Inovalon to Go Private in $7.3 Billion Deal
Topic of the day
Inovalon Holdings Inc. (+8,3 %) has agreed to be acquired by an equity consortium for $7.3 billion. The provider of cloud-based platforms for healthcare said its stockholders would receive $41 a share in cash. Shares were up 8.5% at $40.37 in midday trading Thursday. Inovalon said the consortium is led by Nordic Capital, with Insight Partners the lead co-investor. 22C Capital and Inovalon founder and Chief Executive Keith Dunleavy, as well as some Class B stockholders of Inovalon, are also investing in the deal. Upon completion of the deal, expected in late 2021 or early 2022, Inovalon would become a private company. Dr. Dunleavy would continue as CEO and would remain a substantial shareholder.
The Swiss stock market experienced a clear downward trend on Thursday. The SMI lost 1.1 percent to 12,404 points. Of the 20 SMI stocks, 18 posted price losses. The two winners in the index were Nestle, which closed steady, and Alcon shares, which were up 0.7 percent, again benefiting from the ophthalmology specialist's good figures and encouraging outlook. Turnover was 37 (previously: 26.93) million shares. By far the highest price losses in the SMI were recorded by the shares of luxury goods groups Richemont (-6.7%) and Swatch (-6.6%). After China recently took some companies, especially from the technology sector, by the rein through stricter regulatory measures, Beijing is now taking aim at the country's super-rich. The government is calling for a redistribution of wealth, raising fears that the luxury goods sector could lose sales as a result. Chinese consumers accounted for 35% of the industry's sales in 2019, the year before the Corona pandemic, UBS said. Geberit (-1.7%) had slightly exceeded expectations with its first-half figures. However, the outlook of the manufacturer of sanitary equipment was described in trading as rather conservative. Also, the share had performed well since the beginning of the year, so that profits were now realised.
European stocks were deep in the red on Thursday, with the Stoxx Europe 600 down 1.5% to 467.2 points, dragged lower by losses in the energy and utilities sectors. Oil and copper prices tumbled as global growth concerns related to the Covid-19 pandemic continued to weigh on sentiment. Investors were also assessing the latest Federal Reserve meeting minutes and while no date is confirmed and Fed members were split, it appears increasingly likely the central bank will start tapering asset purchases before year-end, said Interactive Investor. In Paris, the CAC 40 and the SBF 120 gave up 2.4% and 2.3%, respectively. In Frankfurt, the DAX 30 dropped 1.3%, while the FTSE 100 in London fell 1.5%. Oil and gas stocks suffered from the sharp decline in oil prices. In Paris, TechnipFMC lost 7.3%, Vallourec shed 4.4%, CGG fell by 1.9%, TotalEnergies gave up 3.8% and Technip Energies dropped by 3.4%. In London, BP lost 4.9% and Shell fell 3.9%. In Milan, Eni was down 2.8% and Saipem was down 2.8%. The French luxury groups Kering (-9.5%), LVMH (-5.7%) and Hermes (-4.7%) suffered from signs of slowdown sent by the Chinese economy on which these companies depend heavily. In London, Burberry lost 6.6% while in Zurich, Richemont lost 6.7%. In Milan, Salvatore Ferragamo fell 4.7%, Moncler dropped 6.1%, and Tod's was down 5%. Shares of the SBF 120 automotive groups were among the biggest decliners in the index, as Japanese carmaker Toyota confirmed that it would cut its global production by 40% in September compared to its previous forecast. Renault fell 2.6%, while Stellantis folded 3.4%. In Frankfurt, BMW lost 3%, Daimler gave up 3.1% and Volkswagen was down 4%. Among automotive suppliers, Valeo lost 2.8%, Plastic Omnium dropped 2.6% and Faurecia shed 4.3%. Antofagasta shares fell more than 5% in London after the miner cut its 2021 copper production guidance due to the risk of continued low levels of rainfall at the Los Pelambres mine in Chile.
The S&P 500 rose Thursday, stabilizing after two days of declines and a choppy trading session as investors seemed to spot a buying opportunity. Gains by technology and consumer-staples shares helped the U.S. stock benchmark end the day higher despite losses in economically-sensitive groups like energy, materials and financials. The S&P 500 gained 5.53 points, or 0.1%, to 4405.80. The Dow Jones Industrial Average dropped 66.57 points, or 0.2%, to 34894.12. The tech-heavy Nasdaq Composite added 15.87 points, or 0.1%, to 14541.79. Stocks hit turbulence this week after major indexes posted a series of record highs. Investors generally remain upbeat about the outlook for share prices given the rapid pace of earnings growth. But some have become cautious, concerned that rising coronavirus cases will dent the global economic recovery at the same time that the Federal Reserve gears up to rein in its huge bond-buying program. “These things are going to cause market volatility,” said Caroline Simmons, U.K chief investment officer at UBS Global Wealth Management. “People are trying to work out what [the Delta variant] is going to mean: does it mean more lockdowns, is it going to damage growth?” Commodity markets showed signs of wariness, with oil and copper prices retreating. The energy and materials sectors were the worst-performing groups in the S&P 500, as shares of Exxon Mobil, Marathon Petroleum and miner Freeport-McMoRan each fell at least 3%. The S&P 500 has rallied 17% in 2021, keeping stock valuations at historically high levels despite strong earnings growth. But with low yields in the bond market, many investors still see stocks as an attractive place to put money. A lack of routine pullbacks this year means they have not had many chances to feel that they are buying at a discount. “There’s liquidity sitting outside the market that would like to get in, and it wants to get in on pullbacks,” said Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management. ”It is a market which has not given people many opportunities to enter.” Among individual stocks, shares of Bath & Body Works rose $6.22, or 10%, to $65.51 after the retailer beat analysts’ earnings expectations for the second quarter.
The East Asian stock markets on Friday disconnect from Wall Street and display outright losses, more significantly on the Chinese stock exchanges. Chinese tech shares extend losses in Hong Kong after state media reports that Beijing has passed data-privacy laws that are among the world’s strictest. The HSI in Hong Kong slumps by 2.3 percent, as again technology stocks are sold on a large scale. In Shanghai, the index falls by 1.7 percent. Tokyo’s Nikkei index slips 0.7 percent to 27,086 points. In Seoul, the Kospi declines by 0.7 percent to 3,075.68 points.
Long-dated U.S. government bonds rallied, pushing down yields. The yield on the 10-year U.S. Treasury note dropped 1 basis point to 1.248%. The yield of the German Bund with the same maturity was recorded at -0.487%, compared to -0.480% on Wednesday evening.
Goldman Sachs increases Lanxess to Buy (Sell)/Target EUR 72 (56)
Citi increases Carlsberg target to DKK 1,280 (1,225) - Buy
Deutsche Bank increases Alcon target to CHF 85 (74) - Buy
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