This is a very solid defensive play. Sempra Energy (NYSE: SRE) is a natural gas transmission and distribution company headquartered in San Diego. The company’s California Utilities segment distributes gas and electricity to approximately 25 million customers in southern California via South California Gas and San Diego Gas and Electric.
The company announced Monday that it has entered into a definitive agreement to sell a non-controlling 20% interest in its new business platform, Sempra Infrastructure Partners, to KKR for $3.37 billion in cash. KKR is a leading global investment firm. This transaction values Sempra Infrastructure Partners at approximately $25.2 billion, including expected asset-related debt at closing of $8.37 billion.
BofA Securities sees the transaction accretive to the firm’s sum-of-the-parts multiple of 13 times enterprise value/EBITDA, and it is within the elevated range that was expected. They also feel that Wall Street will have a positive reaction despite boosted expectations. The use of proceeds of the sale will be a key talking point at the firm’s analyst day in June.
Shareholders receive a 3.29% dividend. The BofA Securities price target of $136 is below the $144 consensus target. Sempra Energy stock closed on Monday at $133.84 per share.
This remains a top Warren Buffet holding and offers not only safety but also an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, one of the world’s most valuable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Holders of Coca-Cola stock receive a 3.18% dividend. The $56 BofA Securities price target is less than the $57.50 consensus target. Shares closed at $52.81 on Monday.