Tag: Acquisition

Nano Dimension to Acquire Desktop Metal: A Game-Changer in Additive Manufacturing

Posted on by slightbourne@noblecapitalmarkets.com

The additive manufacturing landscape is set for a seismic shift as Nano Dimension Ltd. (Nasdaq: NNDM) announces its plans to acquire Desktop Metal, Inc. (NYSE: DM) in an all-cash transaction. This merger, expected to close in Q4 2024, promises to create a powerhouse in the 3D printing industry, offering investors a unique opportunity to capitalize on the burgeoning trend of digital manufacturing.

Under the terms of the agreement, Nano Dimension will purchase all outstanding shares of Desktop Metal for $5.50 per share, valuing the company at approximately $183 million. This represents a 27.3% premium to Desktop Metal’s closing price on July 2, 2024. However, investors should be aware that the final price could potentially decrease to $4.07 per share, reducing the total consideration to $135 million, depending on transaction expenses and other factors outlined in the agreement.

The strategic rationale behind this merger is compelling. By combining two complementary product portfolios, the new entity aims to create a comprehensive offering across metal, electronics, casting, polymer, micro-polymer, and ceramics applications. This broader product range is expected to accelerate the industry’s transition from prototyping to mass production, a key growth driver in the additive manufacturing sector.

The merger will also deepen the companies’ penetration in key end markets such as automotive, aerospace/defense, industrial, and medical. The combined entity will serve an impressive roster of blue-chip customers, including Amazon, Tesla, NASA, and the US Army, positioning it at the forefront of industry innovation and adoption.

From a financial perspective, the merged company is projected to have 2023 combined revenue of $246 million, with a notable 28% generated from recurring revenue streams. This recurring revenue component is particularly attractive to investors, as it provides more stable and predictable cash flows. Moreover, the deal is expected to generate over $30 million in run-rate synergies over the next few years, in addition to previously announced cost savings from each organization.

Post-merger, the combined entity is expected to boast a strong cash position of approximately $665 million (or $680 million at the reduced price scenario), providing ample resources for future growth initiatives and R&D investments. This financial strength, coupled with an installed base of over 8,000 systems, positions the new company to capitalize on significant opportunities in services and consumables, further enhancing its recurring revenue potential.

The merger positions the new company as a leader in the rapidly evolving additive manufacturing industry, particularly in the transition from prototyping to high-volume production. Investors should take note of the company’s focus on high-tech, premium margin solutions, which could lead to improved profitability in the long term. The diverse product portfolio and expanded customer base also provide some insulation against industry-specific risks.

However, potential investors should be aware of the challenges that come with such a significant merger. Integration risks, including the consolidation of operations across multiple geographies, could impact short-term performance. Additionally, the transaction is subject to approval by Desktop Metal’s stockholders and regulatory authorities, which introduces some uncertainty. The additive manufacturing industry is also highly competitive and rapidly evolving, which may require continuous innovation and investment to maintain market position.

For investors interested in the additive manufacturing sector and M&A activity, this deal offers an attractive entry point into a potentially transformative merger. The combined company’s strong financial position, diverse product offering, and focus on high-growth areas of digital manufacturing make it a compelling investment proposition. However, as with any merger, investors should closely monitor the integration process and the company’s ability to realize projected synergies. The potential for price adjustments also warrants attention, as it could impact the overall value of the deal.

In conclusion, the Nano Dimension-Desktop Metal merger represents a significant consolidation in the additive manufacturing industry, creating a well-capitalized leader with a comprehensive product portfolio. For investors willing to navigate the inherent risks of M&A transactions, this deal could offer substantial long-term value as the additive manufacturing industry continues its growth trajectory, potentially reshaping the future of manufacturing across multiple sectors.

Boeing’s $4.7 Billion Gamble: Will This Shock Acquisition Save the Struggling Aerospace Giant?

Posted on by slightbourne@noblecapitalmarkets.com

In a significant move that’s reshaping the aerospace industry, Boeing has announced its decision to acquire Spirit AeroSystems in an all-stock deal valued at $4.7 billion. This strategic maneuver, which brings Spirit’s equity value to $8.3 billion including debt, marks a pivotal moment in Boeing’s efforts to streamline its supply chain and address ongoing quality control issues.

The acquisition comes at a critical juncture for Boeing, following a series of setbacks that have dented its reputation and financial performance. The company’s stock has plummeted by over 30% this year, underscoring the urgency for transformative action. By bringing Spirit AeroSystems back into the fold, Boeing aims to regain control over a crucial segment of its production process, potentially mitigating the quality concerns that have plagued its operations.

Spirit AeroSystems, which was spun off from Boeing in 2005, has been a key supplier for the aerospace giant, accounting for approximately 70% of its revenue. The company manufactures critical components for Boeing’s aircraft, including fuselages for the 737 and sections of the 787 Dreamliner. However, both companies have struggled with manufacturing flaws, most notably highlighted by the recent mid-flight door panel blowout on an Alaska Airlines 737 Max 9.

