In ad tech circles, this move is hardly a surprise. Facebook had pared down the number of partners eligible to buy ads via FBX in early 2015 and lately appears to have shifted its focus to its own Audience Network, which lets marketers buy ads across the Web using Facebook’s data--through direct deals with Facebook.
Third party vendors can still purchase ads on Facebook through the company’s “application programming interface.” This allows a wide number of companies to advertise on Facebook, ranging from e-commerce firms to small local businesses to mobile game developers via an automated set of digital tools, for example.
Most FBX partners work with other exchanges and were not necessarily reliant on Facebook ad inventory, said people familiar with the matter.
The ad inventory available through the FBX product was limited to space desktop computers, such as display ads that appear along the right side of Facebook’s home page. FBX did not feature mobile or video ads. And mobile now makes up the bulk of Facebook’s traffic and revenue.
“Mobile is now a necessary component of effective marketing campaigns, and Facebook is helping millions of businesses understand their customers’ purchase path across devices,” said Matt Idema, vice president of monetization product marketing. “Dynamic Ads and Custom Audiences have mobile at their core and are delivering excellent results for businesses, so Facebook Exchange spending has shifted towards those solutions.”
Facebook has been beefing up its Audience Network, and recently started selling video ads through the platform. The company said fourth-quarter 2015 sales on the Audience Network suggested an annualized run rate of $1 billion. (Facebook’s advertising revenue last year was over $17 billion.)
In general, Facebook has been asserting more control over its ad offerings of late, while tweaking some of its ad technology offerings.
For example, Facebook recently scaled back some of its video ad-serving capabilities. (In 2014 Facebook had acquired the video ad tech firm Liverail, which had helped deliver video ads to multiple outlets).
And Facebook’s display ad-focused ad product Atlas--at one point a major competitor to Google’s leading ad serving tool--has struggled to gain traction among among top marketers and ad agencies, according to AdExchanger.
Meanwhile, Facebook has found itself becoming even more central to both the media distribution business and the digital advertising industry, perhaps making FBX less important to its future.
“Facebook is becoming more of a closed ecosystem, something we expected,” said Greg Williams, MediaMath’s co-founder and general manager of Media. “It allows Facebook to control their own platform by maintaining the ability to make the last-mile decisions on behalf of advertisers.”
Antonio Garcia-Martinez, a former Facebook product manager who helped build FBX, said that the exchange was hatched around the time Facebook was going public and the company was “desperate to boost revenue.”
“People interpreted this as a massive move into programmatic,” he added. “But they hated any idea of outside bidders have access and control [of Facebook ads]. Facebook always want to have everything owned and operated.”
Now that mobile advertising on Facebook has exploded, FBX may have simply outlived its usefulness, said Mr. Garcia-Martinez, who is publishing a book on Silicon Valley next month. “Facebook is sitting high on the hog.”
MergerMarket
* Raising equity dubbed “offensive” on present terms
* Monsanto’s Glyphosate risk looms over bid valuation
* Approach viewed as possible gambit to secure crops JV
Bayer [ETR: BAYN] would likely struggle to secure shareholder backing for an increased bid for Monsanto [NYSE:MON], according to a top-20 and two further shareholders in the German life sciences group.
The second and third shareholders said they would not back a rights issue to finance a higher offer for the US crop sciences giant.
“We are backing the rights issue only within the current parameters. But we won’t support it in the event of an increase of price, so management should keep this in mind when reviewing the offer,” the second shareholder said.
On 24 May, Monsanto rejected Bayer’s proposed all-cash offer at USD 122 per share as it was deemed “incomplete and financially inadequate”, but the company remains open to discussing a potential path forward. Bayer said it planned to finance around 25% of the USD 62bn acquisition consideration via a rights issue.
Monsanto may be amenable to a deal, indicated one US sector banker. Monsanto knows we are at a low point in the agricultural cycle, which is why it bid for Syngenta [VTX:SYNN], he pointed out. This banker estimated that Bayer would need to offer at least the same as ChemChina is paying for Syngenta for its bid to be successful, estimating a bid in the range of USD 130-USD 140 per share. ChemChina’s bid for Syngenta values the Swiss company at 17x EV/EBITDA.
But Bayer investors are “very unhappy” about the German company’s stock price fall since Monsanto bid talk emerged and already consider equity raising on the proposed terms “offensive”, the third shareholder said.
The current offer at USD 122 is a fair price with a good premium on offer, so Bayer management should not improve its offer, the second shareholder said, adding that there was absolutely no room for increase.
Even at the current terms, “I’d be diluted down […] I’m not giving them more money,” the third investor said.
The first, top-20 shareholder said Bayer should not increase its bid. But he conceded he might be able to support an increase if Monsanto gave assurances of its support for the approach.
It is premature to speculate on shareholder sentiment, a person familiar with Bayer’s position said.
Product mix headache
Bayer shareholders have also expressed their concerns around Monsanto’s product mix, with a particular focus on herbicide Glyphosate, the second and third investors said. This product is enduring a difficult progress towards relicensing in the European Union, as reported.
