Red Hat (NYSE: RHT) announced that it proposes to offer, subject to market conditions and other factors, $700 million aggregate principal amount of its convertible senior notes due 2019 (the “notes”). The notes are to be offered and sold only to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). In addition, Red Hat will grant the initial purchasers an option to purchase up to an additional $105 million aggregate principal amount of notes on the same terms and conditions (the “additional notes”), exercisable within a 30-day period. Upon conversion of the notes, holders of the notes will receive cash, shares of Red Hat’s common stock or a combination of cash and shares of Red Hat’s common stock, at Red Hat’s option. Interest on the notes will be payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2015. The notes will mature on October 1, 2019, unless earlier repurchased or converted in accordance with their terms prior to such date. The interest rate, initial conversion rate, offering price and other terms of the notes will be determined at the time of pricing the offering. If and when issued, the notes will be senior unsecured obligations of Red Hat.
Red Hat intends to use a portion of the proceeds to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of warrants pursuant to the warrant transactions described below). If the initial purchasers exercise their option to purchase the additional notes, Red Hat expects to sell additional warrants to one or more of the initial purchasers of the notes or their affiliates or other financial institutions (the “Option Counterparties”) and use a portion of the proceeds from the sale of the additional notes, together with the proceeds from the additional warrant transactions, to enter into additional convertible note hedge transactions.
Red Hat intends to use up to $400 million of the remaining net proceeds from the offering to repurchase shares of its common stock. Such repurchases will be conducted through one or more of the initial purchasers or their affiliates as Red Hat’s agents in negotiated transactions with institutional investors concurrently with or following this offering, as well as under a $375 million accelerated share repurchase program pursuant to an agreement with Goldman, Sachs & Co. (the “ASR Agreement”). The effectiveness of the ASR Agreement is conditioned upon the closing of the offering. Red Hat expects the purchase price per share of the common stock repurchased from institutional investors in privately negotiated transactions to equal the closing price per share of Red Hat’s common stock on the date of pricing of the offering. The purchase price per share of the common stock repurchased through the accelerated share repurchase program will be determined and adjusted based on a discount to the volume-weighted average price of Red Hat’s common stock during a period beginning after the execution of the ASR Agreement. The exact number of shares repurchased pursuant to the accelerated share repurchase program will be determined based on such adjusted price.
In connection with the accelerated share repurchase program, Red Hat has been advised that the counterparty to such transaction or its affiliate expects to purchase shares of Red Hat’s common stock in secondary market transactions, and may execute other transactions in Red Hat’s common stock, or in derivative transactions relating to Red Hat’s common stock, during the term of the ASR Agreement. These activities and Red Hat’s repurchases of shares of Red Hat’s common stock may cause or avoid an increase or a decrease in the market price of Red Hat’s common stock or the notes, which could affect the ability of holders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that holders will receive upon conversion of the notes. In addition, the share repurchase transactions that settle concurrently with the closing of the offering could have the effect of increasing, or limiting a decline in, the market price of Red Hat’s common stock and could result in a higher effective conversion price for the notes.
Red Hat intends to use the remaining net proceeds of the offering for working capital and general corporate purposes, which may include capital expenditures, potential acquisitions or strategic transactions.
In connection with the pricing of the notes, Red Hat intends to enter into convertible note hedge transactions and warrant transactions with the Option Counterparties. The convertible note hedge transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the same number of shares of common stock that will initially underlie the notes and are expected generally to reduce the potential dilution with respect to Red Hat’s common stock upon conversion of the notes and/or to offset any cash payments Red Hat is required to make in connection with the conversion of the notes, as the case may be. The warrants will cover, subject to customary anti-dilution adjustments, the same number of shares of common stock that will initially underlie the notes. The warrant transactions could separately have a dilutive effect with respect to Red Hat’s common stock to the extent that the market price per share of Red Hat’s common stock exceeds the strike price of the warrants, unless, subject to certain conditions, Red Hat elects to settle the warrants in cash.
In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the Option Counterparties or their respective affiliates expect to purchase shares of Red Hat’s common stock and/or have entered into or expect to enter into various derivative transactions with respect to Red Hat’s common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Red Hat’s common stock or the notes at that time. In addition, the Option Counterparties or their respective affiliates may modify their hedge positions (and are likely to do so during any observation period related to a conversion of notes or in connection with any repurchase of notes by Red Hat on any fundamental change repurchase date or otherwise) by entering into or unwinding various derivatives with respect to Red Hat’s common stock and/or purchasing or selling common stock or other securities of Red Hat in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could also cause or avoid an increase or a decrease in the market price of Red Hat’s common stock or the notes, which could affect the ability of holders to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that holders of notes will receive upon conversion of the notes.
