>>> DD/DOW Merger Agreement Quick Summary



MA Announced: 12/11/15

MA Dated: 12/11/15

MA Filed: 12/11/15

Merger Consideration: DD = 1.282 DOW

Termination Date: 3/15/16; Extendable to 6/15/17

Termination Fee:

Orion (DD) - $1.9B

Diamond (DOW) – $1.9B

Orion (DD) Vote – Majority S/O

Diamond (DOW) Vote – Majority S/O

Regulatory:

HSR – As soon as practical

EC – As soon as practical

Canada – As soon as practical

China – As soon as practical

Brazil – As soon as practical

Other Foreign Antitrust – As soon as practical

Other Regulatory  - As soon as practical

Proxy – As soon as practical

Section 355 Overlap.  Orion and Diamond shall have reasonably determined, utilizing data available as of the time of the Closing that (i) the Diamond Merger and related transactions shall not constitute an acquisition of a fifty percent or greater interest (within the meaning of Section 355(d)(4) of the Code) in Diamond, as determined under the principles of Section 355(e) of the Code and the Treasury regulations promulgated thereunder, and (ii) the Orion Merger and related transactions shall not constitute an acquisition of a fifty percent or greater interest (within the meaning of Section 355(d)(4) of the Code) in Orion, as determined under the principles of Section 355(e) of the Code and the Treasury regulations promulgated thereunder.  Such determination shall be made as reasonably agreed to by Orion and Diamond, substantially consistent with Schedule 7.1(g), as updated or revised by mutual agreement of Orion and Diamond from time to time prior to Effective Time.

 

Dividends:

Orion (DD)  – $0.47 (per quarter)

Diamond (DOW)  – $0.57 (per quarter)

Dividend Coordination.  Orion and Diamond shall coordinate with each other to designate the same record and payment dates for any quarterly dividends or distributions declared in accordance with this Agreement in any calendar quarter in which the Closing Date might reasonably be expected to occur.

Confidentiality Agreement: 11/24/15

Superior Proposal Notice Period (both companies): 4 business days; 2 business days for amendments

Matching Rights (both companies): Yes (good faith negotiations)

Dissenters Rights: None

Governing Law: Delaware

Best Efforts: The parties agree that the use of “reasonable best efforts” in this Section 6.3 shall include proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, (x) the sale, divestiture or disposition of such assets or businesses of either party or its Subsidiaries or affiliates and (y) restrictions, or actions that after the Effective Time would limit HoldCo’s or its subsidiaries’ or affiliates’ freedom of action or operations with respect to, or its ability to retain, one or more of its or its subsidiaries’ businesses, product lines or assets, in each case (A) as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by this Agreement and (B) conditioned upon the consummation of the Mergers.

MAC: Any fact, circumstance, effect, change, event or development (each, an “Effect”) that materially adversely affects the business, properties, financial condition or results of operations of Orion and its subsidiaries, or Diamond and its subsidiaries, in each case taken as a whole, respectively, excluding any Effect to the extent that it results from or arises out of (A) general economic or political conditions or securities, credit, financial or other capital markets conditions, in each case in the United States or any foreign jurisdiction (in each case, other than any Effect that affects either Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, in a materially disproportionate manner as compared to other companies that participate in the businesses that Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, operate, but, in such event, only the incremental disproportionate impact of any such Effect shall be taken into account in determining whether a “Material Adverse Effect” has occurred), (B) any failure, in and of itself, by Orion or Diamond to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect on Orion or Diamond, respectively, unless otherwise excluded in this definition of “Material Adverse Effect”), (C) the execution and delivery of this Agreement or the public announcement or pendency of the Mergers or any of the other transactions contemplated by this Agreement, including any litigation resulting or arising therefrom or with respect thereto (except that this clause (C) shall not apply with respect to the representations or warranties in Section 4.1(b)(ii) and (iii), in the case of Orion, and Section 4.2(b)(ii) and (iii), the case of Diamond), (D) any change, in and of itself, in the market price or trading volume of Orion’s or Diamond’s, respectively, securities (it being understood that the facts or occurrences giving rise to or contributing to such change may be taken into account in determining whether there has been or will be, a Material Adverse Effect on Orion or Diamond, respectively, unless otherwise excluded in this definition of “Material Adverse Effect”), (E) any change in Applicable Law, regulation or GAAP (or authoritative interpretation thereof) (in each case, other than any Effect that affects either Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, in a materially disproportionate manner as compared to other companies that participate in the businesses that Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, operate, but, in such event, only the incremental disproportionate impact of any such Effect shall be taken into account in determining whether a “Material Adverse Effect” has occurred), (F) geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this Agreement (in each case, other than any Effect that affects either Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, in a materially disproportionate manner as compared to other companies that participate in the businesses that Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, operate, but, in such event, only the incremental disproportionate impact of any such Effect shall be taken into account in determining whether a “Material Adverse Effect” has occurred), (G) any hurricane, tornado, flood, earthquake or other natural disaster (in each case, other than any Effect that affects either Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, in a materially disproportionate manner as compared to other companies that participate in the businesses that Orion and its subsidiaries or Diamond and its subsidiaries, as applicable, operate, but, in such event, only the incremental disproportionate impact of any such Effect shall be taken into account in determining whether a “Material Adverse Effect” has occurred), or (H) any action expressly required by Section 6.3 of this Agreement

 

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. © 2015 Oscar Gruss & Son Incorporated. All rights reserved.