From an investor’s perspective, this acquisition presents both opportunities and challenges. On the positive side, the deal could lead to improved quality control and streamlined production processes, potentially reducing costly delays and enhancing Boeing’s ability to meet delivery targets. This integration may also result in significant cost synergies and operational efficiencies, which could bolster Boeing’s profitability in the long term.

However, the transaction also carries risks. Boeing’s decision to take on additional debt at a time when it’s facing financial pressures could strain its balance sheet. The company has already warned of negative cash flow in the first half of 2024, and integrating Spirit’s operations will require substantial resources and management attention.

The market reaction to this deal will be closely watched. While Boeing’s stock has been under pressure, the potential for improved operational performance could lead to a positive reassessment by investors. Conversely, Spirit AeroSystems’ shareholders stand to benefit from the premium offered in the all-stock transaction, with the $37.25 per share offer representing a significant uplift from recent trading levels.

This acquisition also has broader implications for the aerospace supply chain. By bringing a major supplier in-house, Boeing is signaling a shift towards greater vertical integration. This move could prompt other aerospace manufacturers to reevaluate their supply chain strategies, potentially leading to further consolidation in the industry.

For Airbus, Boeing’s main rival, the deal presents both challenges and opportunities. While Airbus will lose access to Spirit’s manufacturing capabilities, it will receive a $559 million compensation package and gain control over key production lines. This could allow Airbus to streamline its own supply chain and potentially gain a competitive edge in certain aircraft programs.

Investors should also consider the regulatory implications of this deal. Given the critical nature of aerospace manufacturing and its importance to national security, the transaction will likely face scrutiny from regulators. The timeline for closing, projected for mid-2025, reflects the complex approval process ahead.

Boeing’s acquisition of Spirit AeroSystems represents a significant shift in the aerospace manufacturing landscape. For investors, it offers a potential turnaround story for Boeing, albeit with considerable execution risks. The deal’s success will hinge on Boeing’s ability to effectively integrate Spirit’s operations, improve quality control, and restore confidence in its production capabilities. As the aerospace industry continues to evolve, this acquisition may well be remembered as a defining moment in Boeing’s efforts to regain its position as a leader in commercial aviation.

Telecommunications Giant Nokia Expands Optical Network Presence with Infinera Acquisition

Posted on by slightbourne@noblecapitalmarkets.com

In a strategic move to bolster its position in the optical network market, Finnish telecommunications behemoth Nokia has announced plans to acquire Infinera Corporation, a California-based optical networking equipment manufacturer. The deal, valued at $2.3 billion, marks a significant step in Nokia’s efforts to scale up its optical network capabilities and strengthen its foothold in North America.

The acquisition, announced on Thursday, sent ripples through the tech industry, with Infinera’s stock price surging by nearly 22% following the news. Under the terms of the agreement, Nokia will pay $6.65 per share for Infinera, representing a substantial 26.4% premium over the company’s closing price of $5.26 on the day of the announcement.

This move comes as telecommunications companies worldwide are racing to upgrade their network infrastructure to meet the growing demand for high-speed connectivity and data transmission. Optical networks, which use light to transmit data over fiber optic cables, are crucial for supporting the increasing bandwidth requirements of 5G networks, cloud computing, and emerging technologies like artificial intelligence and the Internet of Things.

Infinera, headquartered in San Jose, California, has built a reputation as a leading provider of optical semiconductors and networking equipment for both fixed-line and mobile telecommunications networks. The company’s expertise in this field is expected to complement Nokia’s existing portfolio and accelerate its growth in the optical networking sector.

The deal structure allows for flexibility in payment, with Nokia committing to pay at least 70% of the purchase price in cash. Infinera shareholders will have the option to receive up to 30% of the total consideration in the form of Nokia’s American Depositary Shares, providing an opportunity for investors to maintain a stake in the combined entity.

From a financial perspective, the acquisition is projected to be immediately accretive to Nokia’s comparable earnings per share in the first year after closing. Moreover, the Finnish company anticipates that the deal will contribute over 10% to its profits by 2027, underscoring the long-term strategic value of the acquisition.

The move is particularly significant for Nokia’s expansion plans in North America, a key market for telecommunications infrastructure. By integrating Infinera’s technology and customer base, Nokia aims to enhance its competitive edge against rivals in the region and capitalize on the ongoing investments in network upgrades and 5G rollouts.

Industry analysts view this acquisition as a clear signal of Nokia’s commitment to diversifying its product offerings and strengthening its position in critical growth areas. The optical networking market is expected to experience robust growth in the coming years, driven by the increasing demand for high-capacity data transmission in various sectors, including telecommunications, data centers, and enterprise networks.