Morgan Stanley, BofA Merrill Lynch, Citigroup, J.P. Morgan, Barclays, Goldman, Sachs & Co., RBC Capital Markets and Wells Fargo Securities are acting as joint book-running managers for this offering.
RGS Energy (Nasdaq: RGSE) announced today its strategy to focus on its core residential solar engineering, procurement and construction business. To provide greater financial resources for its Residential and Sunetric business segments, the Company decided today to exit its legacy, large commercial business segment. The Company will present the results of its commercial business segment as Discontinued Operations in its Report on Form 10-Q for the quarter ended September 30, 2014 and for prior periods.
Dennis Lacey, RGS' CEO, stated: "As we believe our best opportunity for improved future financial performance rests with our Residential and Sunetric business segments, we have made the strategic decision to exit the large commercial business segment. This decision will have a positive impact upon our future cash from operations as well as improving the Company's profit margin. We are taking actions to monetize the value of this business segment. We will complete our existing large commercial construction contracts in progress in the ordinary course of business in the coming months. Although we will no longer be pursuing large solar commercial projects, we will continue in our Residential and Sunetric business segments to operate in the small commercial solar customer segment, generally under 200kW in size. For instance, oftentimes our Residential solar customers own a small business and we also provide solar solutions for their business facilities. We believe the small commercial segment is an opportunity for future profitable growth."
Infosys Limited (NYSE: INFY) announced that it is extending its relationship with Oracle (NYSE: ORCL) to enhance support for a range of innovative solutions and services on new technology platforms. These platforms will enable enterprises to use Oracle products to reshape their business and create new innovation ecosystems.
Chief Executive Officer of Infosys, Dr. Vishal Sikka, made these significant announcements in his keynote address at the Oracle OpenWorld. Infosys will use its Oracle PartnerNetwork Diamond Level Partner status, its global network of Innovation Centers, and its extensive experience of implementing Oracle solutions in more than 30 countries to help their joint clients gain lasting competitive advantage driven by the latest technology advancements.
Infosys and Oracle will expand their relationship across digital marketing, big data and Oracle Cloud Applications, underpinned by investments from Infosys in Oracle technology.
- Infosys has established a Center of Excellence (CoE) for digital marketing exclusively around Oracle Marketing Cloud. The rich and robust product functionality of the Oracle suite combined with Infosys business consulting, systems integration and innovation services can help implement enterprise digital marketing strategies efficiently. These include supporting the marketing process - from campaign conceptualization to measuring return on marketing investments
- Infosys announced it has accelerated campaign launch cycle by 30 percent and increased campaign response rates by five percent for a leading industrial manufacturer using a combination of Infosys consulting and systems integration capabilities and Oracle Marketing Cloud
- Infosys has also implemented Oracle Marketing Cloud to drive automation and increase efficiency across its marketing operations
- Infosys has worked with Oracle to enable the Infosys Big Data platform to unlock the value from clients' investments in existing Oracle systems such as Oracle Exadata Database Machine, Oracle Big Data Appliance, Oracle Exalytics and other data technologies. This now allows customers to extract business insights from very large amounts of both structured and unstructured data in near real-time, providing complete, real-time and end-to-end visibility of data across the entire IT landscape
- The Infosys Big data platform comes with over 50 data source connectors that allow immediate access to structured and unstructured data residing across the enterprise in existing Oracle and other vendor systems
- Infosys has also developed industry-specific solutions for big data in retail, communications, oil and gas, and automotive industries delivering capabilities such as fraud detection and prevention, predictive analytics and monitoring, and customer micro-segmentation that deliver faster returns on investment
Oracle Cloud Applications
- Infosys is increasing its activities around Oracle Cloud Applications. This includes training 1000 consultants every year in each Oracle Cloud Applications pillar, augmenting one of the largest pools of Oracle Cloud Applications' consultants worldwide
- Infosys is building solutions for Oracle Cloud Marketplace and has more than 30 solutions in the pipeline. The two companies are also co-developing Oracle Fusion applications
- Infosys has utilized multiple Oracle Exadata Database Machines to build CoEs on Oracle-engineered systems
- Infosys and Oracle are building solutions including proof-of-concept solutions for clients. These are demonstrated in the Infosys Innovation Center located at the Oracle headquarters in San Francisco
Java related competencies
- Infosys has deeply invested in Java and built an experienced pool of strong Java/JEE skilled employees spanning across the globe and working on providing solutions to Infosys clients across multiple domain and verticals
- Infosys is a key member of the Oracle PartnerNetwork specializing in Oracle Java Platform. The company is expanding its open ecosystem capabilities around Java and domain-specific languages such as Scala, Groovy, Jython, JRuby and Clojure that are based on Java and Java Virtual Machine
Ravi Kumar, Executive Vice President and Global Head, Oracle Practice, Infosys:
"Infosys has worked with Oracle to create a wide range of service offerings to help our joint clients take advantage of the transformational power of software. Oracle continues to develop their products to help businesses compete and grow. Combining the innovation power of Oracle and the global consulting and systems integration expertise of Infosys will enable organizations to redesign and transform their operations and derive increasing value from existing and emerging technologies."
