TheChek News Flow

DMG Mori Seiki Co for DMG Mori Seiki AG (GIL GY)

Excercise caution

DMG Mori (Bidder) says that they now control 38.52% of the total target share capital

They also say that they have achieved its primary objective of regaining a de facto majority based on the attendance rate in the 2014 Annual General Meeting of DMG MORI SEIKI AG going forward.

Target General Meeting results

2014

2013 *

Shares present represented at the target AGM

59.87%

46.55%

Bidder holding in target at AGM time

24.3%

24.3%

Bidder equivalent control percentage

41%

52%

The 2014 meeting was attended by 59.8% holders , add now the Elliott holding 5.6% for a likely 65.5% attendance.

At such attendance, the bidder’s current 38.5% holding would de-facto control the meeting with c59% equivalent voting control. It would require attendances over 76% to neutralise the defacto control.

We argued the bid was low. heck it is still low but chasing the stock now should be approached with care.

The minimum acceptance is for 50%+1 share. The bidder already has 38.5% of the target’s capital. A mere 11.5% have to be convinced to tender for the offer to be succesful but even if it is not succesful the bidder has achieved their objective - to regain General Meeting control in the target to be able to control synergies from the cooperation plan.

They have also said they do not want or need a domination agreement now. In time yes but not now.

The current €30 offer is expected to settle by mid-April so that accepting AG shareholders are not expected to receive a dividend for 2014

The trade perhaps is to buy the Japanese DMG line.

The bidder estimated in their original announcement that over the next 5 years "the integration effect expects to bring cash flow comparable to the investment amount". Meaning a benefit of €556m. In addition, the bidder expects more synergies (not quantified) if or shall we say when, a domination agreement is in place.

We argue that since the stock was trading at €25.6 before the bid was announced (01/21/15), the €30 offer aimed at buying a mere 18.5m shares to gain control offers a control premium of €4.4 per share equivalent to spending €81m.

The bidder wants to pay €81m premium (€4.4 x 18.5m shares) to gain control but such control allows the bidder to generate benefits of €556m?

The offer even at €30 looks low but the objective of the takeover has been satisfied, therefore a position could be entered for the subsequent domination agreement but buying now for a further bump may not prove profitable.

RTRS - STRYKER CORPORATION : STRYKER ANNOUNCES NEW $2 BILLION SHARE REPURCHASE AUTHORIZATION

--> SN/ LN getting hit

Gapping down

Gapping down In reaction to disappointing earnings/guidance: OPWR -19.2%, ACUR -9.1%, BALT -8.1%, TEDU -6.8%, CMLS -6.5%, CZR -5.6%, NBR -3.7%, NMFC -3.3%, HTGC -3.2%, CODI -2.6%, TPH -2.3%, GWRE -2.2%, BCS -2.2%, CKEC -1.9%, MLHR -1.7%, (also announces Greg Bylsma named Chief Operating Officer, Herman Miller N. Am.; Jeff Stutz promoted to CFO), SN -1.6%, MYL -1.5%, EVDY -1.2%, PANW -0.9%, KATE -0.7%

M&A news: PRIM -13.6% (acquires Otter Tail Corporation (OTTR) subsidiary Aevenia in transaction valued at ~$23 mln; also reported earnings)

Other news: PLUG -6.1% (files to delay its 10-K), SLW -4.3% (announces it has entered into an agreement with a syndicate of underwriters led by Scotiabank; whereby they will purchase 38,930,000 common shares of Silver Wheaton at a price of $20.55/share), AKRX -4.1% (announces filing extension for Form 10-K for YE 2014 ), LUX -3.9% (following earnings released AMC in Europe yday), OAK -3.4% (announces a public offering of 4,000,000 Class A units), NRF -2.8% (announces pricing of public offering of common stock with a forward component at $18.65/sharek), XOMA -2.4% (entered into a Loan and Security Agreement with Hercules Technology Growth Capital (HTGC) under which it borrowed $20 mln), RDS.A -2.2% (Announces Scrip Dividend Program in 2015)

