Today's stock market
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WebMD finds a buyer
Shares of health information provider WebMD soared 19.8% today after the company announced it has reached an agreement to be acquired by Internet Brands, a portfolio company of global investment company KKR. The all-cash offer of $66.50 per share is valued at $2.8 billion and represents a premium of 20% over Friday's closing price and about 30% over WebMD's share price in February, when the company announced it was looking into a merger or sale of the company.
"After a thorough review of strategic alternatives, we are pleased to announce this transaction, which provides our stockholders with immediate and significant cash value and a substantial premium," said Martin J. Wygod, chairman of WebMD.
WebMD has been struggling to grow revenue of late, projecting a 1% to 4% increase for the full year as it dealt with what CEO Steven Zatz described as a "challenging macro environment." With the agreement already approved by the WebMD board of directors and financing all set, the transaction is pretty much a done deal, and the tender offer will commence within 10 business days.
Hasbro earnings surge but shares fall
Hasbro stock fell 9.4% on second-quarter earnings results that strongly beat analyst profit projections but failed to impress on the revenue line due to some softness in the U.K. and Brazil. The toymaker's net earnings rose 30% to $67.7 million, or $0.53 per share, as compared to the consensus analyst estimate of $0.46. Revenue was up 11% to $972.5 million, essentially matching Wall Street expectations.
The strength in Hasbro's results this quarter came primarily from its franchise brands portfolio, which saw revenue grow 21%. Revenue from the partner brands portfolio, mostly tied to movie releases from media companies such as Disney and DreamWorks, grew just 1%.
U.S. and Canada turned in a revenue gain of 16% and 41% jump in operating profit, while the international segment saw a 43% drop in operating profit on revenue growth of only 6%.
CEO Brian Goldner said in the press release, "Franchise Brand, Hasbro Gaming and Partner Brand revenues grew year-over-year, and revenue increased across all geographic regions. We entered the important second half of the year with strong consumer momentum, a robust and diverse entertainment slate and compelling new brand initiatives."
Management pointed out that the timing of movie releases will favor second-half results and especially the fourth quarter. With a new Star Wars movie, a Frozen spinoff, and new offerings from Disney's Marvel unit, Hasbro expects a big improvement in partner brands in the rest of the year. Moreover, 90% of operating profit from the international segment typically comes in the second half of the year.
Hasbro investors were apparently hoping for more in the first half, but with the stock up 35% for the year and retracing back to its level from only two months ago, shares that may have gotten a little ahead of reality were reset by the market.
Jim Crumly owns shares of Hasbro and DIS, and has the following options: long January 2019 $80 calls on DIS. The Motley Fool owns shares of and recommends Hasbro and DIS. The Motley Fool has a disclosure policy.