Author Archives: Scalper1

Abbott Boosts Cardio Device Business With $25 Billion St. Jude Buy

Two giants in cardiac devices agreed to merge Thursday, as Abbott Laboratories ( ABT ) announced an agreement to acquire  St. Jude Medical ( STJ ) in a deal worth $25 billion. Abbott agreed to pay $46.75 plus 0.8708 Abbott share for every St. Jude share. Based on Abbott’s five-day average share price, the deal valued St. Jude shares at $85 apiece. St. Jude stock was up more than 25% in morning trading on the stock market today , near 78, while Abbott stock was down more than 7%, below 41. Abbott said that the deal will add 21 cents to its EPS next year and 28 cents the following year. It expects to save $500 million in costs from the combination by 2020. Abbott will also assume or refinance St. Jude’s $5.7 billion in debt. The move will greatly enlarge Abbott’s cardiovascular device business, which now represents 19% of its revenue. “St. Jude Medical’s strong positions in heart failure devices, atrial fibrillation and cardiac rhythm management complement Abbott’s leading positions in coronary intervention and transcatheter mitral repair,” said Abbott’s press release. “Together, the company will compete in nearly every area of the cardiovascular market and hold the No. 1 or 2 positions across large and high-growth cardiovascular device markets.” Leerink analyst Danielle Antalffy agreed. St. Jude’s flat-to-negative sales growth over the last few years picked up to 8% in Q1, and she wrote in a research note that it’s set up to continue, while Abbott looked to be growing only in the low single digits. Antalffy also wrote that a competing bid is unlikely. “The most logical buyer beyond Abbott in our view would be Johnson & Johnson ( JNJ ),” Antalffy wrote. “In our meetings with J&J in mid-2015, management emphasized that the company is not interested in what they deemed ‘value’ markets within MedTech, specifically calling out cardiac rhythm management (nearly 30% of St. Jude’s total sales) and drug-eluting stents.” The deal announcement came on a busy day for M&A in medical field. Biotech Medivation ( MDVN ) confirmed that it had received an unsolicited $9.3 billion bid from big pharma Sanofi ( SNY ), while AbbVie ( ABBV ), which used to be Abbott’s biopharma division before it was spun out, agreed to buy another cancer-focused biotech, Stemcentrx, for $5.8 billion.

Comcast Buys DreamWorks, Content Provider To Netflix, Amazon

Comcast ( CMCSA ) on Thursday agreed to buy movie studio DreamWorks Animation ( DWA ) for $3.8 billion in cash, or $41 per share, adding to its NBCU Universal media and entertainment properties. DreamWorks Animation stockholders will receive $41 in cash per share. DreamWorks stock spiked on Wednesday after multiple reports of Comcast’s interest surfaced. The deal will boost Comcast-NBCU’s presence in China. Comcast will also retain control of DreamWorks’ AwesomenessTV, which develops short-form video for millennials, those ages 18 to 34. Verizon Communications and Hearst in early April acquired a 24.5% stake in AwesomenessTV for $159 million. DreamWorks CEO and co-founder Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will include Awesomeness TV and Nova, a 3D visualization technology startup. The acquisition is expected to close by year-end, said Comcast. Comcast stock was up a fraction in the stock market today , near 61.50. DreamWorks stock was up 24%, near 40. “The biggest reason (for Comcast) to buy DreanWorks is to secure content supply,” said Evan Wingren, an analyst at Pacific Crest Securities, in a research report. “Comcast has a dominant position in live video distribution, but has fallen behind Netflix ( NFLX ) and Amazon ( AMZN ) in on-demand. By securing a pipeline of children’s television content and library films, it could bolsters its on-demand catalog in an effort to compete with Netflix.” DreamWorks has developed TV shows for Netflix and Amazon.com’s Prime streaming service. Comcast acquired NBCU from General Electric ( GE ) in 2011. Aside from Universal Films, Comcast owns Focus Features and Illumination Entertainment, the latter of which developed the “Minions” movies. DreamWorks’ most popular movie franchises include “Shrek,” “Madagascar,” “Kung Fu Panda ”  and  “ How to Train Your Dragon.” There’s optimism, analysts say, for the upcoming “Despicable Me 3” and “The Secret Life of Pets.” Theme parks have become a key part of Comcast’s overall growth. In a research note, Bryan Kraft, an analyst at Deutsche Bank, said the Dreamworks acquisition “expands NBCU into animation in a more meaningful way, increases the intellectual property pipeline for  theme parks and consumer products, and increases Universal Studios’ exposure to tent pole global film franchises. It also diversifies Comcast away from a more mature U.S. media/television industry.” Comcast-NBCU is building a $3.3 billion theme park in Beijing with local investors. It’s slated to open in 2019. The Oriental DreamWorks movie studio, meanwhile, is building a headquarters and entertainment center in Shanghai with local partners.

AT&T Push Into Mexico Vs. America Movil Looking Good So Far

AT&T ’s ( T )push into Mexico’s wireless phone market seems to be gaining traction vs. incumbent America Movil ( AMX ), analysts say. AT&T said it added 529,000 wireless subscribers in Mexico in Q1, with one-fourth the higher-spending postpaid customers who are billed monthly.  Late Tuesday, AT&T reported that its Q1 operating loss was $251 million, amid network investments and subscriber acquisition costs. “This is now the second consecutive quarter with 500,000 plus net adds, giving us confidence in the execution of the strategy abroad,” said Amy Yong, a Macquarie analyst, in a report. “Profitability is also expected to improve by the second half of 2016. We expect free cash flow contribution could come as early as 2017.” AT&T and America Movil both acquired more radio spectrum in a radio spectrum auction held by the Mexican government last quarter. In the U.S., AT&T said it lost postpaid phone lines for the sixth consecutive quarter amid stiff competition from  Verizon Communications ( VZ ), T-Mobile US ( TMUS ) and Sprint ( S ). AT&T acquired Mexico’s No. 3 wireless firm, Iusacell, as well as Nextel Mexico out of bankruptcy, for a combined $4.4 billion. It’s spending over $3 billion to upgrade networks to 4G technology. With the Q1 gain, AT&T has  9.2 million total wireless subscribers in Mexico. AT&T’s subscriber gains could accelerate after it finishes the 4G network upgrade, says Colby Synesael, an analyst at Cowen & Co. America Movil, which sells wireless services under the Telcel brand in Mexico, holds nearly 68% of the market, with Telefonica ( TEF ) at 19% and AT&T at 13%. Controlled by Carlos Slim, America Movil is one of Latin America’s two largest wireless services providers, along with Telefonica.