>>> CWC takeover by Liberty Global could be carried out at LiLAC level

CWC takeover by Liberty Global could be carried out at LiLAC level

Liberty Global [LBTYA:NASDAQ] could choose to issue shares at the LiLAC [NASDAQ:LILA/LILAK] rather than parent level for its acquisition of Cable & Wireless Communications [LON:CWC], two bankers following the deal and a top minority investor said.

Liberty and CWC are in talks regarding a cash and share offer for CWC, with a PUSU deadline of 19 November. Liberty’s Latin America and Caribbean Group (LiLAC) began trading in July this year to give shareholders the opportunity to invest directly in the region.

Issuing shares in LiLAC rather than Liberty Global would give the entity welcome scale, the investor, who holds shares in both Liberty and CWC, said. However, as LiLAC trades at a lower multiple to Liberty Global, the acquisition would be more dilutive to its shareholders than if the shares were issued at parent level, the investor said.

Liberty Global plc is trading at 10.4x LTM EBITDA and Liberty LiLAC Group is trading at 8.1x LTM EBITDA, according to Dealreporter analytics.

A share issue at the LiLAC level would also limit the impact of the CWC acquisition on the prospects of a Vodafone [LON:VOD]/Liberty Global tie-up in the future, the first sector banker said. Keeping the emerging market assets operating independently from Vodafone and Liberty Global’s European portfolio would simplify any potential future discussions between the two companies, this banker said.

The exact division of cash and shares for the deal is not yet known. The investor said he did not have concerns about the ratio as yet, but noted the price is yet to be confirmed.

Talks are understood to be focused on an offer price of between 80-85p per share, as previously reported. This seems to be a full price for CWC, the first banker and investor said. The company is still in transition, having completed its acquisition of Columbus International in March this year, a third sector advisor noted.

CWC’s interim results for the first half, published today, state group revenue is up 4% on the previous year, at USD 1.2bn. The company saw a pre-tax loss due to ‘exceptional items’ including the integration of Columbus.

The acquisition holds strong rationale for Liberty Global, the two bankers said. Despite concerns about constraints on improving performance in certain countries and large minority government stake, the acquisition makes sense when the lack of alternative options is considered, the two bankers said.

CWC has presence across the Caribbean and Latin America. Peers with a similarly wide geographic scope, America Movil [NYSE:AMX] and Telefonica [NYSE:TEF], could not be acquired by Liberty Global, the bankers said. Digicel is smaller and financially viable but does not have the geographic scope Liberty wants, they said.

Liberty Global and CWC declined to comment.

>>> Hologic rebuilds M&A team to focus on tuck-ins

Hologic rebuilds M&A team to focus on tuck-ins

Hologic (NASDAQ:HOLX), the Marlborough, Massachusetts-based healthcare and diagnostics company, has reorganized its management structure to seek bolt-on acquisitions in the surgical space, according to CEO Stephen MacMillan.

In the Q&A session on Wednesday’s 4Q15 earnings call, Goldman Sachs analyst Joel Kaufman asked how Hologic felt about the M&A landscape in the surgical space.

“I think we feel pretty good,” MacMillan said.

The CEO noted that Hologic “blew up” its acquisitions activities when he arrived at the company around two years ago. MacMillan said it now had teams in place looking on a divisional basis for opportunities.

“Surgical is clearly an area that would be a great tuck-in acquisition opportunity for us. So we've rebuilt the team there to be focused on that as well,” he added.

Later on the call, William Blair analyst Brian Weinstein asked MacMillan to confirm that the company’s first use of cash would be debt paydown, then high-yield buybacks and finally tuck-in buys.

“Very well said,” the CEO replied.

Hologic develops, manufactures and supplies diagnostic products, medical imaging systems and surgical products. Its core business units focus on diagnostics, breast health, GYN surgical and skeletal health.

A report by this news service in late August listed Hologic as one of several potential suitors for Norcross, Georgia-based Guided Therapeutics (OTCBB:GTHP). Separate earlier reports by this news service suggested Hologic, among others, as potentially interested in medical device companies Novian Health, based in Chicago, Illinois and Malvern, Pennsylvania-based Neuronetics.

