Lemelson Capital Reports 2% Stake in Geospace (GEOS), Says Fair Value is Above $78 Per Share Oct 20, 2014 02:46PM

Lemelson Capital Management, a private investment management firm, today announced that it has taken a significant position in shares of Geospace Technologies (NASDAQ: GEOS). Lemelson Capital's investment in Geospace Technologies, which will be held in the firm's flagship Amvona Fund, represents approximately two percent of Geospace Technologies' outstanding shares.

Geospace Technologies is a global leader in engineering and manufacturing in the oil and gas sector of the energy industry. "Shares of Geospace Technologies have continued to be dramatically undervalued, trading slightly above tangible book value recently, which the company has managed to grow at an impressive pace of nearly 23 percent per year over the last five years," said Emmanuel Lemelson, Chief Investment Officer of Lemelson Capital Management.

Geospace Technologies closed at $28.01 per share on Friday. Lemelson Capital Management today placed fair value for the shares above $78.

Lemelson Capital Management's Amvona Fund, managed by Emmanuel Lemelson, has garnered substantial attention for several of its high-profile long and short activist positions in publicly-traded stocks. The fund has a widely-publicized short position in Ligand Pharmaceuticals. It also currently has high-profile long positions in American Eagle Outfitters, Inc., Apple Inc., Kulicke & Soffa Industries and World Wrestling Entertainment, Inc.

Since its 2012 inception, Lemelson Capital's Amvona Fund has been named repeatedly as one of the world's top-performing hedge funds. BarclayHedge, a global leader in fund performance ranking and assessment, ranked The Amvona Fund as the world's top-performing "long bias" fund for August 2014.[1] On several occasions over the past two years, The Amvona Fund also has been ranked by Barron's as the top-performing hedge fund in the world. Since September 2012, The Amvona Fund has returned 257 percent gross and 160 percent net through August 31, 2014.

Disclosure: The Amvona Fund, LP is long shares of AEO, AAPL, GEOS, KLIC and WWE and short LGND for its clients.

DDR Corp. (DDR), Blackstone Affiliate Close on $1.9B Shopping Center Portfolio Acquisition Oct 20, 2014 06:16AM

DDR Corp. (NYSE: DDR) and an affiliate of Blackstone Real Estate Partners VII today announced that a joint venture formed by the two entities has closed on the acquisition of 71 shopping centers previously owned by American Realty Capital Properties, Inc. (Nasdaq: ARCP) for $1.93 billion.

The portfolio primarily consists of prime power centers located in Los Angeles, Houston, Denver, Chicago, Atlanta, Washington D.C. and Phoenix and is occupied by high quality retailers such as Whole Foods, Trader Joe's, The Fresh Market, Costco, Target, Walmart, Kohl's, PetSmart, Dick's Sporting Goods, Bed Bath & Beyond, and the TJX Companies. Trade area demographics for the portfolio are in-line with DDR's Prime portfolio featuring average household income of approximately $75,000 and a population of approximately 400,000 people. The average base rent per square foot of the portfolio is 6% below DDR's current prime average, representing a unique opportunity to drive future growth.

Blackstone Real Estate Partners VII, a real estate fund managed by Blackstone on behalf of its investors, owns 95% of the common equity of the joint venture and an affiliate of DDR owns the remaining 5%. DDR will provide leasing and management services and has the right of first offer to acquire 10 of the assets, under certain conditions.

DDR's investment in the joint venture includes approximately $20 million of common equity and $300 million of preferred equity with a fixed dividend rate of 8.5%. DDR also assumed its pro rata share of joint venture debt of $62 million.

The joint venture has assumed approximately $437 million of senior non-recourse debt, which has a weighted average term of 7.1 years and an interest rate of 4.45%. The venture has also originated an additional $800 million non-recourse loan facility, which has a five-year term and an interest rate of LIBOR plus 160 basis points.

David J. Oakes, president and chief financial officer of DDR, commented, "We are pleased to once again announce the closing of a transaction with our partners at Blackstone, further highlighting our ability to source high-quality acquisitions in an opportunistic manner. In consultation with our partner, we are in discussions with various counterparties to sell a portion of the portfolio over the near term with the goals of improving the risk-adjusted returns and maximizing portfolio quality for the joint venture."