The Glyphosate product may be withdrawn from sale in Europe and this situation is just one signal of potential underlying problems with Monsanto’s business, these shareholders concurred.
Monsanto could not immediately be reached for comment.
A joint venture with Monsanto in the crop sciences space would still be a suitable end scenario, all the shareholders agreed.
One way that Bayer’s bid for the whole of Monsanto might make sense is if the US group is dragging its feet on a JV, the third shareholder suggested. This could be Bayer’s gambit to bring Monsanto to the table to ink a deal on the venture, he reasoned. There is otherwise no rationale for trying to buy the whole business and diluting its healthcare operations, he added.
It does not make much strategic sense to keep Bayer’s crop sciences activities under its banner, the second shareholder said. Monsanto may be better placed to manage these assets, he argued.
If this is the case, new Bayer CEO Werner Baumann may be “smarter than we think,” the third shareholder said. Baumann took up the post earlier this month. His move for Monsanto represented a very sudden shift in strategy, all three shareholders agreed.
Bayer should have focused on selling its remaining 69% stake in specialiy chemicals player Covestro [ETR:COV] and finding a solution for crop sciences assets before moving for a pharma acquisition, the first shareholder said.
The German group had space to do work internally to boost pharma margins, the third shareholder added. Diluting down its pharma capability with a full takeover of Monsanto would be “permanently damaging” to the stock, he argued.
Bayer declined to comment.
Should the full takeover of Monsanto not materialise, it would be beneficial for Bayer shareholders in the long run because the share would re-rate, the first and third shareholders said. However, this would be a big hit for Monsanto investors, who will have to face another failed transaction after Syngenta [VTX:SYNN], the first shareholder said.
Bayer’s shares were trading at EUR 100 before rumours of its approach emerged. The stock closed today (Wednesday) at EUR 87.15.
Fed's Kaplan says Fed should act in the near future to remove accomodation
Fed's Kaplan says Brexit vote will be taken into account, notes July meeting also lies ahead; Sees a risk to not raising ratesHearing chatter Bayer is unlikely to raise its offer, which could scuttle deal - TTN.COM
PIMCO Exec: ready to buy aggressively on market weakness - sees better than 50/50 chance of Fed rate hike in June
MergerMArket/DealReporter
Hewlett Packard Enterprise (NYSE:HPE), the Palo Alto, California-based provider of technology services including servers, storage and networking, will look out for potential acquisitions after agreeing to merge its services business with Computer Sciences Corporation (NYSE:CSC), CEO Meg Whitman said Tuesday.
On the 2Q16 earnings call, Wells Fargo analyst Maynard Um asked if HPE expected any further transactions for its remaining business, including M&A, spinoffs or a sale. Whitman said the company’s focus going forward would be on next generation software defined infrastructure, as well as higher growth, higher margins and more robust free cash flows.
“We don’t necessarily think there is a need for acquisitions,” she said. “But if we find the right companies, we certainly will move.”
Whitman cited the previous acquisitions of 3PAR, 3Com and Aruba Networks as examples of successful deals.
“And so, we will keep our eyes out for those kinds of acquisitions,” she added. “Unfortunately there aren’t a lot of those around, but to the extent we see them, we won’t hesitate to move.”
Asked by Credit Suisse analyst Kulbinder Garcha if the company planned any further portfolio optimization actions, the CEO said HPE was happy with the performance of its overall portfolio.
“Obviously over time, we continue to ensure that we’ve got the right set of assets,” she said. “We are going to continue to optimize the set of assets that we have but we are really happy with the current portfolio.”
Tysons, Virginia-based CSC announced Tuesday its agreement to merge the company with HPE’s Enterprise Services segment. Following the deal, which is expected to close in March 2017, CSC and HPE shareholders will own approximately 50% of the new company’s shares.
In addition to the Enterprise Services division, HPE is organized into four other segments: Enterprise Group, Software, Financial Services and Corporate Investments.
In November 2015, HP (NYSE:HPQ), formerly known as Hewlett-Packard Company, spun off HPE into an independent publicly traded company.
HP bought California-based user centric networks and secure mobility solutions provider Aruba in March 2015 for around USD 2.4bn. In 2010, HP completed its acquisitions of 3PAR, a California-based provider of utility storage systems and 3Com, a Massachusetts-based provider of secure converged networking solutions, for approximately USD 2bn and USD 2.6bn, respectively.
Aside from the deal with CSC, HPE’s M&A efforts have been light since the separation from HP. In February this year, it bought Switzerland-based Trilead for an undisclosed sum.
Goldman Sachs advised HP on the HPE separation, and was also used by the latter for the merger of its Enterprise Services segment. Barclays, JPMorgan and Morgan Stanley were used for the Aruba, 3PAR and 3Com deals, respectively.
For the HPE separation, HP used Simonsen Vogt Wiig, Baker & McKenzie, Freshfields Bruckhaus Deringer and Skadden Arps Slate Meagher & Flom. The latter three were used by HP on multiple earlier buys, according to the Mergermarket M&A database.
On Tuesday’s call, HPE reported total gross cash and debt in 2Q16 of USD 9.3bn and USD 16.1bn, respectively. The company has a market capitalization of USD 27.9bn.