>>> US Clos Dow-1.76% S&P-1.94% Nasdaq-2.21% Russell-2.21%


Closing Market Summary: Stocks Slide Ahead of Fed Week

The stock market ended a defensive week on a woeful note with the S&P 500 (-1.9%) diving below its 100-day moving average (2,031). The benchmark index lost 3.8% since last Friday, while the Nasdaq (-2.2%) underperformed, falling 4.1% for the week.

The bulk of today's weakness unfolded during the first half of the day while afternoon action saw the key indices slip to fresh lows. The early weakness followed an overnight session, which featured news from China, indicating the People's Bank of China nudged the yuan to a four-year low against the dollar (6.4553). This stoked up concerns about China's deflation being exported to other economies while continued weakness in commodities compounded those worries.

Furthermore, reports of trouble in the junk bond arena weighed on sentiment after it came to light that Third Avenue Management is liquidating its high-yield Focused Credit Fund and barring investor withdrawals while it is doing so. This invited fears about other bond funds with similar exposure while junk bonds faced daylong pressure that sent the iShares iBoxx $ High Yield Corporate ETF (HYG 79.52, -1.62) to its lowest close since July 2009.

All ten sectors ended the day in negative territory and the market saw no dip-buying during the afternoon. To be fair, the lack of an afternoon rebound was not a shock considering the Federal Reserve is likely to introduce another wrinkle into the fold next week when the central bank is widely expected to announce the first fed funds rate hike since June 2006.

The continued weakness in commodity prices took its toll on cyclical energy (-3.4%) and materials (-2.7%) sectors. The energy space widened this week's loss to 6.5% while crude oil also struggled, falling 3.2% to $35.62/bbl, to end the week lower by 10.9%.

Meanwhile, the remaining cyclical sectors fared a bit better, but that was a small victory considering the "best" performing growth-sensitive sector still lost 1.6%. The industrial sector settled just a step ahead of the broader market thanks to strength in select railroad names after it was reported Berkshire Hathaway (BRK.B 130.31, -1.40) is considering a bid for Norfolk Southern (NSC 89.53, +1.85). On a related note, the Dow Jones Transportation Average ended in line with the S&P 500.

The 1.9% gain in the shares of NSC represented one of few bright spots in the market as declining issues at the NYSE outpaced advancers by a 7:1 margin.

Treasuries rallied throughout the day, ending on their highs with the 10-yr yield sliding ten basis points to 2.13%.

The Friday retreat invited above-average volume as nearly a billion shares changed hands at the NYSE floor.

Economic data included PPI, Retail Sales, Michigan Sentiment, and Business Inventories:

  • The Producer Price Index report for November produced some better than expected readings, with both total PPI and core PPI, which excludes food and energy, increasing 0.3%
    • The median estimate of economists polled by Briefing.com called for a 0.1% decline in total PPI and a 0.1% increase in core PPI
    • On a year-over-year basis, the index for final demand is down 1.1%, which is the tenth consecutive 12-month decline. Core PPI is up 0.5%
  • The November Retail Sales report showed a below-consensus increase of 0.2% (Briefing.com consensus +0.3%), yet sales excluding autos (+0.4%) were stronger than expected (Briefing.com consensus +0.3%) while core retail sales, which exclude autos, gasoline station, and building materials sales, were up a healthy 0.6%
    • Core retail sales factor into the goods component of personal consumption expenditures in the GDP report, so this November data can be thought of as a positive input
  • The preliminary reading for the University of Michigan Index of Consumer Sentiment for December was 91.8, which was up slightly from the final November reading of 91.3 and nearly matched the Briefing.com consensus estimate of 91.6
    • The improvement stemmed from a better feeling about current conditions, evidenced by a jump in the Current Economic Conditions Index to 107.0 from 104.3
  • Total business inventories were unchanged in October following a downwardly revised 0.1% increase (from 0.3%) in September
    • The Briefing.com consensus expected business inventories to be up 0.1%
    • Manufacturer inventories (-0.1%) and merchant wholesaler inventories (-0.1%) were already known. Retailer inventories were the only unknown and they increased 0.1% in October on top of a 0.8% increase in September

Investors will not receive any economic data on Monday.

  • Nasdaq Composite +4.2% YTD
  • S&P 500 -2.3% YTD
  • Dow Jones Industrial Average -3.1% YTD
  • Russell 2000 -6.6% YTD