24/7 Wall St. » DBD

Conglomerate M&A Rumors: Loose Lips Sink Ships (UTX, TYC, HON, TXT, GE, DBD, ITT)

Administrator — Fri, 16 Sep 2011 15:31:13 +0000

There is value in the world of conglomerates. The news flow is further evidence of that, but we have to throw up the caveat the driving force today should likely be considered a rumor rather than news until more details emerge. Reuters has the conglomerate sector up in arms today on its report that United Technologies Corporation (NYSE: UTX) is out putting together a financing that could be more than $20 billion to fund a large acquisition. It is those ‘people familiar with the matter’ that is the basis for all of today’s excitement.

This of course has speculation that Tyco Corporation (NYSE: TYC) could fall into the prey category, and we would caution that this is not the first time that Tyco has been in the M&A rumor mill. Honeywell International (NYSE: HON) or Textron Inc. (NYSE: TXT) could also be in the target group if you consider their size and markets. Keep in mind that General Electric Co. (NYSE: GE) once tried to acquire Honeywell but that deal was blocked in the European Union.

Keep in mind that Diebold, Incorporated (NYSE: DBD) was given a $2.6 billion ($3 billion enterprise value) hostile buyout offer from United Tech, but that was withdrawn in late-2008 after Diebold fended the buyout off. Its shares are now higher than when the buyout offer was first made, but the stock is still well down from its highs. Diebold was also worth more than $50 a share back in 2007. United Tech also paid $1.8 billion to acquire GE’s security operations in 2009, which closed in 2010.

Another situation that comes to mind is the break-up of ITT Corporation (NYSE: ITT). The market cap is ‘only’ about $8 billion and the $44.50 price compares to a 52-week trading range of $42.08 to $64.00.

Rockwell Collins Inc. (NYSE: COL) is another name which might fit in and the 6% gain to $55.33 today should actually be noted that the stock was under $48.00 as recently as this last Tuesday.

Again, the implication is that there is value in the conglomerate sector. Taking out a loan for M&A (or for a huge buyback) is currently cheaper than it has almost ever been. Imagine a ten-year debt financing for under 3% or 4% in annual borrowing costs for a corporation… Then add in other accretive acquisition opportunities. The strong companies can prey on the weaker companies right now.

Our value analysis take is that GE still remains the best value in the conglomerate sector, but that is a different matter entirely.

United Technologies is not even down 1% at $74.88 on the news, and its 52-week range is $67.12 to $91.83. The summer market drop was particularly harsh on this company. We recently opined that United Tech could be one of the next megacap stocks (over $100 billion in stock value) and that it might it acquire its way there. Maybe it isn’t too far off base after all.

JON C. OGG

Filed under: Banking, Conglomerates, Mergers and Buy Outs, Rumors, Value Investing Tagged: DBD, GE, HON, ITT, TXT, TYC, UTX

The Twitter-24/7 Wall St. Stock Market Report 6.3.2010 The Wisdom Of Crowds?

247wallst — Thu, 03 Jun 2010 12:41:39 +0000

Twitter has, by most estimates, 100 million members, which makes it one of the largest social networks in the world. All major media companies are on Twitter and some have more than one million Twitter users. It raises the question of whether there is wisdom in crowds.

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweet are a sign of which companies the Twitter universe is interested in. These financial sites are followed by a combined 625,000 Twitter users which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites.

Among the daily top trending symbols on stock twitter aggregator StockTwits are AT&T, Inc (NYSE: T), Halliburton Company (NYSE: HAL), Oil Services HOLDRs (AMEX: OIH), Transocean Ltd (NYSE: RIG), BP plc (NYSE: BP), and Diebold Incorporated (NYSE: DBD).MarketWatch: U.S. weekly initial jobless claims total 453,000, down 10,000; 4-week average up slightly http://on.mktw.net/9FQQDu

CNNMoney: Number of people filing for first-time jobless benefits falls by 10,000 to 453,000, government says. $$

CNNMoney: BP rating downgraded http://bit.ly/9QFEVo

FT: BP ‘not prepared’ for deep-water spill: The chief executive of BP has said the company and the oil industry need t…http://bit.ly/cFkU6x