Emerson Electric's (EMR) Power Unit Attracts Bidders - Reuters Oct 16, 2014 03:00PM

Timken (NYSE: TKR), Regal Beloit Corp (NYSE: RBC) and Altra Holdings, Inc. (NASDAQ: AIMC) are among companies competing to acquire Emerson Electric's (NYSE: EMR) power transmission solutions business, according to Reuters, citing sources. Private equity firms Warburg Pincus and Onex Corp are also in the race.

KKR (KKR) Makes Equity Investment in German IT Automation Firm, arago AG Oct 16, 2014 06:55AM

KKR announced a minority investment in arago AG, the German-based specialist in IT automation which is managed by the company’s founders Chris Boos and Dr. Bernhard Walther. KKR will support arago’s global expansion with primary capital. The terms of the transaction were not disclosed.

arago AG’s key product is “AutoPilot”, a knowledge-based automation platform, which was developed over the last eight years. The platform is based on a unique combination of different technologies and high-performance algorithms. It enables companies to automate their entire IT-Stack, including heterogeneous IT environments and individual applications. AutoPilot applies reusable knowledge modules for processing tasks in a dynamic way and enables automation rates of up to almost 90 percent.

This visionary approach was acknowledged amongst others by Gartner analysts who named arago “Cool Vendor in IT Operations 2014”, a designation given to those who support digitalization and the notion of “Big Change”. arago’s technology is used by large corporations with complex IT systems such as banks, telecommunication companies, IT service providers and outsourcers.

Chris Boos, CEO and co-Founder of arago AG, commented: “I have worked on algorithmic software development for the last 25 years. With AutoPilot, we have developed a unique technology that is proven and highly scalable. We have found a partner in KKR that immediately understood our technology and product vision and will support our global roll-out with capital, operational resources and access to its global network.”

Commenting on the reasons for choosing KKR as an investor, Chris said: “I believe that we have seen a lot of disruption in the B2C space and that the next wave of drastic change will be seen in enterprise. Our automation solution, for example, is disruptive to the way enterprises run IT. This is where KKR’s strong network and understanding of B2B business models is highly valuable to us.”

Philipp Freise, Member and Head of the European Media & Digital investment team at KKR, added: “For KKR, this investment is about supporting the global development of a cutting-edge German technology company founded and run by a world class entrepreneur. arago is an excellent example of Europe’s ability to produce outstanding technology companies and we believe our partnership will demonstrate the role KKR can play in helping such companies to become global champions.”

Lucian Schönefelder, Director of the European Media & Digital Investment team at KKR, added: “We are proud to partner with Chris Boos, who is a true visionary and who has built a unique technology. This investment fits into our strategy of supporting European B2B companies in their global growth ambitions through access to KKR’s global network of companies and domain experts.”

KKR has a long track record of supporting companies in technology, having invested more than $9 billion of equity since 1999 in more than 20 technology companies across different sub-sectors including software, online companies and semi-conductors. Recent partnership oriented growth investments include BMG, Fotolia and Ringier Digital. In addition to its long track record of investing, KKR has a unique vantage point from its private equity portfolio that is comprised of more than 90 companies that together spend nearly $10 billion on IT annually.

The arago investment is part of KKR’s newly established growth equity effort, which focuses on selective investments in fast-growing, tech-enabled companies that sell highly differentiated products with global market potential and which are led by outstanding founders.

“KKR’s growth equity initiative is highly tailored towards the needs of entrepreneurs. Investing into companies like arago also gives us a unique perspective when we look at larger investments across different sectors”, Philipp Freise said.

Other recent growth equity investments by KKR include Ping Identity, an identity security company whose technology aims to protect people’s identity as they traverse myriad connected devices and cloud-connected applications at work and at home.

KKR is funding the investment primarily from the balance sheet of KKR & Co. LP (NYSE: KKR).

GlaxoSmithKline (GSK) Seeks Binding Bids for $3B in Older Drugs - Reuters Oct 14, 2014 01:15PM

GlaxoSmithKline (NYSE: GSK) wants binding bids by next month for older drugs worth $3 billion, according to reports from Reuters. Potential bidders include KKR, India's Lupin and Denmark's Lundbeck, the report said.

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