Out Fox The $treet

  Zynga agrees to be bought by Take-Two Interactive at a disappointing valuation despite the deal premium. The new entity proposes a company rivaling EA trading at a major discount to the gaming giant. The new Take-Two will have appealing 14% growth rates plus $500 million in net bookings synergies in mobile. The stock will trade at a FY23 EV/S multiple of 3.5x, which is a major discount to past multiples. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » For long-term shareholders, the  Take-Two Interactive Software  ( TTWO ) deal to acquire  Zynga  ( ZNGA ) for $10 per share is a disappointing valuation considering the stock regularly traded above $11 last year. For short-term traders, the 64% premium provides a good time to exit the stock after a rough last few months. My  investment thesis  remains Bullish on the stock after the massive hit to Take-Two Interactive takes Zyng...

  Zoom beat FQ2'22 analyst targets, but the size of quarterly beats continues to trend downwards. The company forecast FQ3'22 revenues to decline sequentially in further signs of a slowdown in business. The stock headed into the quarter trading at 20x forward sales while the future growth rates don't warrant this valuation. Looking for more investing ideas like this one? Get them exclusively at Out Fox The Street.  Learn More » A lot of individual investors didn't want to listen, but  Zoom Video  Communications  ( ZM ) faced nearly impossible comps due to pulled  forward  demand. In  addition, the recent deal to acquire  Five9  ( FIVN ) is exactly what companies do in order to replace stalling growth. My  investment thesis  remains very Bearish on the stock not correctly priced for the new normalized, post- Covid  phase. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the dis...

Aurora Cannabis was in talks with Aphria on a merger of equals. The deal was estimated to generate C$200 million in synergies. The stocks could have had up to 50% upside on a merger. Over the last week,  Aurora Cannabis  ( ACB ) and  Aphria  ( APHA ) apparently discussed a  merger  with talks falling apart. A merger would've made the new entity into a global giant in the cannabis space after the Canadians have lost a ton of market leadership to U.S. firms in the last year. The synergies alone could make this a no brainer deal as Aurora Cannabis already had made an impressive transformation on costs making the  long-term investment thesis  on the stock more bullish. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

The Justice Department agreed to a settlement with T-Mobile and Sprint, removing another hurdle from closing the merger. Thirteen state attorneys general are still suing to block the merger. Dish remains in no position to effectively launch at viable 5G network. The risk/reward equation on Sprint heavily tilts towards high downside risk. As  Sprint  ( S ) surged to $8 based on a  DOJ approval clearance  of the combination with  T-Mobile  ( TMUS ), a large risk still exists the merger will fail to obtain all the necessary regulatory approvals. The stock is not correctly priced for the binary outcome with large downside risk highlighted in  previous research  from a failure to close the merger while the upside gains are now limited. Read the full article on Seeking Alpha.  Update - August 2  1st Republican state joins the lawsuit to block the merger. The deal is still not guaranteed to obtain approval placing Sprint ...

After the initial rally following the signed merger between Cloudera (CLDR) and Hortonworks (HDP) , the stock has collapsed 50% from those $20 highs. The stock hit pennies away from a new low following their IPO over 18 months ago as the merger closed this morning.

Bristol-Myers Squibb (BMY) agreed to acquire Celgene (CELG) in a stock and cash deal valuing the later at a 51% premium from their closing price. So much to like with a deal that has an EPS accretion of 40% in the first year. The transaction is about 50% cash and 50% stock with a unique CVR worth up to $9 based on the 3 potential blockbuster drugs getting FDA approvals. Bristol-Myers should be up on this news, not down 10%. Disclosure: Long CELG. Please review the disclaimer page for more details. 