Hologic’s last notable acquisition was the purchase of Gen-Probe, a California-based provider of rapid nucleic acid tests. The deal was completed in August 2012 for a total net purchase price of approximately USD 3.8bn.

Since that deal, Hologic has focused its strategic efforts on disposals. Most recently, the company sold its Sentinelle Breast and Prostate Coils product lines in September 2014 for an undisclosed sum.

MacMillan was appointed CEO in December 2013.

Goldman Sachs and Perella Weinberg Partners were used for the Gen-Probe deal, with the former having advised on multiple earlier buys. Hologic has also used JPMorgan, EY, Jefferies and Deutsche Bank in the past decade.

Brown Rudnick was used for legal matters on Gen-Probe, as well as for several previous acquisitions, according to the Mergermarket M&A database. Hologic has also used Richards Layton & Finger and Jones Day on multiple occasions each.

According to Brown Rudnick’s website, partner Philip Flink has advised Hologic in numerous matters including venture capital financings, IPO, technology spin-offs, multiple follow-on offerings and the acquisition of several companies, both public and private.

Lawrence Levy has been one of Hologic’s directors since December 2005. He retired from the position of Senior Counsel at Brown Rudnick in January 2011.

On the call, Hologic reported USD 493m in cash and net debt of USD 3.1bn at year-end, with a current leverage ratio of 3.3x net debt to EBITDA. The company has a market capitalization of USD 11.bn.

>>> BlackBerry higher by 3% pre-market; strength attributed to renewed chatter t

BlackBerry higher by 3% pre-market; strength attributed to renewed chatter that Microsoft (MSFT) could acquire the company


In May, talk on the Street was of a possible US$7.5bn bid for Blackberry, with names in the frame including Microsoft, Xiaomi, Huawei, and Lenovo.

Microsoft is now rumoured to have bankers working on a possible offer for Blackberry, which it is said to want to beef up its own lacklustre mobile phone operation.

A market source said: "The only way Microsoft can compete with Apple is to buy a company like Blackberry that has all the technology patents and add it to its own business."

A spokesman for Microsoft told Proactive Investors: "Microsoft does not comment on rumour or speculation". Blackberry did not respond to a request for comment.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance: XENT -23.9%, GUID -21.5%, FEYE -18.4%, BLUE -17.9%, ALR -14.5%, CSLT -14.2%, LCI -14.1%, AVG -14%, FRSH -12%, ACLS -11.8%, MGA -8.2%, G -7.4%, CF -7.3%, WAC -7.3%, WFM -7.2%, ETP -7.1%, EPAM -6.9%, TUMI -6.2%, ENVA -5.8%, LPSN -5.4%, MBI -5.4%, CSTM -5.4%, ANDE -5.1%, QCOM -5%, PDLI -4.7%, ESI -4.7%, ATHM-4.6%, ZUMZ -4.1%, RLYP -3.4%, XNPT -3.3%, SEAS -3.2%, HOLX -3.1%, RGR -2.8%, VVUS -2.6%, RIG -2.6%, MET -2.6%, VER -2.3%, SBAC -2.2%, TWO -2.2%, FNHC -1.9%, HDP -1.8%, FUEL -1.8%, (appoints Randy Wootton as CEO), BKCC -1.7%, SFY -1.7%, SPPI -1.1%, (Eagle Pharma and Spectrum Pharmaceuticals (SPPI) enter into a co-promotion agreement for six Eagle products; Eagle to pay Spectrum a base fee of $12.8 mln and potential milestones), INOV -1.1%, SQNM -1.1%, WMGI -1%, PEIX -1%

Other news: LCI -14.1% (discloses update on pending acquisition of Kremers Urban Pharmaceuticals regarding transition of one of its customers), AVG -14% (announces that John Little will transition from his role as Chief Financial Officer), SABR -1.7% (announces the secondary public offering of 30 mln shares of common stock by existing stockholders; Co will repurchase ~$100 mln of the 30 mln shares from the underwriter), SPPI -1.1% (Eagle Pharma and Spectrum Pharmaceuticals (SPPI) enter into a co-promotion agreement for six Eagle products; Eagle to pay Spectrum a base fee of $12.8 mln and potential milestones), TVPT -0.9% ( files mixed securities shelf offering), VLRS -0.9% (reported October traffic)

