Sirtex Medical Ltd (ASX: SRX)

Takeover announcement leading to an upswing movement: Sirtex Medical Ltd.’s (ASX: SRX) shares zoomed up a whopping 45.7% on January 31, 2018 as the group came out of the trading halt and had announced about a potential material corporate take-over proposal on January 30, 2018. SRX has entered into a binding scheme implementation deed with Varian Medical Systems (NYSE: VAR, an integrated cancer care solutions provider) and the board has even unanimously recommended to go ahead with proposal of acquisition of all the outstanding shares of Sirtex by Varian Medical Systems for A$28 per share in cash. On a fully diluted basis, this represents a total equity purchase price for the acquisition of approximately A$1,585M. The group has also indicated about evaluation of the transaction by an independent expert, to be retained by Sirtex, to be in the best interests of Sirtex shareholders and in the absence of a superior offer. The offer price of A$28 per share, represents a 49% premium to Sirtex’s closing price of A$18.83 per share on Monday. Considering the proposals that the group had received in 2017, this deal looks appealing and shareholders will have the opportunity to vote on the scheme in May 2018. With this move, Varian will be able to strengthen its goals via its long-term strategy to become a global leader in multi-disciplinary integrated cancer care solutions while SRX will be able to increase its footprint of product offering to the clinical community. Meanwhile, SRX full year FY18 underlying EBITDA is forecasted to be $75-85 million against $61.5 million of FY17, and the first-half financial results will be announced on 21 February 2018. Given the developments, we put a “Hold” on the stock at the current price of $27.45
 

Event Schedule (Source: Company Reports)
 

Cann Group Ltd (ASX: CAN)

Slipping on trading update:  Cann Group Ltd.’s (ASX: CAN) stock plunged by 5.2% on January 31, 2018. It appears that the investors were not contented with the group’s latest quarterly update. CAN has highlighted that construction at the Southern facility is largely complete and cultivation is now running at maximum capacity. However, the group would be requiring more works in terms of housing new imported strains at its Southern facility. Work is underway for site selection and planning of the Phase 3 facility. The group has raised ~$78 million capital to fund Phase 3 expansion program. Meanwhile, Cann Group got some boost from the grant of an import/export licence for cannabis genetics and medicinal cannabis products by the Australian Government during the quarter ended December 31, 2017. Looking at the scenario, we give an “Expensive” recommendation at the current price of $3.10

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