Analyst comments: MNKD -8.1% (downgraded to Sell from Neutral at Goldman), AKS -3.2% (downgraded to Neutral from Buy at Nomura), MU -2.6% (downgraded to Neutral from Buy at Nomura),  X -2.2% (downgraded to Neutral from Buy at Nomura), SYT -1.9% (downgraded to Underperform at Exane BNP Paribas), PVH -1.6% (downgraded to Neutral at Goldman -- Removed from Conviction Buy List), OPK -1.5% (downgraded to Perform from Outperform at Oppenheimer), ESV -1.3% (downgraded to Hold from Buy at Societe Generale), AXP -0.7% (downgraded to Underperform from Neutral at Macquarie)

Gapping up

In reaction to strong earnings/guidance: DRRX +21.4%, (also announced its Epigenomic Regulator Program, and the successful completion of a Phase 1 clinical trial with the program's lead product candidate DUR-928), MDR +18%, NTRI +13.4%, XON +6.8%, CISG +6.6%, EC +6.2%, CHUY +5.4%, AZO +4.5%, NAV +3.7%, DKS +3.5%, DTSI +3.3%, THLD +3%, PBYI +2.9%, GSAT +2.8%, BBY +2.8%, ASPS +2.6%, RIGL +2.3%, HALO +1.8%, JD +1.8%, INSY +1.8%, IG +1.3%, DPLO +1.3%, CNXR +1.2%, FSIC +1.1%, SSI +1.1%, MBI +0.8%

M&A news: DATE +9.9% (announces receipt of 'going private' proposal and departure of director; proposal includes an acquisition price of $5.37 per ADR), OCN +5.2% (provides various updates; anticipates that its fourth quarter results will be impacted by a $370--$420 mln non-cash charge to write-off goodwill; has hired Moelis & Company and Barclays Capital Inc. to support the Company and to advise regarding adjustments and help explore its strategic options), 

Select oil/gas related names showing strength: GDP +3.5%, PBR +2.5%, SDRL +1.9%, PWE +1.6%

Other news: ONCY +15.9% (confirms the FDA granted Orphan Drug Designation for its lead product candidate, REOLYSIN, for the treatment of primary peritoneal cancers), BIOC +8.8% (David Rimm, MD, Professor of Medicine in Medical Oncology at Yale University School of Medicine, will join the Company as a scientific advisor), TSEM +8.2% (has begun mass production of an IR sensor used by Intel (INTC)), PSTI +4% (PSTI and Hadassah Medical Center announce significant data showing PLX-R18 Cells improve bone marrow transplantation), WLT +3.4% (disclosed that it agreed to issue an aggregate of 8.65 mln shares of our common stock in exchange for $66.725 mln aggregate principal amount of 8.5% Senior Notes due 2021 held by a noteholder ), DTSI +3.3% (announced its Headphone:X technology will be available on select smartphone models from top Chinese brands Huawei, vivo, nubia and letv later this year; co also reported earnings), NBG +2.7% (cont vol surrounding Greece/EU), NSAM +2.7% (filed mixed shelf offering), ISRG +1.4% (awarded $430 mln Defense Logistics Agency contract), CBOE +1.4% (reported February 2015 average daily volume for options and futures contracts declined 22% yoy to 4.7 million), HAR +1.3% (filed for a ~839.7K share common stock shelf offering by selling stockholders), SHPG +1.3% (still checking), TASR +1.1% (announces undisclosed amount of large orders of its AXON body-worn video cameras and Evidence.com solution; notes the number of agencies on the Evidence.com platform recently surpassed 5,000), C +0.9% (announces definitive agreement to sell OneMain Financial Holdings to Springleaf Holdings (LEAF) for $4.25 billion), BBRY +0.8% (introduces BlackBerry Leap)

Analyst comments: DRRX +21.4% (upgraded to Buy from Hold at Cantor Fitzgerald), LL +3.2% (upgraded to Buy from Neutral at Janney), NXPI +1.6% (upgraded to Neutral from Sell at Goldman), GPS +1.4% (upgraded to Outperform from Mkt Perform at FBR Capital)