CNBC: BofA: Mortgage Walkaways Have Huge Incentivehttp://bit.ly/aDqO8N #realestate #mortgage

Reuters Biz: Costco May same-store-sales lower than Street viewhttp://link.reuters.com/zyh97k

Reuters Biz: BP to speak with analysts Friday, shares risehttp://link.reuters.com/guc97k

Douglas A. McIntyre

Filed under: Research Tagged: BP, DBD, HAL, OIH, RIG, T

Top Analyst Downgrades (BCS, CBY, CBS, LFC, CHL, DBD, ELX, NCR, PHG, QSII)

247wallst — Mon, 30 Mar 2009 11:24:26 +0000

These are some of the top pre-market analyst downgrades and negative analyst calls we have seen from Wall Street firms this Monday morning:

Barclays (BCS) Cut to Sell at Societe Generale.
Cadbury (CBY) Cut to Underweight at JPMorgan.
CBS (CBS) Cut to Sell at UBS.
China Life Insurance Co. Ltd. (LFC) Cut to Neutral at UBS.
China Mobile (CHL) Cut to Neutral at UBS.
Diebold (DBD) Cut to Neutral at Baird.
Emulex (ELX) Cut to Sector Perform at RBC.
NCR (NCR) Cut to Neutral at Baird.
Philips (PHG) Cut to Sell at Societe Generale.
Quality Systems (QSII) Cut to Sell at UBS.

JON C. OGG

Posted in Analyst Calls Tagged: BCS, CBS, CBY, CHL, DBD, ELX, LFC, NCR, PHG, QSII

Why So Many Mergers Are Failing (WMI, RSG, AW, VSH, IRF, DBD, UTX, SNDK)

247wallst — Mon, 13 Oct 2008 13:05:16 +0000

Back in normal economic times and back when private equity was king, Mondays were often referred to as "Merger Monday" because mergers would be announced at the start of the week. If you monitor mergers and possible buyout targets in the manner we do at 247 Wall St., then today might feel like it should be named De-Merger Monday. There are three very large mergers which have been scrapped today and this brings up issues in another pending giant technology merger.

Waste Management Inc. (NYSE: WMI) withdrew a $6.7 billion offer to acquireRepublic Services Inc. (NYSE: RSG). Waste Management shares are up more than 10% and Republic Services shares are up about 6% on the news. Thereason cited was the current turmoil in the financial markets. WasteManagement had even raised its offer, but is now unwilling to risk itsfinancial strength to go after a hostile merger that would be for terms that are now way out of the money. This now leaves AlliedWaste Industries Inc. (NYSE: AW) as a potential target again ofRepublic Services. Bill Gates has been a serial acquirer of RepublicServices’ shares, and he’d be sitting on about a 50% gain from today’s pricesif that merger was accepted. Imagine a software pioneer gone garbageman.

Vishay Intertechnology Inc. (NYSE: VSH) threw out its proposed offer toacquire International Rectifier Corp. (NYSE: IRF). That $23.00 bid had essentially become a hostile merger, and in today’s climate payingup for a company that doesn’t really want to sell is a riskyventure when the capital markets are closed or illiquid. InternationalRectifier shareholders rejected the nomination of three oppositioncandidates for its board of directors just last week. That merger wasalso raised from its initial level and it would have been a $1.7billion deal.

Diebold Inc. (NYSE: DBD) has beenfending off a buyout offer from United Technologies Corp. (NYSE: UTX).This offer was a $2.63 billion buyout that would have valued Diebold at$40.00 per share. Management of Diebold had refused requests to speakand was not allowing the internal due diligence to make any formal dealclose. That was more than a 60% premium from the price at the time ofthe offer, but it was also more than 20% down from its trailing 52-weekhighs at the time the offer was made.

This merger has had no updates today, but there is also this pending"troubled" acqusition of SanDisk Corp. (NASDAQ: SNDK). Samsung in Korea has sent a$5.8 billion offer to management at SanDisk which would value it at$26.00 per share. Again management of SanDisk is fighting this andeven cited its 52-week high as part of the reason it won’t allow thedue diligence and negotiations to proceed. Shares of SanDisk aretrading under $17.00 today, which would net more than a 50% return ifit somehow went through. Of course that will also destroy many holdersas the 52-week high is north of $50.00.

