CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $1.1 billion and year to date flows stand at -$6.5 billion. New issuance for the week was $9.9 billion and year to date HY is at $215 billion, which is up 18% over the same period last year.

(Company Report) United Rentals Completes Acquisition of Neff Corporation

• United Rentals, Inc. announced that it has completed its previously announced acquisition of Neff Corporation for a total purchase price of approximately $1.3 billion. The purchase was funded primarily through newly issued unsecured debt.
• The acquisition will augment the company’s earthmoving capabilities and efficiencies of scale in key market areas, particularly fast-growing southern geographies, and is expected to lead to attractive revenue synergies through the cross-selling of United Rentals’ broader fleet, including its specialty offerings. The assets acquired with Neff include approximately $867 million of fleet based on original equipment cost, and 69 branch facilities serving end markets in the infrastructure, non-residential, energy, municipal and residential construction sectors.
• Michael Kneeland, president and chief executive officer of United Rentals, said, “We’re excited to complete the Neff combination and begin leveraging the many areas where we’re stronger together. Today we welcome approximately 1,200 new colleagues who share our focus on safety and customer service.”
• The company plans to update its 2017 financial outlook to reflect the combined operations when it releases financial results for the third quarter.

(Company Reports) US Concrete makes several acquisitions

• U.S. Concrete has acquired the assets of two independently owned and operated ready-mixed concrete operations, Harbor Ready-Mix and A-1 Materials. The acquisitions include two ready-mixed concrete batch plants and 23 mixer trucks. The acquisitions also include the assets of L.C. Frey Co., Inc., a landscape materials business related to A-1’s operations.
• Both ready-mixed concrete operations serve the commercial and residential sectors in the Peninsula and South Bay areas of San Francisco. These favorably located plants give U.S. Concrete increased capacity to serve an expanded customer base in the Northern California market.
• U.S. Concrete also acquired the assets of Action Supply Co, which supplies the Philadelphia metropolitan market with high-quality, high-strength ready-mixed concrete to commercial and infrastructure construction projects. Action’s proximity to U.S. Concrete’s aggregates production facility, Corbett Aggregates Companies, LLC, offers immediate synergies from the vertical integration of fine aggregates.
• For 58 years, Action has been known for its service and innovation in the delivery of concrete. Action is Pennsylvania Department of Transportation approved and has the capabilities to meet stringent specifications. Action’s well-known projects in Philadelphia include Lincoln Financial Field, Citizens Bank Park, FMC Tower and the South Street Bridge replacement.
• Finally, U.S. Concrete has entered into an arrangement agreement with Polaris Materials, pursuant to which U.S. Concrete will acquire all the issued and outstanding common shares of Polaris for C$3.40 per share in cash by way of a statutory plan of arrangement. The price per share implies an aggregate fully diluted equity value for Polaris of approximately C$309 million.
• “We believe that Polaris is an ideal strategic fit and enables a replication in California of our vertically integrated business model that we successfully operate in New York” said U.S. Concrete’s President, CEO and Vice Chairman William J. Sandbrook. “The acquisition of Polaris will provide U.S. Concrete with long-term, high quality aggregate reserves and is expected to deliver meaningful synergies and strengthen the Company’s strategic position in the highly attractive, aggregate supply-constrained Californian markets. Following completion of the acquisition, U.S. Concrete expects to have the capability to self-supply a large majority of its market leading ready-mixed concrete operations’ aggregate requirements in Northern California and to drive increased production volumes at Polaris’ Orca Quarry.”

(Reuters) Seagate to give $1.25 bln of $18 bln deal to buy Toshiba chip unit

• Seagate Technology said it would contribute up to $1.25 billion towards the purchase of Toshiba Corp’s chip unit by a consortium led by Bain Capital LP.
• Toshiba said it had signed an $18 billion deal to sell the unit to the group, overcoming a key – albeit not its last – hurdle as it scrambles for funds to stave off a potential delisting.
• Seagate also said it expects to enter into a long-term supply agreement with the unit, Toshiba Memory Corp.
• Besides Seagate, Bain’s consortium includes Apple Inc , South Korean chipmaker SK Hynix, Dell Inc and Kingston Technology.

(Barrons) CenturyLink-Level 3 Gains DOJ Approval

• The merger of Level 3 Communications and CenturyLink cleared a key hurdle Monday afternoon when the U.S. Department of Justice gave its approval for the deal, subject to some conditions.
• For the deal to close, it still needs court approval of some provisions and it remains subject to approval from the Federal Communications Commission and the California Public Utilities Commission.
• The muted response of the stocks may reflect that investors had already priced in that the deal would close.