Top 10 Under Armour Curry 2 Shoes Of 2016
Cloud-computing company Salesforce announced a $2.8bn acquisition of Demandware, sending shares in the latter surging and signalling that the mergers and acquisitions market is looking healthy.
Shares in Demandware, a company whose software is used to run ecommerce websites, jumped nearly 56 per cent to $74.81 after Salesforce said it would pay $75 a share in cash for the company.
The offer represented a 56 per cent premium to Demandwares closing price on Tuesday. Shares in Salesforce closed 0.3 per cent lower at $83.45.
Demandware shares were down 11 per cent this year before the acquisition.
The purchase brings Salesforce exposure to a digital commerce market expected to grow 14 per cent year-on-year to $8.5bn by 2020, according to research company Gartner with brands including Lands End, LOral and Marks and Spencer using Demandware software.
The deal, expected to close in the quarter ending in July, is also expected to lift Salesforces fiscal 2017 revenue by between $100m and $120m.
Moreover, with Salesforces move, analysts note that after a slow start to this year the M&A market looks healthy.
Noting private equity bids for Marketo and SciQuest on Tuesday and the premium paid by Salesforce for Demandware, Tom Roderick, an analyst at Stifel, said: Its quite clear that the M&A market is wide open again and, seemingly, as healthy as ever.
He added: The big premium and healthy revenue multiple suggests to us that Salesforce.com won an M&A bidding war against at least one other competing vendor [likely Adobe, in our opinion, but potentially also Oracle and others].
The rally in Demandware shares came alongside a US equity market that was little-changed.
At the close, the S&P 500 was 0.1 per cent higher at 2,099.3, the Dow Jones Industrial Average was unchanged at 17,789.7 and the Nasdaq Composite had crept 0.1 per cent higher to 4,952.3.
Elsewhere, shares in Under Armour fell nearly 4 per cent to $36.25 after the sportswear maker lowered its sales outlook, citing the closure of Sports Authority stores.
Baltimore-based Under Armour, riding high on the success of its NBA star Stephen Currys shoes, said it expected revenues of about $4.93bn for the year, below analysts estimates for $5.02bn and its own outlook for about $5bn.
It also expected to incur a $23m impairment charge tied to Sports Authoritys bankruptcy.
We view this event as largely one-time, and believe the brand is still in the early innings of growth, said Randal Konik, an analyst at Jefferies. Our main concern here remains high expectations, valuation and the potential rise of Adidas back into the US market.
Meanwhile, shares in Michael Kors rose 6.6 per cent to $45.55 and were the biggest gainer on the benchmark S&P 500 after the fashion retailer reported a full-year earnings outlook alongside quarterly sales and earnings that exceeded analysts expectations.
Whole Foods Market shares jumped 4.9 per cent to $33.94 after analysts at Credit Suisse upgraded the stock to outperform from neutral and raised their price target on the stock to $40 from $30.
Whole Foods shares are down nearly 50 per cent since their peak in 2013, providing investors with an attractive entry point, said Edward Kelly, an analyst at Credit Suisse.
With Whole Foods cutting prices, lowering costs, investing in technology and introducing its Whole Foods 365 value stores, Mr Kelly noted that this innovative management teams aggressive response looks supportive of a return to growth.
mamta.badkar@ft.com
Twitter: @mamtabadkar
Source: http://www.ft.com/cms/s/0/d199f370-280c-11e6-8ba3-cdd781d02d89.html