Derek Williams, Executive Vice President, Oracle:
"I am pleased to see the continued commitment and investment from Infosys across the Oracle portfolio. Infosys teams with our sales organization to provide differentiated value in our joint sales cycles and implementation services to enable successful customer go lives. In addition, they have worked with us on co-development projects. Their Diamond level sponsorship at Oracle OpenWorld is another example of their level of continued commitment."
Troy Richardson, Senior Vice President, Strategic Alliances, Oracle:
"Oracle and Infosys have worked together for over a decade and this has resulted in joint go-to-market synergies across Oracle's entire portfolio. Infosys' deep domain expertise and global delivery model can help solve our joint customers' most complex business problems via its transformation-led consulting approach."
Gilead Sciences (NASDAQ: GILD) and Italy's pharmacy agency agreed to a pact on supply of Sovaldi to treat hepatitis C patients in Europe, according to Bloomberg.
BlackBerry (Nasdaq: BBRY) announced that it has been named a "Leader" in The Forrester Wave": Enterprise Mobile Management, Q3 2014.(1)
Forrester Research, Inc. evaluated BlackBerry along with 14 other of the most significant mobile device management vendors. BlackBerry earned the highest score in Strategy as well as Global Presence, and tied for the top ranking in Market Presence, which considers revenue, install base and partners. In addition, BlackBerry received the highest possible score in 12 of the 27 criteria measured by Forrester, including Network Security, Future Vision, and Support.
According to Forrester Research, "As other vendors have rushed to offer competitive alternatives to BlackBerry's platform, the company has had to reinvent itself around the characteristics that made it a Leader previously - and its strong commitment to enterprise mobility and security has paid off."
"Security is our cornerstone and BlackBerry remains laser focused on developing and delivering the solutions enterprises around the globe have come to expect from us," said John Sims, President, Global Enterprise Services, BlackBerry. "Our mobility solutions are in government agencies and enterprises around the world because customers trust the experience we've built over the decades. With current and future BlackBerry offerings, we will leverage our experience in security to create solutions that meet the evolving needs of our customers, from cross-platform support for BYOD programs to the management of Internet of Things."
Forrester Research also noted in the report, "Continued investments in collaboration applications and a strong vision that incorporates a strategy for Internet of Things management and automotive support have placed BlackBerry in a Leader position."
Today BlackBerry is the dominant mobile device management (MDM) leader with more customers than its top three competitors combined. Since the EZ Pass migration program launched on March 31, 2014, 3.4 million new BlackBerry Enterprise Service 10 (BES10) client access licenses have been claimed by customers worldwide. More than 840,000 of these licenses have been traded in from competitors' MDM platforms.
To achieve this position and increase the value that BlackBerry brings to customers, the company continues to make investments and expand beyond MDM capabilities into other value-added services. Recent highlights of this strategy include:
-- The acquisition of Movirtu, a provider of virtual identity solutions.
Movirtu's technology allows multiple numbers to be active on a single
device in order to improve device management and provide split billing
for voice, messaging, data and applications.
-- The launch of BBM Protected, the first solution in the eBBM" Suite
for secure enterprise-class messaging. This service brings regulated
industries the most secure and reliable real-time mobile messaging
experience in the industry by offering an enhanced security model for
BBM messages sent between BlackBerry smartphones.
-- The establishment of the BlackBerry Technology Solutions (BTS) business
unit. This group comprises of the company's innovative technology
assets, including QNX (embedded software), Project Ion (Internet of
Things application platform), Certicom (cryptography applications), and
Paratek (RF antenna tuning), as well as BlackBerry's extensive patent
portfolio. BTS will focus on the company's long-term growth strategy on
the Internet of Things and will maximize BlackBerry's intellectual
property and patents to create operational synergies and new revenue
(1) Forrester Research, Inc. " The Forrester Wave": Enterprise Mobile Management, Q3 2014, " by Christian Kane and Tyler Shields, September 30, 2014.
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