As the telecommunications landscape continues to evolve rapidly, strategic acquisitions like this one are becoming increasingly common. Companies are seeking to consolidate their strengths, fill gaps in their technological capabilities, and expand their market reach through carefully planned mergers and acquisitions.

The Nokia-Infinera deal is subject to customary closing conditions, including regulatory approvals and shareholder consent. Both companies have expressed confidence in the transaction’s potential to create value for their respective stakeholders and contribute to the advancement of global telecommunications infrastructure.

As the industry awaits the completion of this significant acquisition, all eyes will be on Nokia to see how it leverages Infinera’s expertise to drive innovation and growth in the competitive optical networking market.

Noble Corporation Acquiring Diamond Offshore in $3.6 Billion Deal

Posted on by slightbourne@noblecapitalmarkets.com

In a blockbuster transaction in the offshore drilling sector, Noble Corporation plc (NYSE:NE) announced today that it has agreed to acquire Diamond Offshore Drilling, Inc. (NYSE:DO) in an all-stock and cash deal valued at $3.6 billion. The combination will create one of the largest offshore drilling contractors, with a massive fleet and diverse global footprint.

Deal Terms
Under the agreement, Diamond Offshore shareholders will receive 0.2316 shares of Noble stock plus $5.65 in cash for each Diamond share they own. This represents an 11.4% premium over Diamond’s closing share price on June 7th. Upon closing, Diamond shareholders will own approximately 14.5% of the combined company.

Noble has secured $600 million in committed bridge financing to fund the cash portion of the deal. One member of Diamond’s board will join Noble’s expanded board once the transaction is completed.

Strategic Rationale
This transaction brings together two leading offshore drillers with complementary capabilities and customer bases. The combined company will boast an impressive fleet of 41 rigs, including 28 floaters and 13 jackups, with a $6.5 billion backlog providing strong revenue visibility.

Of particular note, Noble will acquire four of Diamond’s 7th generation ultra-deepwater drillships along with the harsh environment semi-submersible Ocean GreatWhite. These high-spec assets augment Noble’s already formidable ultra-deepwater fleet, cementing its pole position as the leader in this critical offshore segment.

On the other side, Noble brings additional scale in jackup rigs and geographic diversity. The companies cited synergy opportunities around operational excellence, safety culture, and customer relationships as key strategic benefits.

Noble management forecast at least $100 million in annual cost synergies, with 75% achieved within a year of closing. The deal is expected to be immediately accretive to Noble’s free cash flow per share.

Return of Capital Emphasis
Illustrating the combined company’s commitment to shareholder returns, Noble’s board approved a 25% increase to its quarterly dividend to $0.50 per share starting in Q3 2024. This represents an annualized dividend of $2.00 per share.

Noble has prioritized generous capital returns in recent years as offshore drilling activity and dayrates have recovered. With enhanced scale, efficiencies and cash flow from this acquisition, Noble is well-positioned to continue growing its dividend over time.

Management Comments
“This acquisition enables Noble to continue our journey of delivering superior innovation and value to a broad range of the leading offshore operators across the world,” stated Noble CEO Robert Eifler. He highlighted the drillship additions and accretion to free cash flow as key drivers.

Diamond CEO Bernie Wolford noted “This combination is an ideal outcome that provides Diamond shareholders both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a through-cycle basis.”

Neal Goldman, Chairman of Diamond, added “We have created tremendous value for our shareholders and customers that has culminated in a strategic merger that will continue to add value for all.”

Path to Completion
The deal is subject to customary closing conditions including regulatory approvals and a vote of Diamond’s shareholders. It is expected to close by Q1 2025 after securing the necessary approvals.

With the financial incentive of an 11.4% premium, supportive comments from leadership, and strategic benefits like increased scale and cost synergies, this transaction has a high likelihood of being consummated as proposed in the coming months.

Robinhood Doubles Down on Crypto With $200M Bitstamp Buyout

Posted on by slightbourne@noblecapitalmarkets.com

Robinhood Markets is making its biggest bet yet on the booming crypto market. The popular trading platform announced a deal to acquire Bitstamp, one of the world’s oldest and largest cryptocurrency exchanges, for approximately $200 million in cash.

The blockbuster transaction represents Robinhood’s largest acquisition to date and a major escalation of its push into the digital assets space. By bringing Bitstamp’s established crypto exchange capabilities in-house, Robinhood is positioning itself to become a fierce competitor to industry giants like Binance and Coinbase.

Founded in 2011, Bitstamp has emerged as a leading crypto exchange particularly popular among European and Asian traders. Its core spot trading platform offers a deep pool of liquidity with over 85 digital assets available for trading. Critically, Bitstamp also holds around 50 operational licenses and registrations across the globe.

For the fast-growing Robinhood Crypto division, acquiring Bitstamp provides an immediate expansion of its product lineup and geographic reach. The deal comes as Robinhood’s crypto business is already experiencing explosive growth. In the first quarter of 2024, crypto revenues drove a massive earnings beat, underscoring the intense customer demand. However, the company is also facing headwinds from U.S. regulators.

