The PBR1000 Breaking News Review: July/August, 2013

September 5, 2013 by

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By Larry C. Paxton

The summer months of July and August were busy ones with lots of deals affecting The PBR1000, some of them with some significant controversy. Unless specified otherwise, the ranking(in parentheses after the company name) is based on The PBR1000 3rd Quarter Progress Report. Here’s the recap, sorted by the most recent news date:

August 25, 2013: Amgen Inc(PBR151) to acquire Onyx Pharmaceuticals, Inc(NASDAQ: ONXX, $362 million in revenues in 2012) for $125/share, $10.4 billion all cash deal, expecting to close during early 4th quarter 2013. Will give Amgen some additional cancer medications and research.

August 23, 2013: Steve Ballmer, CEO since 2000 for Microsoft Corporation(PBR34), announced today that he will be retiring sometime within the next 12 months.

August 20, 2013: After filing for protection in January, 2012, today Eastman Kodak Company(PBR527) received approval from the US Bankruptcy Court of its Chapter 11 Reorganization Plan. According to CEO Antonio Perez the goal is to emerge from bankruptcy on September 3, 2013, and focus on being a technology leader serving large and growing commercial imaging markets such as commercial printing, packaging, functional printing, and professional services.

August 7, 2013: AOL Inc(PBR807) to acquire Adap.tv, Inc., a leading global, programmatic video advertising platform for the world’s largest brands, agencies, and publishers. Deal valued at $405 million, $322 million in cash, $83 million in AOL common stock. Deal expected to close during 3rd quarter 2013.

August 5, 2013: The Washington Post Company(PBR542) announced today that Jeff Bezos, founder of Amazon.com, Inc.(PBR47), in a separate personal transaction valued at $250 million, will be acquiring the company. The transaction includes the main paper and some other smaller publications, but not all entities of the company. It is expected that the deal will be completed before the end of 2013.

August 2, 2013: The New York Times Company(PBR870) agreed to sell off its New England Media Group, which includes The Boston Globe and related holdings, to John W. Henry, sports entrepreneur and principal owner of the Boston Red Sox, for $70 million cash. The deal is expected to close in 30-60 days.

July 30, 2013: KKR & Co, LP(PBR258) completes acquisition of Gardner Denver, Inc(PBR773) for $3.9 billion, plus assumption of debt.

July 30, 2013: Community Health Systems(PBR174) to buy Health Management Associates(PBR354) for $13.78/share, deal valued at $7.6 billion, which includes HMA debt of $3.7 billion. Deal expected to close by end of 1st quarter 2014.

July 29, 2013: US drug maker Perrigo(PBR620) to buy Ireland based biotech firm Elan(NYSE: ELN) in $8.4 billion deal.

July 29, 2013: Canadian retailer giant Hudson Bay(parent of Lord & Taylor) to buy Saks, Inc(PBR646) for $2.6 billion.

July 28, 2013: Omnicom Group Inc(PBR182) and Publicis Groupe SA(Paris, France) announce definitive agreement to merge and form Publicis Omnicom Group, a holding company based in the Netherlands with head offices in Paris and New York City. It will be the largest communications, advertising, marketing and digital services company in the world. Transaction valued at $35 billion, expected to close during 4th quarter 2013 or 1st quarter 2014.

July 24, 2013: HanesBrands Inc(PBR489) to buy Maidenform Brands, Inc(NYSE: MFB, $600MM revenues in 2012) for $23.50/share, $575 million total deal value.

July 12, 2013: AT&T(PBR12) reaches agreement to acquire LEAP Wireless(PBR625) for $15/share, $1.2 billion, expected to close in 6-9 months.

July 10, 2013: Japan’s SoftBank Corp completes its $21.6 billion acquisition of Sprint Nextel Corp(PBR83-2Q13), renames it to Sprint Corporation(PBR82), will continue trading under stock symbol S.

