Buyout Thursday

Apparently, the Thursday before Labor Day is a popular time to make strategic acquisitions. Two of our Buy List stocks announced deals today.

First up, Moody’s (MCO) said they’re buying Reis (REIS), a firm that deals in real estate data. It’s an all-cash deal that values Reis at $278 million or $23 per share. The stock closed yesterday at $17.40 per share.

The transaction will be funded through a combination of cash on hand and commercial paper. Moody’s expects the acquisition of Reis to be accretive to earnings per share on a GAAP basis in 2020. On an adjusted EPS basis, which excludes purchase price amortization, the transaction will be accretive in 2019. Moody’s continues to expect share repurchases for 2018 to be approximately $200 million, subject to available cash, market conditions and other capital allocation decisions.

The deal is expected to close in Q4.

Today’s other deal is that Stryker (SYK) is buying K2M Group Holdings (KTWO) at $27.50 per share. That works out to $1.2 billion. KTWO closed yesterday at $21.82 per share.

Stryker said K2M Chief Executive Eric Major will become head of the division upon the completion of the deal.

Stryker said the deal wouldn’t affect earnings this year. It expects to report adjusted earnings of $7.22 to $7.27 this year.

Earlier this year, Stryker completed its acquisition of Entellus Medical Inc., a manufacturer of devices for various ear, nose and throat diseases.

K2M, which was founded in 2004, has become a prominent player in the $10 billion spinal market, Stryker said, through its development of minimally invasive and complex spinal support systems.

Posted by on August 30th, 2018 at 10:47 am


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