Just last month, Robinhood disclosed that it received a Wells Notice from the Securities and Exchange Commission regarding its crypto trading practices. The SEC has staked out an aggressive position that many digital assets should be classified and registered as securities. In contrast, Robinhood and other major crypto firms have pushed back against what they view as regulatory overreach by the SEC into the crypto markets. Despite the legal turbulence, Robinhood intends to keep communicating with regulators as it moves forward with the integration of Bitstamp.

Analysts view Robinhood’s big crypto bet as ultimately positioning the company for further growth. The Bitstamp deal supercharges its global crypto capabilities at a time when adoption of bitcoin, ether and other digital assets is rapidly accelerating worldwide. An analyst stated the acquisition fits squarely with Robinhood’s crypto-first strategy and could be a game-changer, immediately making them a major player worldwide. The analyst reiterated a Buy rating and $15 price target on the stock.

Indeed, Robinhood’s shares spiked over 3% in pre-market trading as investors cheered the transformative deal. The stock has already surged 69% so far this year amid the company’s renewed focus on profitable growth after cost-cutting measures.

While the $200 million price tag is just a drop in the bucket for Robinhood’s over $6 billion war chest of cash reserves, the acquisition symbolizes its all-in embrace of crypto. By combining Bitstamp’s battle-tested exchange with its own fast-growing retail crypto platform, Robinhood is positioning itself for a major shake-up of crypto trading.

The deal is expected to close in the first half of 2025, pending any additional regulatory hurdles. But one thing is clear – Robinhood has gone full-crypto, and its fight for dominance in this rapidly evolving space is only just beginning.

Kelly Services (KELYA) – Motion Recruitment Partners in the Fold

Posted on by slightbourne@noblecapitalmarkets.com

Tuesday, June 04, 2024

Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Completed. Kelly Services has completed the acquisition of Motion Recruitment Partners, LLC (“MRP”), from Littlejohn & Co., LLC, a private investment firm. As we highlighted in past reports, this is a transformational acquisition for Kelly, the largest in its history. We believe MRP will be a key driver in Kelly posting a higher revenue growth rate as well as continued expansion of Kelly’s adjusted EBITDA margin.

MRP Refresher. MRP is the parent company to a group of leading global talent solution providers. The acquisition of MRP strengthens the scale and capabilities of Kelly’s staffing and consulting solutions across technology, telecommunications, and government specialties in North America, and recruitment process outsourcing solutions globally.


Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Virtual Therapeutics Levels Up in Digital Mental Health With $276M Akili Deal

Posted on by slightbourne@noblecapitalmarkets.com

One of the pioneering players in applying video game technology to treating mental health conditions is going all-in on its digital therapeutic ambitions. Virtual Therapeutics announced Monday it has struck a deal to acquire Akili, Inc. in an all-cash transaction valuing the digital therapeutics firm at $276 million.

The acquisition marks a bold consolidation move as Virtual Therapeutics aims to establish itself as a diversified leader in the rapidly evolving digital health landscape. Akili shareholders will receive $0.4340 per share under the terms of the agreement, representing an 85% premium to the stock’s closing price in late April before a strategic review was announced.

Virtual Therapeutics has built a portfolio of virtual reality and immersive game experiences explicitly designed to provide mental health and cognitive fitness solutions. By adding Akili’s clinically-validated mobile software products to its platform, the combined company can offer a multi-modal suite of digital therapeutic offerings across multiple therapeutic areas.

For Akili investors, the all-cash bid comes as a welcome event after a turbulent stretch for the newly-public company. Shares had plunged over 80% from their 2022 IPO price amid slower-than-expected uptake for its flagship ADHD treatment. The $276 million deal price provides Akili shareholders with a rare exit opportunity in the cash-burning digital health space.

Founded in 2011, Boston-based Akili pioneered a new category of medicine it calls “digital therapeutics” – video game-like software programs prescribed by doctors that are clinically validated to treat medical conditions directly through cognitive engagement and video inputs. Its lead product, EndeavorRx, was cleared by the FDA in 2020 as a treatment for children with ADHD.

Take a moment to discover more emerging growth biotechnology companies by taking a look at Noble Capital Markets’ Research Analyst Robert LeBoyer’s coverage list.

Virtual Therapeutics has been taking a different tack, creating visually-rich, immersive game worlds as mental health interventions for conditions like depression, anxiety, PTSD and cognitive decline. The two approaches could prove complementary, with Akili’s mobile experiences providing one delivery mechanism and Virtual Therapeutics’ VR worlds offering an alternative modality.

Combining platforms may allow the merged company to deliver a truly multi-channel digital therapeutic offering spanning mobile, console and virtual reality environments. Cost synergies from eliminating redundancies in technology, R&D and sales infrastructure could also drive improved profitability over time.