July 9, 2013: Kroger Co(PBR26) announced that it is acquiring the upper end 212 store chain Harris Teeter Supermarkets(PBR487) for $49.38/share, $2.44 billion transaction value, to close during 2013.

July 2, 2013: Coinstar, Inc.(PBR807-2Q13), changes name to Outerwall, Inc.(PBR804), still trading on NASDAQ with new symbol OUTR, new website, continues to provide Coinstar, ATM, and RedBox services.

Larry Paxton is the President/CEO of Pax Business Resources, LLC. The marketing research division, www.PBRMarketTools.com, produces the popular The PBR1000 Quarterly Progress Report.

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Will the US Airways/American Airlines Merger Fly?

August 29, 2013 by

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By Larry Paxton

The saga of the US Airways(PBR188) and American Airlines(PBR109) merger continues to drag out with the US Justice Department filing antitrust suits earlier this month against the $11 billion deal.

The primary concerns of the Justice Department are that the merger would provide fewer choices for consumers and drive up fares because of increased costs. Also, with the merger the new American Airlines would also have significantly more gates at some airports, such as the Washington Dulles Airport where they would have three quarters of the gates. A new argument is that American Airlines, which is in bankruptcy, just had its first profitable quarter in quite some time. The thinking is that they are now demonstrating that they are capable of going it alone and don’t need to merge.

Of course, the airlines claim that just the opposite would be true, and that another benefit of the merger is that increased competition would result.

It was anticipated that the merger would be completed during this 3rd quarter. The airlines have said that any delay would provide additional problems because US Airways operations are already in the process of moving to the Dallas-Ft Worth area, personnel are putting in bids for houses there, selling theirs in the Phoenix area, and many other complications.

Because of the suit the next court date is scheduled for November, but the Justice Department has asked for a delay until March, 2014, to adequately prepare their case. The airlines say they are ready to present their case and there is no reason why the Justice Department shouldn’t be ready as well.

There have also been some indications that the Justice Department might be willing to settle. The airlines might have to give up some gates and some other concessions are possible.

As a person who flies a few times a year for both business and pleasure it is hard to know how this should be resolved and the impacts it will have on me and my fellow travelers. The concerns from both sides seem legitimate, but, as usual, the time it takes to negotiate and resolve the issues seem to be taking much too long. It is another classic case of big capitalistic companies clashing with big government to figure out what is best for the confused and sometimes helpless consumer. I wish us well.

(Larry Paxton is President/CEO of Pax Business Resources, LLC, which provides the popular The PBR1000 Quarterly Progress Report, tracking over 1,000 of the largest US publicly traded companies through its business research arm, www.PBRMarketTools.com.)

 

Filed Under: Business Tagged With: , , ,

The PBR1000 2nd Quarter Review

July 15, 2013 by

Activity during the 2nd quarter for The PBR1000 was pretty typical with deals in the media, healthcare, telecom, food processing, and high tech arenas. One of the more intriguing acquisitions is China’s Shuanghui trying to get the US’ Smithfield Foods. It will be interesting to see how the US government impacts this. Of course, Berkshire Hathaway was busy and perhaps we can take some comfort in knowing that when we buy Heinz Ketchup we are now helping support Warren Buffett.

Here’s a recap of the 2nd Quarter activity for The PBR1000, in reverse date order, and all PBR rankings are for the 2nd quarter only:

June 28, 2013: News Corporation(PBR87) completes split into two companies. The successor organizations are 21st Century Fox and News Corp.

June 24, 2013: Tenet Healthcare(PBR258) is acquiring Vanguard Health(PBR402) for $21/share, $1.73 billion, to create the 2nd largest hospital system in the US, behind HCA Holdings(PBR79). Expected to close by the end of 2013.

June 7, 2013: The H J Heinz Co(PBR221) is acquired by Berkshire Hathaway(PBR5) & 3G Capital, $72.50/share, transaction valued at $28 billion.

