Wednesday, July 1, 2015
6:48 PM| Comment!
6:21 PM| 5 Comments
- Bloomberg reports Parkway Properties (NYSE:PKY) is "in the early stages of exploring strategic options including a sale." The REIT is reportedly working with BofA/Merrill and Wells Fargo.
- Parkway has risen to $18.50 AH. dealReporter reported last month Parkway is expected to pursue a sale or asset divestitures. TPG Capital (21% stake) would presumably have a large say in what transpires.
- PayPal (EBAY, PYPL) is acquiring leading online money transfer/remittance service provider XOOM for an enterprise value of $890M, or $25/share, in cash.
- The price represents a 21% premium to Xoom's Wednesday close. The deal comes ahead of PayPal's mid-July spinoff into a separate, publicly-traded, company. XOOM has been halted.
- PayPal president/soon-to-be-CEO Dan Schulman: "Expanding into international money transfer and remittances aligns with our strategic vision to democratize the movement and management of money ... Xoom's presence in 37 countries in particular, Mexico, India, the Philippines, China and Brazil will help us accelerate our expansion in these important markets."
- The deal is expected to close in Q4, and be slightly dilutive to PayPal's 2016 EPS. PayPal plans to pay for it with existing cash. Xoom will operate as a separate service within PayPal.
- Recent PayPal acquisitions include white-label mobile payments services provider Paydiant, cybersecurity software firm CyActive, and rival online/mobile payments service provider Braintree.
- In addition to beating FQ2 EPS estimates (while missing on revenue), Progress Software (NASDAQ:PRGS) has guided for FQ3 EPS of $0.35-$0.38 (favorable to a $0.35 consensus) and FY16 (ends Nov. '16) EPS guidance of $1.45-$1.52 (above a $1.42 consensus).
- The app development software provider expects FQ3 revenue of $101M-$104M and FY16 revenue of $415M-$425M, in-line with consensus estimates of $103.2M and $419.2M.
- Also: Progress has promoted Jerry Rulli, until now president of the company's OpenEdge software unit, to the newly-created position of COO. He'll now be responsible for the operations of all 3 of Progress' business units - OpenEdge, data connectivity/integration, and app development/deployment. The presidents of the last two units will report to Rulli.
- Progress has risen to $29.70 AH.
- FQ2 results, PR
- GrubHub (NYSE:GRUB) tumbled below $32 after ITG Research stated checks pointed to Q2 share loss in newer markets, and forecast quarterly revenue of $84M (below an $85.3M consensus). Shares are now barely $1 above a 52-week low of $30.62.
- ITG's note overshadowed a bullish coverage launch from Guggenheim Securities' Jake Fuller (Buy, $45 target), who argued the selloff seen following GrubHub's Q1 report (was accompanied by soft adjusted EBITDA guidance) was unjustified, and that growth investments (pressuring EBITDA) will pay off.
- Fuller also speculates the online food-ordering/delivery leader could be acquired. "We see consolidation unfolding across the broader restaurant services vertical, which runs from discovery to reservations, ordering, delivery and payments ... GOOG recently added order-now links, TRIP and YELP have acquired a number of restaurant reservation services, and Priceline bought OpenTable ... GRUB can certainly be a buyer in the discovery, delivery and payments area in its own efforts to vertically integrate, but could also be a key link for larger players looking to build out a viable restaurant services offering."
- Chesapeake Energy (CHK -5.5%) agrees to sell assets in Oklahoma’s Western Anadarko Basin to privately-held FourPoint Energy for $840M.
- FourPoint will get interest in ~1,500 producing wells in western Oklahoma that produce an average 21.5K boe/day, split between oil, natural gas liquids and natural gas; the assets cover nearly 250K net acres of mineral rights.
- CHK had drilled and completed more than 190 horizontal wells in the acquisition area since 2012, and halted drilling there this Q1 in anticipation of selling the wells, FourPoint says.
- While AT&T and CBS settled another carriage negotiation today, Comcast (CMCSA, up 3.3% and setting new all-time highs this afternoon) and Discovery Communications (NASDAQ:DISCA) are still talking over a less certain deal -- and with Discovery's key "Shark Week" programming just a few days away.
- Talks are progressing after some early Discovery worries about retaliation (Discovery spoke out against the Comcast-Time Warner Cable merger deal). Some analysts figure that with the TWC deal dead, Comcast may get more aggressive in carriage talks.
- Shark Week broke Discovery viewing records last August.
- Also today, New York's 30 Rockefeller Plaza -- longtime home of NBC, and previously known as the RCA Building and the GE Building -- officially became the "Comcast Building." New signage on the iconic Manhattan skyscraper will hold Comcast's logo, as well as feature NBC's trademark peacock for the first time.
- Previously: Comcast at all-time high as Brean raises target (Jul. 01 2015)
- Comstock Resources (CRK -12.6%) has dropped sharply following news it agreed to sell its oil and gas properties in the Eagle Ford Shale in east Texas for ~$115M.
- CRK says it expects to realize a $100M-$110M pre-tax loss on the sale, and revises its 2015 oil production guidance to 9K-9.5K bbl/day and its natural gas production guidance to 125MM-150MM cf/day.
- CRK says the sale will help fund its drilling program in the Hayneville shale and elsewhere.