For Virtual Therapeutics CEO and co-founder Dan Elenbaas, the Akili merger represents a major milestone in his mission to “bring behavioral health services to as many patients as possible” through engaging, accessible digital experiences. With clinical validation and regulatory clearance already in hand for Akili’s products, the road to scaling distribution and driving adoption may become clearer.

Weighing the deal’s benefits, BTIG analyst Mark Westbrook called the transaction “highly complementary” and stated it positions Virtual Therapeutics as a “clear leader” in delivering validated digital mental health solutions through novel experiential mediums like gaming.

While the digital therapeutics space is still in its infancy, the Virtual Therapeutics-Akili merger creates a formidable platform anchored by real-world clinical data and evidence. Akili gets taken private at a meaningful premium, while Virtual Therapeutics absorbs validated products to accelerate growth in its core mission of delivering modern, scalable solutions to the mental health crisis.

For healthcare investors seeking new frontiers, the combined digital mental health company resulting from this deal could be an enticing way to capitalize on gaming technology being repurposed for medical applications. Virtual reality video games may be just what the doctor ordered.

GTCR to Take Surmodics Private in $627 Million Medical Tech Deal

Posted on by slightbourne@noblecapitalmarkets.com

One of the medical technology industry’s leading providers of coating systems and surface modification is being taken private by private equity firm GTCR in a $627 million deal. Surmodics (SRDX) announced Monday that it has entered into a definitive agreement to be acquired by GTCR in an all-cash transaction valuing the company at $43 per share.

The acquisition price represents a premium of over 41% to Surmodics’ average trading price over the past 30 days. It comes amid a broader push by private equity to double down on investments in the healthcare technology space as medical device innovation accelerates.

Surmodics has been a pioneer in the delivery of surface modification solutions that enhance the biocompatibility of medical products. The Eden Prairie, Minnesota-based company’s technologies are used by blue-chip medical device manufacturers to enable products to interact more safely and effectively with the human body.

Its proprietary coating and treatment platforms are integrated into thousands of devices including vascular intervention technologies, minimally invasive surgical tools, in vitro diagnostics, and ophthalmic products. Surface treatments from Surmodics can improve device thromboresistance, lubricity, durability, adhesion, and biocompatibility.

Those differentiated capabilities caught the eye of GTCR, which has significant experience investing in healthcare companies. The Chicago-based private equity firm currently manages over $25 billion in equity capital across multiple investment strategies.

For Surmodics shareholders, the $43 per share cash deal represents an attractive exit price. In addition to the 41% premium to the recent trading average, the buyout price is 26% higher than where the stock closed on Friday. The company’s shares soared 25% on Monday following news of the transaction.

Surmodics’ Board of Directors unanimously approved the merger agreement and recommends shareholders vote in favor of the deal. The transaction is expected to close in the second half of 2024, subject to shareholder approval, regulatory clearances, and other customary closing conditions.

Upon completion of the acquisition, Surmodics will become a privately held company and its shares will cease trading on the Nasdaq exchange.

The medical coatings and surface technology space has seen heightened M&A activity in recent years as major medical product companies seek to enhance their product pipelines. Private equity investors like GTCR have ample dry powder to deploy into healthcare sectors positioned for durable growth driven by demographic tailwinds and innovation.

While going private will provide Surmodics with flexibility to invest for the long-term, the $627 million price tag validates the company’s tools and know-how as essential for next-generation medical device engineering. As healthcare investors compete to back enablers of cutting-edge medical products, GTCR’s bet on Surmodics’ coating capabilities could pay off handsomely.

Want small cap opportunities delivered straight to your inbox?

Channelchek’s free newsletter will give you exclusive access to our expert research, news, and insights to help you make informed investment decisions.

Get Instant Access

Biogen’s Bold $1.8B Kidney Disease Treatment Acquisition

Posted on by slightbourne@noblecapitalmarkets.com

Biogen Inc. is doubling down on novel therapies for rare diseases, announcing an acquisition of Human Immunology Biosciences that could be valued at up to $1.8 billion. The deal gives Biogen full rights to HI-Bio’s lead drug candidate felzartamab, which is being studied for several chronic kidney conditions with large unmet medical needs.

The transaction reflects Biogen’s strategic shift under CEO Christopher Viehbacher to diversify beyond its core neuroscience franchise. Just months after the $6.5 billion buyout of kidney disease specialist Reata Pharmaceuticals, Biogen is opening its checkbook again to beef up its pipeline of potential rare disease medicines.

HI-Bio’s felzartamab has completed mid-stage trials for two types of kidney disorders – primary membranous nephropathy and transplant glomerulopathy where the immune system attacks a transplanted organ. Importantly, it is also being evaluated for IgA nephropathy, a leading cause of kidney failure with no approved treatments available.

