>>> Vallourec plans acquisitions, source says

Vallourec plans acquisitions, source says
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Vallourec Heat Exchanger Tubes will pursue acquisitions under its new owner, according to a source familiar with the situation.

The Boulogne-Billancourt, France-based business, acquired by American Industrial Acquisition Corporation (AIAC) on 29 April, has identified a list of global targets, but for now it’s focused on the initial post-closing integration, the source said.

The company has around EUR 100m (USD 113.6m) in annual revenue.

AIAC declined to comment and Vallourec did not respond to requests for comment. Société Générale advised on the transaction.

The source noted that there are synergies with several other companies owned by AIAC. Some of the companies in the portfolio are Vallourec customers, who purchase its titanium tubes for heat exchangers. AIAC's list of current portolio companies includes ACPI, AIP Aerospace, The Carlstar Group, Dynacast, Presstek and Goss, according to its website.

Vallourec is agnostic when it comes to potential geographic locations for targets, said the source. Targets can range from manufacturers of heat exchangers to raw titanium producers. The size of deals can be up to “a couple of hundred million euros,” the source added.

Proprietary Intelligence

>>> US CLose +0.37% S&P +0.33% Nasdaq +0.26% Russell +0.76%

Closing Market Summary: S&P 500 Posts Third Consecutive Gain

The stock market endured a quiet midweek session, but the light participation did not stop the S&P 500 from rising 0.3% to register its third consecutive gain. The benchmark index extended its weekly advance to 1.0% with materials (+0.7%) and industrials (+0.7%) ending in the lead.

Market participants turned some lemons into lemonade today after the World Bank served up some lemons by lowering its 2016 global GDP growth forecast to 2.4% from 2.9% and slashing the U.S. growth outlook to 1.9% from 2.7%. The downgrade did not pressure stocks as investors interpreted the news as a sign that domestic and global monetary policy may remain highly accommodative for longer.

The S&P 500 marked its morning high within the first 30 minutes of action, but the index followed that move with a short-lived retreat to its flat line. Early weakness in sectors like consumer discretionary (+0.1%), financials (+0.2%), and technology (+0.4%) fostered that slip, but the S&P 500 proved resilient thanks to strength in heavily-weighted sectors like industrials (+0.7%) and health care (+0.5%). Furthermore, the technology sector overcame its early weakness thanks in part to Alphabet (GOOGL 742.93, +11.84). The stock climbed 1.6% after a few analysts made positive comments about the company.

To be fair, there were some weak spots among tech shares as the PHLX Semiconductor Index ended flat with Micron (MU 12.58, -0.42) falling 3.2% after announcing that its acquisition of Inotera, which was expected to complete in mid-July, will not be completed in the timeframe that was specified previously.

Elsewhere among cyclical sectors, the energy space (-0.2%) jumped out to an early lead, but could not hold its ground even though crude oil climbed 1.7% to $51.23/bbl, settling at a fresh 2016 high. The energy component posted a solid gain even though the latest weekly inventory report from the Department of Energy showed that gasoline inventories increased by 1.01 million barrels against expectations for a draw. As for crude inventories, they declined by 3.226 million barrels (consensus draw of 2.700 to 3.400 million barrels). Despite today's downtick, the energy sector is still up 4.0% for the week, which puts the group well ahead of the remaining nine sectors.

In other commodities, gold (+1.2% to $1262.20/ozt) and silver (+3.7% to $17.00/ozt) also rallied, benefiting from the fourth consecutive decline in the Dollar Index (93.61), which slipped 0.2% to levels from early May.

Treasuries climbed early on and maintained their gains into the close with the 10-yr yield slipping two basis points to 1.70%.

Today's participation was below average as fewer than 870 million shares changed hands at the NYSE floor.