May 31, 2013: Freeport-McMoran(PBR147) completes the acquisition of Plains Exploration & Production Co(PBR735).

May 29, 2013: China meat producer Shuanghui International offers $34/share, $4.7 billion, to acquire Smithfield Foods(PBR202), the largest pork processor and hog producer in the world.. Expected to close 2nd half of 2013.

May 29, 2013: MidAmerican Energy Holdings, a subsidiary of Berkshire Hathaway(PBR5), signs a definitive agreement to acquire NV Energy(PBR658) for $23.75/share, $10 billion transaction. Expected to close during the 1st quarter of 2014.

May 28, 2013: Fidelity National Financials(PBR341) to acquire Lender Processing Services(PBR872) for $33.25/share, $2.9 billion. Expected to close 4th quarter, 2013.

May 24, 2013: EnergySolutions(PBR926) merges with private equity firm Energy Capital Partners, no longer listed on the NYSE.

May 13, 2013: McGraw-Hill Companies(PBR498) changes name to McGraw Hill Financial after the sale of its McGraw-Hill Education division to Apollo Global Management(PBR682).

May 6, 2013: BMC Software(PBR820) to be acquired by private investment group that includes Bain Capital and Golden Gate Capital and others, for $46.25/share, $6.9 billion. Expected to close by 2013 year end.

May 1, 2013: The merger between Deutsche Telekom/T-Mobile’s T-Mobile USA and MetroPCS Communications(PBR450) is completed, $4.05/share, $1.5 billion transaction value, new unit known as T-Mobile US Inc(NYSE: TMUS).

April 12, 2013: The Metals USA(PBR875) acquisition by Reliance Steel & Aluminum Co(PBR298) is completed.

The PBR1000 3rd Quarter Progress Report should be ready sometime the week of July 22, and there is already a lot of activity just in July already.

Filed Under: Recaps Tagged With: , , , ,

Who’s #1, WalMart or Exxon?

June 5, 2013 by

It’s always fun to compare the Fortune 500 and PBR1000 lists, to find out if we came close to each other. When you take out the mutual fund companies, private companies, non-profits, associations and fraternal groups from the Fortune 500 list, and are left with the US publicly held companies, we actually come pretty close.

The lastest Fortune 500 list came out last month on May 6th, so we took a look. We had already heard some news about this year’s list and it was as a bit of a spoiler alert. As reported, Fortune proudly proclaimed that Logo-Walmart had retaken the #1 spot over            Logo-ExxonMobil.

However, a review of Walmart’s and ExxonMobil’s 2012 10-K reports showed that, in fact, ExxonMobil still had reported a higher revenue number than Walmart.

But, of course, there are some details to consider. ExxonMobil had a note reference in the Fortune 500 report, and in that note Fortune indicated that it had deducted excise taxes collected by ExxonMobil from the revenues to come up with a “total revenues” number. In a way, it does make sense, but it still put us in a quandary.

There are other similar situations. Hospital systems, who have an initial revenue number, then deduct a pretty large number for anticipated losses, show the resulting number as the total revenue number. We saw another company where shipping and handling charges were deducted from the gross revenue to come up with total revenue. After these “total” revenues are calculated, then typical cost of goods/services is deducted to arrive at a net income, then the usual business expenses are then deducted.

So which number should The PBR1000 Quarterly Report use for revenues? We have chosen to just be simple and use the top revenue number on the 10-K report and as reported in the SEC EDGAR reports. It’s simple, straightforward, and we don’t have to come up with explanations. And after all, what’s the difference of a few billion dollars?

So, while Walmart became #1 again, after a year lapse behind ExxonMobil, on the Fortune 500 list, The PBR1000 has decided to stay with ExxonMobil as #1.

Now it’s up to you! Who do you say should be Number 1? We are kind of a democracy at PBRMarketTools, so let us know, we might even make some changes based on your input!

 

Filed Under: Rankings
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