For Biogen, the deal provides another shot on goal as it navigates an uncertain period. While its newly-launched Alzheimer’s drug Leqembi has shown promise, the company was forced to abandon its previous Alzheimer’s treatment Aduhelm after years of controversy. Biogen’s older multiple sclerosis franchises are facing rising competitive threats as well.

The HI-Bio acquisition gives Biogen added pipeline diversification into nephrology and autoimmune diseases. Felzartamab has a unique approach, as it is an anti-FcRn antibody that targets pathogenic IgG antibodies which can damage kidneys and other organs.

If felzartamab can demonstrate positive efficacy and safety in broader Phase 3 testing, it could eventually have multi-billion dollar peak sales potential across its targeted kidney indications according to analyst forecasts. However, there is no guarantee of clinical or regulatory success.

From a financial perspective, Biogen is paying $1.15 billion upfront for private HI-Bio, along with contingent value rights worth up to $650 million if certain development and commercial milestones are achieved. This is relatively modest compared to Biogen’s $6.5 billion acquisition of Reata announced in February.

The HI-Bio deal continues Biogen’s aim to revamp its R&D pipeline through a series of bold acquisitions and partnerships under Viehbacher. The company is betting that assembling a portfolio of high-risk, high-reward clinical candidates for diseases like Alzheimer’s and kidney disorders will ultimately pay off.

For the healthcare sector and public markets, Biogen’s aggressive business development approach is emblematic of the ongoing consolidation wave. With rising costs of drug development and payer pricing pressures, large biopharma companies are increasingly looking to acquisitions of smaller, more focused biotechs to source external innovation.

While Biogen’s M&A strategy carries substantial financial risk, the HI-Bio deal gives it a promising asset that could reshape treatment for serious kidney diseases if it can overcome the high hurdle of clinical success. For healthcare investors, absorbing Biogen’s evolving pipeline story will be crucial in evaluating the company’s future growth prospects.

Want small cap opportunities delivered straight to your inbox?

Billion-Dollar Bidding War Leads to Largest Shipping Deal of the Year So Far

Posted on by slightbourne@noblecapitalmarkets.com

In a transaction that could reshape the landscape of domestic energy transportation, private transportation titan Saltchuk Resources is acquiring publicly-traded Overseas Shipholding Group (OSG) for $950 million. The deal will see OSG, one of the leading providers of liquid bulk transportation services for crude oil and petroleum products in the U.S., become a subsidiary of the diversified Saltchuk group.

The acquisition crowns months of corporate maneuvering and deal-making. It began in late January when Saltchuk, already a significant OSG shareholder, made public its non-binding indication of interest to buy the shipowner outright at $6.25 per share. OSG’s board undertook a review of strategic alternatives, engaging with not just Saltchuk but other potential suitors.

That process culminated in Saltchuk’s winning bid of $8.50 per share – a hefty 61% premium to OSG’s price before word of Saltchuk’s initial approach leaked out. Unanimously approved by both companies’ boards, the cash tender offer values OSG’s equity at $653 million.

For Saltchuk, the deal represents a lucrative double down on the Jones Act shipping sector that ensures American crew, boats and resources are utilized for shipping between U.S. ports. OSG boasts a sizable fleet of U.S.-flagged vessels including shuttle tankers, ATBs, and Suezmax crude carriers serving energy industry customers.


“OSG, our nation’s leading domestic marine transporter of energy, has a strong cultural fit with Saltchuk and shares our commitment to operational safety, reliability, and environmental stewardship,” remarked Mark Tabbutt, Saltchuk’s Chairman.

Acquiring OSG significantly expands Saltchuk’s marine services footprint to complement its existing freight transportation and energy distribution operations under brands like TOTE Maritime, Foss Maritime, NorCal Van & Stor, and Hawaii Petroleum. With over $5 billion in consolidated annual revenues, the private Seattle-based holding company gains increased exposure to the lucrative end markets for moving and handling oil, gas and refined products.

From OSG’s perspective, the sale unlocks a premium acquisition price while providing long-term operational stability by tucking into Saltchuk’s family of companies. OSG President and CEO Sam Norton expressed enthusiasm about “soon joining the Saltchuk family of companies” and gaining access to its resources.

However, the deal must first clear customary closing conditions and regulatory approvals. The tender offer is expected to be completed within the next few months, after which any remaining shares will be acquired in a second-step merger. While the acquisition enjoys board support, OSG shareholders will ultimately determine whether to tender their stakes.

If successful, the combination of OSG’s expertise in Jones Act petroleum shipping with Saltchuk’s scale and diversification could create a new domestic energy shipping powerhouse. But questions remain whether the lofty valuation and integration will pay off for the private buyers in an industry facing headwinds from the transition to cleaner fuels. Regardless, this megadeal indicates the importance both parties place on securing reliable domestic shipping services to keep U.S. energy production on the move.