Economic data was limited to the weekly MBA Mortgage Index and JOLTS:

  • The weekly MBA Mortgage Index increased 9.3% to follow last week's 4.1% decline
  • The Job Openings and Labor Turnover Survey for April pointed to an increase in openings to 5.788 million from last month's 5.757 million (revised from 5.670 million)

Tomorrow's data will feature weekly Initial Claims (consensus 265K) and April Wholesale Inventories (consensus 0.1%), which will be released at 8:30 ET and 10:00 ET, respectively.

  • Russell 2000 +4.7% YTD
  • S&P 500 +3.7% YTD
  • Dow Jones Industrial Average +3.3% YTD
  • Nasdaq Composite -0.7% YTD

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: UQM +13.9%, PLAY +5.8%, HQY+5%, LULU +2%

M&A news: HHS +15% (to explore strategic alternatives for its Trillium Software business)


Select metals/mining stocks trading higher: SSRI +7.3%, AG +5.3%, HMY+5.1%, IAG +5.1%, AU +4.6%, GFI +4.4%, SLW +3.4%, HL +3.4%, CLF +3.3%,ABX +2.9%, FCX +2.9%, NEM +2.9%, GOLD +2.8%, SLV +2.8%, GDX +2.7%, X+2.7%, BHP +2.6%, GG +2.5%, RIO +2.3%, AA +1.8%

Select oil/gas related names showing strength: CHK +3.4%, MRO +2.6%,WLL +2.5%, SDRL +2.4%, SDRL +2.4%, BP +1.5%

Other news: GEVO +110.5% (announces that the first two commercial flights using its renewable alcohol to jet fuel flew from Seattle to San Francisco and Washington), IMNP +52.8% (Immune Pharma and Hadasit jointly file patent for oral use of anti-eotaxin monoclonal antibodies), BEBE +41.2% (receives $35 million in connection with the formation of a JV w/ Bluestar Alliance), CERE +29% (in sympathey with peer GEVO), CAPN +17.3% (enters into exclusive 3-year distribution agreement with M/s Healthware Private for the sale of its CoSense End-Tidal Carbon Monoxide Monitor & Precision Sampling Sets in India), LC +5.9% (Former CEO Laplanche has held talks with banks about potentially financing an acquisiton of LendingClub, according to Reuters), PLUG +2.1% (partners w/ HyGear; to supply HyGear's hydrogen generation technology to its fuel cell customers globally), TGT+0.9% (raises quarterly dividend 7.1% to $0.60/share)

Analyst comments: AKS +7% (upgraded to Outperform at Credit Suisse),RDS.A +2.5% (upgraded to Buy from Hold at Evercore ISI), RP +1.3% (upgraded to Outperform from Market Perform at William Blair)

>>> Polycom receives USD 12.25 per share offer from private equity sponsor

Polycom receives USD 12.25 per share offer from private equity sponsor

Polycom [NASDAQ:PLCM], a California-based communications products and services provide, said in a regulatory filing that it has received a revised, non-binding proposal of USD 12.25 per share from the private equity sponsor described as “Sponsor 1”.

Canada-based Mitel (Nasdaq:MITL) (TSX:MNW) and Polycom in April entered into a definitive merger agreement in which Mitel would acquire all of the outstanding shares of Polycom common stock in a cash and stock transaction valued at approximately USD 1.96bn.

According to an earlier Bloomberg report, which cited unidentified individuals, "'Sponsor 1" is Siris Capital Group.

An excerpt from 8-K SEC filing follows:

On June 8, 2016, Polycom, Inc. (“Polycom”) announced that it has received a revised, non-binding proposal from a private equity sponsor that was previously described as “Sponsor 1” in the Registration Statement on Form S-4 filed by Mitel Networks Corporation (“Mitel”) with the Securities Exchange Commission on May 13, 2016. Under the terms of Sponsor 1’s revised proposal, Sponsor 1 would acquire 100% of the outstanding common stock of Polycom for an all-cash offer of USD 12.25 per share in a take-private transaction. Sponsor 1 indicated that the revised proposal would be funded, in part, with USD 650m of equity financing and USD 950m of debt financing. The revised proposal included a letter from a potential lender indicating that, subject to a number of conditions and contingencies, the potential lender was highly confident it could arrange the debt financing. Polycom continues to engage in discussions with Sponsor 1 with respect to the revised proposal.