What is very interesting here is that companies are wanting more andmore to be acquired and they are acting to not sell their companiesfor what a "mark to market" merger of today would be worth. Going backin time and picking all-time highs or 52-week highs is not really howthe market values companies. The market price is the vote of today forwhat a company is worth. But when managers only want to sell at whatcompanies were once worth at the peak, then it can get in the way ofthe shareholder agendas of today.

It is important to remember one thing about merger investing. You canfrequently pick that actual target of a buyout. But he thing youcannot accurately do is predict the reaction to the offer. Some public companies run by founders or run by strong managers do not wantto sell at all. Some only want to sell at prices that are notreflective of the realities of today’s prices.

The buyers can only buy companies which they either deem as cheap orbolt-on companies that give a lock over an industry or give a bettercompetitive advantage. In either case, the price often makes thatdetermination.

None of these mergers being broken todayhave anything to do with the woes in private equity. These issues hereare essentially either management of the target company not wanting tosell or it is an issue of the cost not making sense. In a world wherecompanies have to hoard cash and run lean to protect their debt ratingsand to protect their ability to raise cash, it might be an easy call tosay that mergers with wildly high premiums are probably not going to beseen for a while.

Jon C. Ogg
October 13, 2008

Posted in Mergers and Buy Outs Tagged: AW, DBD, IRF, RSG, SNDK, UTX, VSH, WMI

Top Pre-Market Analyst Upgrades (DBD, FFIV, FSLR, GILD, GHL, WM)

247wallst — Fri, 12 Sep 2008 06:28:44 +0000

There are surprisingly few analyst calls today, but these are some of the top positive calls and upgrades with more than two hours to the market open:

Diebold (DBD) Raised to Buy at Wedbush Morgan.
F5 Networks (FFIV) Raised to Overweight at JPMorgan.
First Solar (FSLR) Started as Buy at Societe Generale.
Gilead Sciences (GILD) Raised to Outperform at Baird.
Greenhill & Co. (GHL) Raised to Outperform at Wachovia.
Washington Mutual (WM) Raised to Neutral from Sell at Goldman Sachs.

Jon C. Ogg
September 12, 2008

Top 10 Pre-Market Analyst Calls (ACAS, AAPL, CAi, CMA, DBD, GYI, UST, WHQ, YHOO)

247wallst — Mon, 05 May 2008 07:12:54 +0000

These are some of the analyst calls affecting shares this Monday morning:

American Capital Strategies (NASDAQ: ACAS) downgraded to Sell at UBS.
Apple (NASDAQ: AAPL) raised target to $220 from $200 at RBC.
CACI International (NYSE: CAI) raised to Buy at Jefferies & Co.
Comerica (NYSE: CMA) raised to Buy at Deutsche Bank.
Countrywide (NYSE: CFC) cut tp underperform at FBR.
Diebold (NYSE: DBD) raised to Buy at KeyBanc Capital Markets.
Getty Images (NYSE: GYI) downgraded to Market Perform at William Blair.
UST Inc. (NYSE: UST) raised to Buy at Deutsche Bank.
W-H Energy Services (NYSE: WHQ) raised to Buy at Deutsche Bank.
Yahoo! (NASDAQ: YHOO) downgraded to Sell at Citigroup.

Jon C. Ogg
May 5, 2008

NYSE Delisting Candidates, Headed To The Pink Sheets?

247wallst — Thu, 17 Apr 2008 09:10:02 +0000

With the sudden delisting of the Journal Register, it is interesting to look at who else is on the NYSE list of companies who could get delisted. The NYSE is generally very good about this and lets the companies have time to get into compliance. Below are the lists. They are grouped based on why the NYSE has problems with them.