Squarespace Buyout Could Unlock Hidden Potential for Small-Cap Tech Investors

Posted on by slightbourne@noblecapitalmarkets.com

In a $6.9 billion megadeal that underscores private equity’s rekindled appetite for undervalued tech assets, website builder Squarespace is being taken private by European investment giant Permira. This blockbuster buyout could have major reverberations across the small-cap software landscape as the No-Code movement continues disrupting how businesses establish digital presences.

For small and micro-cap investors attuned to sifting out overlooked gems, the Squarespace acquisition shines a spotlight on a vital but often-neglected corner of the tech universe. Despite its ubiquity in helping small businesses, freelancers, and entrepreneurs create web presences, the versatile platform had seen its public market value plummet from pandemic-era highs over $8 billion to just $2 billion last year.

Permira’s acquisition at a nearly $7 billion valuation represents both validation of Squarespace’s resilient business model and the turnaround potential achievable under private ownership insulated from quarterly earnings pressures. It’s a staggering premium to where shares traded for much of the past 18 months.

At the heart of Squarespace’s appeal is its flagship website builder offering an intuitive, drag-and-drop interface enabling rapid launches of customized online storefronts, portfolios, and digital hubs. This democratization of web development tooling has fueled Squarespace’s growth into a over $1 billion annual revenue business catering to small and medium enterprises (SMEs).

However, Squarespace is far more than just websites. It encompasses a full ecosystem powering e-commerce transactions, online marketing campaigns, appointment booking, analytics and other capabilities critical for SMEs to effectively run digital operations. Its recent exploration of generative AI to automate content creation and email campaigns makes Squarespace a prime platform for capitalizing on the latest tech disruptors reshaping modern business workflows.

This is the type of robust, diversified product suite often valued at premium multiples in large-cap counterparts. Yet Squarespace languished in public market purgatory as Wall Street consistently underappreciated the depth of its platform and upside potential to cross-sell new offerings across its vast installed SME customer base.

For Permira, taking the company private removes constraints imposed by quarterly earnings whiplash and nearsighted market mentalities. It gives Squarespace’s visionary founder and CEO Anthony Casalena — who is staying aboard — considerable flexibility to focus resources on longer-term initiatives like AI, fin-tech, and verticalized solutions to create more enduring competitive advantages.

From the acquirer’s standpoint, Squarespace represents a savvy, well-timed bet on secularly ingrained tech trends expected to drive durable growth for years to come. The democratization of business tools for an entire generation of entrepreneurs and small enterprises is underpinned by rising self-employment, gig-economy dynamics, and startup formation catalyzing demand for easy, affordable website builders and marketing automations.

It’s little surprise Permira sees the opportunity to build a true industry juggernaut by capitalizing on Squarespace’s headstart in capturing this coveted market as digital transformation initiatives proliferate. The PE firm has a proven playbook for propelling verticalized software champions forward through its investments across sectors like cybersecurity, fintech, and manufacturing.

For smaller investors able to scour opportunities more nimbly than institutional counterparts, the Squarespace deal highlights several key themes to monitor going forward:

First, differentiated innovators commercializing technologies that flatten the digital playing field consistently fetch premium valuations, even amidst broader tech routs. As entrepreneurship and SME formation remain robust, enablers of this ecosystem will stay in hot demand.

Secondly, the abundance of depressed small-cap software valuations creates fertile ground for well-capitalized consolidators to pounce. Many unloved public companies commanding strong niches and cash flows could become prime targets for buyouts aiming to revitalize growth trajectories away from quarterly investor scrutiny.

Finally, generational tech disruptors like no-code platforms, AI, fin-tech and vertical SaaS models are seen as highly strategic assets warranting aggressive investments from value-conscious buyers. As industry convergence intensifies, small-caps effectively straddling multiple megatrends could emerge as diamonds in the rough.

The Squarespace saga underscores why diligent small-cap investors must maintain a watchful eye for overlooked assets with compelling runway stories. In today’s environment of dizzying tech change and plentiful private capital awaiting deployment, the most unassuming names may harbor some of the market’s most extraordinary upside opportunities.

Want small cap opportunities delivered straight to your inbox?

Channelchek’s free newsletter will give you exclusive access to our expert research, news, and insights to help you make informed investment decisions.

Get Instant Access

Blockbuster Music Rights Deal: Blackstone Outbids Concord for Hipgnosis Songs

Posted on by slightbourne@noblecapitalmarkets.com

In a major shakeup in the booming music rights acquisition space, private equity giant Blackstone has emerged victorious in a heated bidding war to acquire Hipgnosis Songs Fund, trumping an earlier offer from music company Concord.

The deal, valued at around $1.57 billion, sees Blackstone acquiring the prized music rights portfolio of Hipgnosis, which holds over 65,000 songs from iconic artists like Shakira, Red Hot Chili Peppers, Blondie, and Neil Young. Blackstone’s superior cash offer of $1.30 per share outmaneuvered Concord’s bid of $1.25 per share, which had previously received the backing of Hipgnosis’ board. However, the board has now withdrawn its recommendation in favor of Blackstone’s higher bid.