Polycom’s board of directors, in consultation with its legal and financial advisors, will consider the outcome of its discussions or negotiations with Sponsor 1 to determine the course of action that is in the best interest of Polycom and its stockholders. There can be no assurance that discussions or negotiations will result in a binding proposal from Sponsor 1, that the Polycom board will determine that any such proposal is a “Company Superior Proposal” or that a transaction with Sponsor 1 will be approved or consummated on any particular terms or at all.

Polycom’s board of directors is not approving, endorsing, recommending or deeming advisable the proposal set forth in Sponsor 1’s offer and is not expressing any intent to do so. Polycom’s board has not changed its recommendation in support of Polycom’s merger with Mitel, and accordingly, Polycom’s board reaffirms its recommendation that Polycom’s stockholders vote in favor of the proposed merger with Mitel.


Source US Securities and Exchange Commission documents

>>> US Early premarket gappers

Early premarket gappers

Gapping up: GEVO +156.9%, CERE +44.5%, CAPN +17.3%, HHS +15%, UQM +13.9%, LC +6.8%, AKS +5.2%, AG +4.8%,HMY +4.6%, PLAY +4.6%, AU +4.2%, HQY +4%, GFI +3.4%, CHK +3.4%, FCX +3.2%, SLW +2.7%, ABX +2.6%, SDRL+2.4%, JCP +2.4%, SDRL +2.4%, GDX +2.3%, RDS.A +2.3%, GOLD +2.3%, GG +2.2%, IAG +2.2%, X +2%, WLL +1.9%,MRO +1.8%, BHP +1.6%, RIO +1.4%, BP +1.1%, AA +1.1%

Gapping down: PAY -29.2%, FLXN -13%, ASC -10.7%, OXM -6.3%, RMP -4.7%, DLTH -4.7%, VRNT -3.6%, SU -2.9%, FGP-2.8%, LULU -2.7%, DB -1.4%, ING -1.2%, RBS -1.2%, BCS -1%, PUK -0.9%, LYG -0.7%

>>> Vallourec +20% on the last 3 days - smaller player looking for M&A...

Tubos Reunidos is looking for acwuqistions in the Sector, could ba a signal to start to see more consolidation in a depress sector...
Tubos reunidos is only 110m mkt cap....so just a catalyst ans some read across on the sector....

{TRG SM Equity DES<GO>}


Merger Market

Tubos Reunidos studies acquisitions of tube factories - exec 

Tubos Reunidos [BME: TRG], the Spanish maker of seamless steel tubes, is interested in buying companies that specialize in finished tubular products, general manager Enrique Arriola said.

The company could study acquisitions in the US, particularly in Texas or Oklahoma, or in Asia, particularly in South Korea, India or Indonesia, Arriola said. Its main aim is to be close to its final clients, he said, adding that deals could come in the short or medium term.

Tubos Reunidos hit EUR 19.77m in EBITDA and EUR 352.4m in net revenues last year. It has a net financial debt of EUR 179.4m and EUR 22.5m in cash and cash equivalents at the end of the first quarter. It has a market capitalization of EUR 111.8m.

Many of the company’s clients are in the oil and gas industry. Although low oil prices have hurt investment levels in the sector, the price of potential targets has also fallen, the executive said.

Tubos Reunidos’ last deal was a joint venture (JV) with Marubeni-Itochu Tubulars Europe (MITE), the UK subsidiary of Marubeni-Itochu Steel, to build a new factory to manufacture, market and supply premium oil country tubular goods (OCTG) in 2014. The JV is 51% owned by Tubos Reunidos and 49% owned by MITE.