Scout Daily Update: JOLTS Weakens


Tesla Motors Inc (NASDAQ:TSLA): Shareholders will have a special meeting on November 17th to vote on the Solar City merger plan. Tesla plans to issue 11,080M shares of Tesla common stock. Tesla Motors Inc (NASDAQ:TSLA) shareholders will own 93.1% of the combined companies and SolarCity shareholders will own 6.9%.

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Sprint Corp (NYSE:S): will be mortgaging 14% of its airwaves which is worth $16.4 billion. The firm is looking to raise $3.5 billion. This would be able to satisfy the capital constraints the firm has as it had $3.17 billion in negative cash flow for the fiscal year ending in March. Partially because of this deal the firm expects to be rated investment grade by Moody’s and Fitch.

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Danaher Corporation (NYSE:DHR): agreed to buy Phenomenex which is a supplier to Danaher. It is a privately held manufacturer and distributor of high-value consumables for separation sciences. Ross Muken, who is an analyst at Evercore ISI, estimates Danaher Corporation (NYSE:DHR) paid $700 million for the company. At this purchase price the firm had an enterprise value to revenue multiple of 3.5X as it has $200 million in revenues. It has an enterprise value to EBITDA multiple in the low teens, giving it a 10% return on invested capital by the 5th year.

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The big economic news of the day was the JOLTS job openings index had the biggest miss on record. This is a bad sign, but it needs to be taken with a grain of salt given it has only been calculated for a few years. The takeaway from this labor data is that the labor market is peaking. Employment is a late cycle indicator so it should weaken further sometime by the end of this year or early next year.

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