IBM agreed to pay a 63% premium for Red Hat to become a leader in hybrid cloud. The deal is accretive to free cash flows starting around 2020. The $34 billion of additional net debt adds risk to the story. The transformative deal could be the bold move to change the perception of the stock trading at only 8.5x '19 earnings estimates. The market has long complained that   IBM   ( IBM ) hasn't made a bold move to transform the company. The move to acquire   Red Hat   ( RHT ) was the move that the market always wanted, but no doubt views as highly risky now. The deal premium adds more risk than justified but IBM might just pull the company out of this tailspin with this bold move. Read the full article on Seeking Alpha.  Disclosure: Long IBM. Please review the disclaimer page for more details.   

NXP Semi. trades back below the original Qualcomm takeover price of $110. The stock has far trailed the SOXX ETF since the merger agreement in October 2016. A flood of stock buybacks in the sector due to failed mergers will lift all boats. The Chinese regulator delays provide a unique play on  NXP Semiconductors ( NXPI ) that has a long-term growth opportunity tied into a potential short-term quick gain. Investors that step in now appear set to win either way. Read the full article on Seeking Alpha.  Disclosure: Long QCOM. Please review the disclaimer page for more details. 

The CEO of Broadcom (AVGO) went on CNBC to discuss the $82 offer to buy Qualcomm (QCOM) . Depending on the day, the offer is about a 30% premium above the current price. Broadcom CEO: Our offer for Qualcomm is compelling from CNBC . As Cramer points out, Qualcomm has a plan on the table to boost FY19 profits to about $7 per share. The offer isn't that compelling if the wireless giant can achieve that growth. Do you find the offer as compelling? More research: Qualcomm: NXP Semi. Closure Is Key Disclosure: Long QCOM. Please review the disclaimer page for more details.

Sprint reports improving FQ2 results. The highlights and CEO message aren't supportive of regulatory approval of a merger with T-Mobile. Net debt position remains a problem for stock gains absent a merger and industry consolidation. Along with  FQ2 results ,  Sprint  ( S ) released data points that aren't supportive of an industry needing consolidation. My  investment thesis  continues to suggest the stock isn't worth much more than the current price based on the results and the reported deal on the table with  T-Mobile  ( TMUS ). Read the full article at Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

CenturyLink ended 2016 down at the lows, as the market was unimpressed with the company's decision to purchase Level 3. The 9% dividend appears easily supported after the deal closes, based on free cash flow analysis. A recent analyst price target provides ample upside that is a bonus with the large dividend. CenturyLink  (NYSE: CTL ) ended 2016 in the dumps. The market didn't fondly view the company's proposed merger with  Level 3 Communications (NASDAQ: LVLT ), sending the stock down to the lows from the start of the year. Even after the 6.6% gain on the first trading day of 2017, CenturyLink still offers a nearly 9% dividend yield. Should investors rush into the stock at around $25 per share? Please read the full article on Seeking Alpha.  Disclosure: Long CTL. Please review the disclaimer page for more details. 

Twitter (TWTR) surged 7% on what appears (via Barron's) was trader chatter about a rumor in a likely move to run the stock up. While it wouldn't surprise me that SoftBank would have interest in buying Twitter, the firm recently closed on a sizable $32 billion deal for ARM Holdings.

As reported on Friday, AT&T (T) agreed to purchase Time Warner (TWX) for $107.50 per share. The deal brings together a distribution leader in the form of the wireless network operated by AT&T and the content owned by Time Warner. The deal could be a big victory for the Net Payout Yields model on Covestor where Time Warner has been a long-term holding. The company has long repurchased a large portion of the outstanding stock while paying a decent dividend that recently yielded nearly 2%. The big question is where the stock will trade on Monday with 50% of the value based on whether AT&T breaks the downside collar. As well, the market will likely fear whether the regulators will approve this merger of mega-media giants. Ultimately, a decent price on Monday provides an opportune time to exit a long-term position at the top. Here is hoping to a big pop at the start of trading. Below are links to more detailed reports on my opinions on the merger. WhoTrades Time Warn...