Analyst comments: AVP -2.3% (downgraded to Sell from Neutral at UBS ), DYAX -0.9% (downgraded to Hold from Buy at Needham

>>> US Gapping up

Gapping up
In reaction to earnings/guidance: CCRN +24.4%, PCOM +21%, SD +16.9%, CDXS +16.4%, MHGC +14.8%, BOJA +13.6%, AHS +13.4%, SCSS +13.1%, SEDG +10.9%, FLT +8.3%, MRIN +8.1%, HABT +8%, GDDY +7.7%, MELI +7.5%, TXMD +7%, HDSN +5.9%, POWR +5.8%, BRKR +5.7%, LNTH +5.7%, XPO +5.5%, ACAS +5.1%, OSUR +4.9%, FB +4.8%, MATR +3.7%, HUBS+3.6%, KW +2.9%, COHR +2.8%, LFVN +2.8%, AHT +2.2%, BREW +2.1%, MCHP +2%, OME +1.8%, CLR +1.8%, CTL +1.6%, SUN +1.5%, UHAL +1.4%, IMH +1.3%, TNH +1.2%, WSR +1.1%, PSEC +1%

M&A news: SD +16.9% (acquired the assets of EE3 for $190 mln in cash, adds 136,000 largely contiguous net acres and multiyear niobrara shale drilling inventory in North Park Basin, Colorado; co also reported earnings), AWAY +23.3% (HomeAway to be acquired by Expedia (EXPE) for $38.31/share, or ~$3.9 bln), EXPE +4.1%

Other news: NRX +13.3% (announced successful results from a preclinical toxicity study of intravenous Pyridorin), ETRM +10.3% (presents two year follow up results from the ReCharge Study of vBloc Neurometabolic Therapy in obesity ), OASM +4.8% (confirms the previously published findings from a head-to-head comparison study of its lead human cancer product Paclical and Celgene's Abraxane), INO +4.7% (reports interim data analysis showing that its INO-3112 DNA-based immunotherapy generated specific T-cell responses), RXII +4.5% (initiates a Phase 1/2 clinical trial of RXI-109, as a potential treatment to prevent the progression of retinal scarring), EXPE +4.1% (HomeAway to be acquired by Expedia (EXPE) for $38.31/share, or ~$3.9 bln), ADSK +3.7% (: Sachem Head Capital Management discloses 5.7% active stake in 13D filing; Sachem Head intends to engage with management ), GLUU +3.2% (Integrated Core Strategies (Millennium International Management) discloses 5.2% passive stake in 13G filing), .

Analyst comments: ISIS +3% (upgraded to Overweight from Neutral at Piper Jaffray), MCHP +2% (upgraded to Buy from Neutral at B. Riley & Co), SHOP +1.9% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)