Issuers that are noncompliant with its quantitative and corporate governance listing standards:

Fremont General Corporation (FMT)

Fremont General Financing I (FMTPR)

Impac Mortgage Holdings, Inc. (IMH)

Impac Mortgage Holdings, Inc. (IMHPRB)

Impac Mortgage Holdings, Inc. (IMHPRC)

Journal Register Co. (JRC)

Luminent Mortgage Capital, Inc. (LUM)

Medifast, Inc. (MED)

Milacron Inc. (MZ)

NIS GROUP CO., LTD. (NIS)

Scottish Re Group Limited (SCT)

Scottish Re Group Limited (SCTPRB)

Sun-Times Media Group, Inc. (SVN)

Zarlink Semiconductor, Inc. (ZL)

Companies as delayed in filing both Annual and Interim Reports:

Beazer Homes USA, Inc. (BZH)
Diebold, Incorporated (DBD)
International Rectifier Corporation (IRF)
Penn Treat American Corporation. (PTA)

Sunrise Senior Living, Inc. (SRZ)
Symmetry Medical Inc. (SMA)
VeriFone Holdings, Inc. (PAY)
W Holding Company, Inc. (WHI)
WellCare Health Plans, Inc. (WCG)

Companies as delayed in filing an Annual Report:

China Yuchai International Limited (CYD)
Fremont General Corporation. (FMT)
Fremont General Financing I (FMTPR)
Impac Mortgage Holdings, Inc. (IMH)
Impac Mortgage Holdings, Inc. (IMHPRB)
Impac Mortgage Holdings, Inc. (IMHPRC)
Mesa Royalty Trust (MTR)
Schawk, Inc. (SGK)

Some firms make it on to more than one list, and some, like JRC and FMT, have already left for the "pink sheets"

Douglas A. McIntyre

Top 10 Pre-Market Analyst Calls (BKS, BBY, CMO, COP, DBD, DDS, LLNW, NOVL, SFLY, VG)

247wallst — Tue, 04 Mar 2008 07:32:20 +0000

Below are the top analyst calls that 247WallSt.com is looking at this morning in early trading:

Barnes & Noble (NYSE: BKS) downgraded to Underweight at JP Morgan.
Best Buy (NYSE: BBY) downgraded to Neutral at Banc of America.
Capstead Mortgage (NYSE: CMO) started as Outperform at Bear Stearns; started as Outperform at RBC Capital.
ConocoPhillips (NYSE: COP) downgraded to Equal-weight at Lehman Brothers.
Diebold (NYSE: DBD) raised to Outperform at Robert W. Baird; downgraded to Hold at Jefferies.
Dillards (NYSE: DDS) raised to Neutral at Credit Suisse.
Limelight Networks (NASDAQ: LLNW) raised to Hold at Jefferies.
Novell (NASDAQ: NOVL) downgraded to Hold at Jefferies.
Shutterfly (NASDAQ: SFLY) started as Outperform at William Blair.
Vonage (NYSE: VG) raised to Peer Perform at Bear Stearns.

Jon C. Ogg
March 4, 2008

Media Digest 3/4/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

247wallst — Tue, 04 Mar 2008 03:51:30 +0000

According to Reuters February car sales dropped sharply especially for US made vehicles.

Reuters writes that BHP Billiton (BHP) is working on raising $55 billion for its potential takeover of Rio Tinto (RTP).

The head of Dubai International Capital said more money would be required to rescue Citigroup (C).

The Wall Street Journal writes that Fannie Mae (FNM) and Freddie Mac (FRE) agreed to a code of conduct with New York’s attorney general that would bar inflated appraisals

The Wall Street Journal writes that gold and platinum hit record highs.

The Wall Street Journal reports that Citigroup (C) and Wachovia (WB) face lawsuits from a hedge fund in a dispute over insurance derivatives contracts.

The Wall Street Journal reports that Merck (MRK) has made further steps in settling Vioxx suits.

The Wall Street Journal writes that Deibold (DBD) rejected a buy-out bid from United Technologies (UTX).

The Wall Street Journal writes that Intel (INTC) cut estimates for its gross margins.

The Wall Street Journal reports that more big banks may have to cut dividends.

The Wall Street Journal writes that GM’s (GM) eight brands often compete against themselves, hurting the company’s turnaround effort.

The New York Times writes that the total cash held by companies in S.&P.’s industrial index exceeded $600 billion in February, up from about $203 billion in 1998.

The New York Times reports that Porsche is closer to a takeover of VW.