The stock price continues plunging ahead of the finalization of the merger with ETE. The deal complexity and required cash portion of the transaction were signals to avoid the stock. Williams doesn't trade at enough of a discount to warrant owning the stock prior to the merger closing in early 2016. The energy sector, and especially the infrastructure space, is in the midst of a massive collapse. One stock caught up in the carnage is Williams Cos. (NYSE: WMB ), with the stock down 13% on Monday and nearly $10 in the previous four trading days before a rebound on Tuesday. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

NXP Semi has rebounded following positive regulatory news surrounding the Freescale Semi merger.          Investors should patiently await further dips as the inventory correction and volatile merger integration will no doubt lead to more hiccups in the quarterly financials. The stock remains a prime purchase on future dips due to the synergies from the merger and the benefits to the EPS picture. The recent news events surrounding NXP Semi (NASDAQ: NXPI ) and the associated stock action highlights why investors need to stay prepared. The inventory correction in the semiconductor space and the upcoming completion of the Freescale Semi (NYSE: FSL ) merger makes for a volatile few months. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Skyworks terminates PMC-Sierra deal after the target accepts a higher bid from Microsemi. The company was expected to match the minimal increase in the deal price. The stock remains an attractive investment based on organic growth targets not reliant on a deal for PMC-Sierra. In a surprise move, Skyworks Solutions (NASDAQ: SWKS ) stepped away from the bidding war for PMC-Sierra (NASDAQ: PMCS ). Or maybe the move wasn't surprising, watching PMC accept a bid last week where Microsemi (NASDAQ: MSCC ) only increased the bid price by $0.18. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

PMC-Sierra reported solid Q3'15 results. The strong results are supportive of a higher offer from Skyworks Solutions. The best way to play the deal are the suitors with Skyworks offering the best valuation even if it fails to close the deal for PMC. After the close PMC-Sierra (NASDAQ: PMCS ) released Q315 earnings. The quarterly results of buyout targets are always worth viewing since a prime reason for a board of directors to relent on a buyout is weak results. The market got a prime example of this issue with Dialog Semiconductor ( OTC:DLGNF ) plunging on weak Q4 guidance following agreeing to buy Atmel (NASDAQ: ATML ). Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Liberty Global continues pursuing a deal with Vodafone despite regulatory concerns and disagreements on asset values. The stock continues trading toward multi-month lows on market weakness and the lack of merger news. Vodafone remains attractive with solid growth catalysts and a big dividend. The  unsurprising news  of the week is that Liberty Global (NASDAQ: LBTYA ) is finding it difficult to work out a deal with Vodafone (NASDAQ: VOD ). To most investors it shouldn't be a shock that the companies are struggling to find common ground on a deal in the midst of stricter regulatory scrutiny of related mergers in Europe. The original  investment thesis  surrounding this potential deal back in June questioned some of the logic supportive of a workable deal. Read the full article on Seeking Alpha.  Disclosure: Long VOD. Please review the disclaimer page for more details. 

Williams agrees to fee cuts for higher volumes from Chesapeake Energy. The auction process for the company remains in limbo placing the positive merger with Williams Partners and the promised higher dividends on hold. The uncertainty around Williams makes the stock difficult to own despite the collapsing price. In possibly a somewhat surprising move, Williams Cos. (NYSE: WMB ) subsidiary Williams Partners L.P. (NYSE: WPZ ) agreed to lower the gathering and processing costs for Chesapeake Energy (NYSE: CHK ) for higher future volumes. The move is rare for the MLP sector and has some troubling implications despite the signaling by Williams that the move is a win-win for both parties. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Schlumberger paid a hefty premium for the low-margin business of Cameron. A promising business combination isn't always financially rewarding to shareholders. The recommendation is to stay away from Schlumberger until the merger integration starts achieving synergies by late 2016. One of the most overlooked aspects of corporate combinations is the psychological impacts on stock multiples. A merger might be accretive to the acquirer, but if the combination reduces the growth rate or margins going forward, it could impact the valuation multiple assigned the stock. A stock that currently holds a premium multiple might suddenly lose that valuation due to lower growth rates going forward or less impressive margins. Read the full article on Seeking Alpha. Disclosure: Long HAL. Please review the disclaimer page for more details.