>>> FireEye: Color on Qtr --> -18.8% pre open - 850k traded

FireEye: Color on Qtr
  • FBR Capital notes it is downgrading shares of FireEye from Outperform to Market Perform. While firm (and many on the Street) have been patient during this roller coaster ride over the past 18 months, it appears DeWalt and the FireEye growth story have run into a brick wall as evidenced by the soft 3Q15 performance/4Q15 outlook. Although FireEye delivered 45% top-line growth and is still seeing relatively healthy deal flow, it appears FireEye is seeing a number of company-specific execution issues, and product issues are slowing down growth prospects heading into 2016 despite massive cybersecurity tailwinds. Firm incorrectly believed that FireEye would be able to successfully integrate Mandiant into the fold but it was proven wrong last night. Firm lowers tgt from $53 to $28.
  • Wunderlich Securities notes FEYE CEO Dave Dewalt introduced a significant "Sea Change" to the industry as customers have stopped their "EMERGENCY" spending on security and are trending back to more normalized industry spending levels. FEYE was significantly impacted more than its peers in EMEA, which came in short of expectations. FEYE also had achange in revenue recognition for its email product that affected 3Q results. Despite a significant decrease in firm's tgt to $32 from $62, it is maintaining Buy rating on FEYE. We expect that a estimated 30%+ revenue growth in FY16 combined with expected operating margin expansion garners a market multiple that is in line with industry peers.
  • Stifel Research notes FEYE reported 3Q15 results that fell short of expectations across both revenue and billings. Firm's concerns following Cyber Defense Summit were largely founded as the combination of a tough government compare and European weakness ultimately drove both a sizable miss and a meaningful reduction to the forward outlook. Stifel continues to see FEYE benefiting from both a best-of-breed incident response offering (Mandiant) and FireEye-as-a-Service, both of which grew more than 50% y/y. New CFO has a clear focus on cash flow generation and conservative forward outlooks with incremental cushion. Maintain Buy Rating: but is lowering target price to $45 from $55.
  • Topeka Capital notes it is reiterating Buy rating while lowering the PT to $40 from $56 to reflect; 1) disappointing 3Q billings; 2) a lowering of full year 2015 revenue and billings guidance, and 3) a more conservative valuation given the new financial metrics. For those "glass half full" investors, FEYE did take another positive step toward reaching profitability over the next few years. FEYE needs to fix EMEA to get back on track.
  • D.A. Davidson notes it is reiterating a Buy rating and $51 tgt. Billings miss guidance, primarily driven by weakness in Europe, a shorter average contract length in the United States (resulting from a tough compare with a 5 year, 8-figure deal in 3Q14), and a lower average deal size in large enterprise transactions. FEYE added 299 new customers in 3Q15 (compared to 256 in 3Q14) bringing the cumulative customer count to 3,999. Large enterprise deals (>$1 million) increased 31% YoY. Customer renewal rates remained above 90%, and management also noted that competitive win rates remain "extraordinarily high". Management noted that following 18 months of elevated or ‘emergency' spending, customers are taking a more strategic approach to upgrading security infrastructure.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: IO +30.8%, AWAY +22%, PCOM +21%, CDXS +18.4%, SD +16.6%, AHS +15.7%, CCRN +13.5%, NRX +13.3%, SCSS +10.8%, MHGC +10.5%, ETRM +10.3%, BOJA +9.4%, FLT +8.3%, SEDG +8.2%, MRIN +8.1%, HABT +8%, GDDY +7.5%, TXMD +7%, MELI +6.8%, HDSN +5.9%, POWR +5.8%, BRKR +5.7%, LNTH +5.7%, ACAS +5.1%, OSUR +4.9%, EXPE+4.4%, FB +4.3%, XPO +3.8%, ADSK +3.7%, HUBS +3.6%, GLUU +3.2%, KW +2.9%, COHR +2.8%, AHT +2.2%, BREW +2.1%, MCHP +2%, OME +1.8%, CLR +1.8%, CTL +1.6%, UHAL +1.4%, IMH +1.3%, TNH +1.2%, WSR +1.1%, PSEC +1%, MYRG +0.9%

Gapping down: XENT -23.7%, GUID -21.5%, FEYE -16.9%, LCI -15.7%, CSLT -14.2%, AVG -14%, FRSH -12%, ACLS -11.8%, G -7.4%, EPAM -6.9%, QCOM -6.6%, WFM -6.5%, TUMI -6.2%, ENVA -5.8%, ANDE -5.1%, PDLI -4.7%, ALR -4.4%, ZUMZ -4.1%, LPSN -4%, CF -3.4%, XNPT -3.3%, MRO -3.3%, HOLX -3.1%, RGR -2.8%, MET -2.6%, ETP -2.2%, TWO -2.2%, RIG -1.9%,FNHC -1.9%, HDP -1.8%, FUEL -1.8%, SABR -1.7%, BKCC -1.7%, TVPT -1.5%, SPPI -1.1%, WMGI -1%, PEIX -1%