The FT writes that Ambac (ABK) has decided not to split itself into two companies.

The FT writes that GE (GE) will gain large orders for its jet engine business due to EADS getting a new military contract for building tankers.

Douglas A. McIntyre

52-Week Low Club (December 28, 2007)

247wallst — Fri, 28 Dec 2007 15:01:00 +0000

Some of these stocks hit 52-week lows and recovered off of lows so they won’t have a low close. But these did all touch or breach the 52-week lows. At the end we also broke out retail stocks, financial stocks, airlines & transports, and hotels. A separate report could have been compiled for REIT’s as well, but many of those were left off because of room or volume. There were enough 52-week lows today that you might even wonder if there had been a mini-crash in the markets. Here are the 52-week lows for December 28, 2007:

Advanced Micro Devices (NYSE: AMD)… imagine if the company got Hector Ruiz to leave.
American Greetings (NYSE: AM)…again.
AstraZeneca (NYSE:AZN)… new entrant.
Carmike Cinemas (NASDAQ:CKEC)
ChipMOS (NASDAQ:IMOS)
Corp. Office Property (NYSE: OFC)
Cryptologic (NASDAQ: CRYP)
Diebold (NYSE:DBD)
Fortune Brands (NYSE:FO)
Group 1 Auto (NYSE: GPI)
Infinera Corp. (NASDAQ: INFN)
Introgen (NASDAQ:INGN)
Japan Smaller Cap Fund (NYSE: JOF)
Lamar Advertising (NASDAQ: LAMR)
Legget & Platt (NYSE: LEG)
Martha Stewart (NYSE: MSO)
Marvell Tech (NASDAQ:MRVL)
Mattel (NYSE:MAT)
McClatchy (NYSE:MNI)
Micron Tech (NYSE:MU)
NGAS Resources (NASDAQ:NGAS)
Nortel Networks (NYSE:NT)
Owens Corning (NYSE:OC)
Omnicare (NYSE:OCR)
Prestige Brand (NYSE: PBH)
PC-Tel (NASDAQ:PCTI)
Ruth’s Chris (NASDAQ:RUTH)
SanDisk (NASDAQ: SNDK)
Theravance (NASDAQ:THRX)
Tractor Supply (NASDAQ:TSCO)
Wendy’s (NYSE: WEN)
World Fuel Services (NYSE:INT)
U-Store-It (NYSE:YSI)

Retail Stocks on 52-week lows: Ann Taylor (NYSE:ANN), Big Lots (NYSE:BIG), Borders Group (NYSE:BGP), Bon Ton Stores (NASDAQ:BONT), Chico’s FAS (NYSE:CHS), Finish Line (NASDAQ:FINL), Liz Claiborne (NYSE: LIZ), Macy’s (NYSE: M), Office Max (NYSE:OMX), Petsmart (NASDAQ:PETM), Stage Stores (NYSE:SSI)

Financial stocks on 52-week lows: Bear Stearns (NYSE: BSC), Citigroup (NYSE:C), Canseco (NYSE: CNO), Discover Financial (NYSE: DFS), Fifth Third Bancorp (NASDAQ:FITB), Fortress Investment (NYSE: FIG), MBIA Inc. (NYSE: MBI), Washington Mutual (NYSE:WM)… urgh! When does it stop?

Airlines/Transports on 52-week lows: Airtran Holdings (NYSE: AAI)…again. Did they launch a Friends Die Free rewards plan? Continental Airlines (NYSE:CAL), Fedex (NYSE:FDX), Mesa Air (NASDAQ:MESA), Northwest Airlines (NYSE: NWA)… near $100 oil is a real pain.

Hotels Hitting 52-week lows: Host Hotels (NYSE: HST), Lasalle Hotel (NYSE: LHO), Starwood Hotels (NYSE:HOT), Sunstone Hotel (NYSE: SHO), Wydham Worldwide (NYSE:WYN). Maybe these all wish they could get the private equity buyers back in the sector. If only they could still borrow.

These CEO’s new year’s resolutions are all the same: "In 2008 I want to keep my stock off the 52-week low lists."

Jon C. Ogg
December 28, 2007