- "The management teams of virtually every large property-casualty company will be having a conversation today about whether they should be more active acquirers,” says Sandler O'Neill's Paul Newsome.
- Before sellers get too excited, they should note the price Ace is paying for Chubb is just 1.7x book value - a discount to what high-quality insurance businesses typically sell for. "“I probably need to reassess what I’m holding out for because I’m never going to get that big price-to-book multiple now," says Newsome. "If a much-vaunted, well-regarded shop gets 1.7x book value, what should the mid-cap company that lacks scale and is kind of struggling get?”
- Possible buyers would include AIG, Allstate, and Travelers. With each having less than a $15B market cap, maybe on the block: W.R. Berkley (WRB +5.2%), Arch Capital (ACGL +2.7%), XL Group (XL +2%), and Cincinnati Financial (CINF +4.5%). Sporting just an $18B market cap and thus also maybe a target is Hartford Financial (HIG +6%).
- "There is now literally no deal that cannot be contemplated in P&C," says Citi's Todd Bault.
- Source: Bloomberg
- Previously: Ace builds more scale with Chubb purchase (July 1)
- Previously: P&C stocks on the move after Chubb sale (July 1)
- Previously: ACE buying Chubb in cash and stock deal for $28.3B (July 1)
- VimpelCom (VIP +2%) has named Alexander Matuschka -- chief transformation officer at Nokia Networks -- as its new group chief performance officer.
- The hire comes amid a push to increase operating efficiency at the Russian telecom, and reduce cost along the way.
- Earlier this week, the Justice Dept. began its own probe of VimpelCom (following in the footsteps of European investigations) over alleged bribes to access Uzbekistan's phone market.
- Previously: U.S. piles in to bribery probe of Russian phone firms (Jun. 30 2015)
- Global Sources (NASDAQ:GSOL) is up 2.2% as it says it's sold its eMedia Asia Limited unit for about $9M in cash.
- GSOL owned 60.1% of eMedia -- which produces print/online publications for Asia's electronics community (EE Times) and puts on the China International Optoelectronic Expo -- and sold that to UBM, which held the other 39.9%.
- The move is consistent with a "strategy to focus on our strong core business of cross border B2B trade and address the markets we believe offer the greatest opportunity for growth," says Global Sources' executive chairman, Merle Hinrich.
- Jim Cramer on yesterday evening's Mad Money: "Apple is not in the same business. A Fitbit (FIT +7.8%) costs a fraction of the Apple Watch." The WSJ's Dan Gallagher recently made a similar argument. Android Wear watches come much closer to matching Fitbit's pricing.
- Whether due to Cramer, momentum traders, general investor enthusiasm, or some combination thereof, shares are strongly adding to the Tuesday gains seen following a bullish RBC coverage launch. RBC cited expectations of strong long-term health/fitness tracker market growth, rising ASPs, and surveys pointing to strong brand power.
- Fitbit's market cap is up to $8.4B.
- A DOJ spokeswoman states the agency is probing potential "unlawful coordination" between some airlines. The AP states a document obtained by the news service indicates the DOJ is "investigating whether airlines are colluding to grow at a slower pace as part of an effort to keep airfares high." No word yet on which airlines are being probed.
- Airline stocks have sold off in response. Decliners include United Continental (UAL -4.3%), American Airlines (AAL -4.1%), Southwest (LUV -4.5%), Delta (DAL -4.2%), Alaska Air (ALK -1.7%), Hawaiian Holdings (HA -4.8%), JetBlue (JBLU -5%), Spirit Airlines (SAVE -3.1%), SkyWest (SKYW -4.1%), and Virgin America (VA -1.9%).
- The U.S. Global Jets ETF (NYSE:JETS) is down 2.8%.
- Amyris (AMRS -7.6%) shares sink after Brazilian sugar and ethanol producer Sao Martinho said it had canceled plans for a joint venture to run a farnesene fermentation plant.
- The Brazilian firm said conditions for the project had not been met, but that it would consider a new proposal from AMRS; otherwise, contracts between the companies will expire at the end of August.
- AMRS says its existing Brotas facility is exceeding targets and provides adequate capacity to meet near and mid-term business needs.
- "We see no ground for further talks at this point," says Eurogroup President Jeroen Dijsselbloem, commenting on Greece's suggestion earlier today of possible grounds for compromise.
- The creditors, says Dijsselbloem, like everyone else, will await the results of Greece's Sunday referendum vote on proposed austerity measures.
- Stocks continue to give back sizable opening gains, with the Dow (DIA +0.4%), S&P 500 (SPY +0.3%) and Nasdaq (QQQ +0.2%) now all at session lows.
- Nanocap programmatic-ad company Adaptive Medias (OTCQB:ADTM) is up 25.7% today after a business update where it raised guidance and provided a positive outlook on 2015 progress.
- The firm now sees Q2 revenues between $1M and $1.1M (vs. a year-ago $1.1M) with a strategy focused more on its higher-margin Media Graph platform, acquired last summer.
- Revenues last quarter were a Q1 record $1.17M, in large part due to Media Graph.
- Success in a cost reduction plan means that the firm expects to reach positive cash flow and breakeven sooner than expected, but it sill expects "a need to raise additional capital in the interim until profitability is achieved."
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