The transaction represents a significant expansion of Blackstone’s already formidable music rights holdings. The private equity titan has been aggressively building its intellectual property portfolio, with existing assets including hit songs from superstars like Justin Bieber, Justin Timberlake, and performance rights organization SESAC, which boasts affiliates like Bob Dylan and Adele.

The Hipgnosis acquisition also sets the stage for an insightful discussion at Noble Capital Markets’ upcoming Consumer, Communications, Media and Technology Virtual Conference in June. Hosted by leading industry analysts, the conference will provide a comprehensive look at the latest trends, challenges, and opportunities shaping the dynamic technology, media, and telecom landscape. With disruptive forces like streaming, 5G, and AI reshaping multiple industries, analysts are eager to examine the strategic implications and growth avenues for major players across this critical sector. The music rights boom will undoubtedly be a key topic of discussion, but the conference aims to deliver a holistic perspective on the evolving TMT ecosystem.

As the dust settles on this blockbuster deal, all eyes will be on Blackstone’s next strategic moves in the world of music IP. With its substantial resources and existing portfolio, the private equity titan is well-positioned to further consolidate its dominance in this lucrative arena. The company’s aggressive pursuit of Hipgnosis signals its belief in the long-term value and growth potential of iconic musical works as the industry continues its shift towards streaming platforms and new content consumption models emerge.

Vertex Banks on Autoimmune Therapy in $4.9 Billion Alpine Acquisition

Posted on by slightbourne@noblecapitalmarkets.com

Boston-based biotech giant Vertex Pharmaceuticals announced today that it has agreed to acquire Alpine Immune Sciences for $4.9 billion in cash, placing a major bet on the smaller company’s promising drug candidate for treating serious autoimmune diseases.

The crown jewel of the acquisition is Alpine’s lead molecule povetacicept, a dual antagonist of the BAFF and APRIL proteins that have been implicated in driving several autoimmune and inflammatory conditions. Through Phase 2 trials, povetacicept has demonstrated potentially best-in-class efficacy for treating IgA nephropathy (IgAN), a serious progressive kidney disease caused by autoimmune complexes.

IgAN is the most common cause of primary glomerulonephritis (inflammation of the kidney’s filtering units) worldwide, affecting approximately 130,000 people in the U.S. alone. The disease frequently leads to end-stage renal failure, yet there are currently no approved treatments that target the underlying causes of IgAN. Povetacicept is slated to enter pivotal Phase 3 clinical trials in the second half of 2024.

“Alpine is a compelling strategic fit that furthers our ambition of creating transformative medicines for serious diseases with high unmet need,” said Reshma Kewalramani, Vertex’s CEO and President. “We look forward to bringing povetacicept, a potential best-in-class treatment for IgAN, to patients faster.”

But Vertex is betting big that povetacicept’s impact could extend far beyond just IgAN. Due to its dual mechanism targeting BAFF and APRIL, the drug candidate holds promise as a potential “pipeline-in-a-product” for treating other autoimmune diseases affecting the kidneys like membranous nephropathy and lupus nephritis. Clinical trials are also evaluating povetacicept’s utility for autoimmune cytopenias that destroy blood cells.

The $4.9 billion acquisition allows Vertex, a leader in cystic fibrosis treatments, to expand into autoimmune and inflammatory diseases – one of the hottest areas of drug development. It also provides Vertex with Alpine’s protein engineering expertise that could unlock new therapeutic modalities.

“Povetacicept has demonstrated potential best-in-class attributes and has broad development potential across autoimmune conditions with significant unmet need,” said Mitchell Gold, Alpine’s CEO. “We’re excited for the opportunity to make a meaningful difference as part of Vertex.”

The deal is structured as an all-cash tender offer, with Vertex paying $65 per share for Alpine’s outstanding stock – a substantial 92% premium over Alpine’s closing price on April 9th. Vertex expects to finance the $4.6 billion net transaction cost through a combination of existing cash on hand and new debt financing.

The acquisition, which was unanimously approved by both companies’ boards, is expected to close in the second quarter of 2024 pending regulatory approval and other customary closing conditions. It marks Vertex’s second acquisition in the autoimmune disease space in recent years, having purchased protein therapeutics firm Semma Therapeutics in 2019 for $950 million.

With povetacicept’s promising data and Vertex’s resources behind it, the combined company will be well-positioned to rapidly advance a potentially transformative new class of autoimmune therapies. But at a lofty price tag nearing $5 billion, the deal places a major bet that the Alpine drug can live up to its blockbuster aspirations.

Register Now to Attend the Noble Capital Markets Emerging Growth Virtual Healthcare Equity Conference

No Cost Attendee Registration