Consumer goods make appetising target for US activists
Nestlé, Procter & Gamble and Unilever are all under pressure to improve performance by hedge funds and rivals
Nelson Peltz has always had a healthy appetite for food. Heinz, Cadbury, Mondelez, PepsiCo and Danone — the veteran US activist investor has agitated for change in them all.
Mr Peltz’s taste have broadened with his ambitions. This week, the 75-year old launched a proxy battle to get a seat on the board of Procter & Gamble, the US’s biggest household products company with a $226bn market value, in which Mr Peltz’s Trian investment group invested $3.3bn this year.
And Mr Peltz is not alone at the table. Nestlé, the world’s largest consumer goods group, discovered last month that its SFr259bn market value was no longer a defence against activist incursion. Dan Loeb, founder and chief executive of Third Point, took a $3.5bn stake in the producer of KitKat chocolate and Nespresso coffee.
Mr Loeb called for a “greater sense of urgency” in boosting performance at the Swiss company, which he described as “staid” and “stuck in its old ways”. Mr Peltz used similar language about P&G — pointing to “excessive cost and bureaucracy” and “a slow moving and insular culture”.
Francois-Xavier de Mallmann, chairman of investment banking at Goldman Sachs, says that activists are stepping up their activity in the consumer goods sector.
“Activists have been investing in the consumer sector for several years but there has been a sizeable increase in both the number and size of the companies they have targeted over recent months.”
Consumer goods companies can make appetising targets. Companies such as P&G and Nestlé — alongside peers that have come into the sights of activists, such as Unilever and Mondelez — are easily criticised for their sprawling empires, weighed down by excessive costs and inefficient staff protected by the size of the business and ingrained management approaches.
But analysts say that the bulk of these companies is almost the point — within their hundreds of thousands of staff, shelves of products and rosters of marketers lies the fat that can be trimmed.
Activists see the potential to boost profits by cutting costs and use their large, cash-dispensing balance sheets that have relatively little leverage to boost shareholder returns.
“Sales growth in consumer industries has slowed and because of this you are seeing the rise of activist investors, looking to cut costs to boost profitability,” said David Dudding, European equities fund manager at Columbia Threadneedle Investment.
Analysts say that the strongest impetus for activists is the potential to drive up profits, as demonstrated repeatedly by 3G Capital, the Brazilian-led private equity group. It has for decades been acquiring consumer companies, cutting costs and boosting profits to levels described by Peter Brabeck-Letmathe, chairman emeritus of Nestlé, as “revolutionary”.
After 3G bought Heinz in 2013 with Warren Buffett, the ketchup maker’s profit margins soared 58 per cent within two years to 28 per cent — almost twice Nestle’s 15 per cent operating profit margin. 3G and Mr Buffett’s Berkshire Hathaway group went on to merge Heinz with Kraft in 2015.
This year, they stunned the consumer goods world with the $143bn takeover bid from Kraft Heinz for Unilever, which is twice the size of Kraft Heinz in revenues. The bid was quickly dropped after stiff opposition from Unilever but the bold approach has left even the biggest consumer goods companies looking vulnerable.
“The catalyst for the focus on consumer groups from activists is the increasing polarisation in the sector between those companies that have been through a 3G-style cost-cutting process and those that haven’t,” said Raphaël Pitoun, chief investment officer at Seilern Investment Management.
“Companies such as Nestlé, Colgate, P&G and others haven’t been through that process so activists see an opportunity to drive earnings per share growth through cost-cutting.”
Mr Peltz has highlighted P&G’s weak organic growth and said its cost-cutting plans have not translated into higher operating profits and shareholder value creation. Mr Loeb’s criticisms of Nestlé are similar. He has called for the company to adopt a formal margin target, something that Mark Schneider, Nestle’s new chief executive, was already considering.
Another attraction is the low levels of debt at many large consumer companies, including Nestlé, Unilever and L’Oréal al, compared to other industries.
Mr Loeb has described Nestle’s net debt of 1 times earnings before interest, tax, depreciation and amortisation as “remarkably low”. He has urged the group to double its borrowings, “monetise” its 23 per cent stake in L'Oréal, which is valued at about $25bn, and return capital to shareholders.
Mr Schneider announced a buyback programme of up to SFr20bn a few days after Mr Loeb burst on the scene, although Nestlé said this had been planned for months.
Unilever too has been jolted into action after the failed Kraft Heinz bid. The company behind Dove soap and Ben & Jerry’s ice cream has sharpened its focus on profitability, setting a target of 20 per cent operating margin by 2020, from 16 per cent last year.
Graeme Pitkethly, Unilever finance director, said on Thursday that it had made €1bn in savings in the first six months of the year out of a three-year €6bn savings programme.
The cost-cutting included reducing advertising agency fees by 17 per cent and lowering the average cost of making an ad by 14 per cent. Staff had taken 30 per cent fewer flights, and each seat cost a quarter less.
But activist investors are also flush with cash and on the hunt for returns outside the US. For investors such as Mr Loeb, Europe was once seen as an uncertain place to attempt to mount a campaign given varying laws and shareholder rights.
All that has changed given the perception of better value in many industries than in the US. David Neuhauser, founder of the small Chicago-based activist investor Livermore Partners, says his fund is increasingly looking to Europe.
“I see a lot more things to do in Europe than in the US, and a lot of that is due to valuation and opportunity and growth prospects,” said Mr Neuhauser. “Some of the things in the US, the valuations are high and they do seem to have their defences up quicker.”
Moody’s, the rating agency, said that despite experiencing outflows last year “activists still have plenty of spending power to take on even the largest companies”, although it added that they usually target smaller groups.
Chris Plath, a Moody’s vice-president, expects more activist campaigns this year. “International activism continues to gain steam. This increase reflects the relative lack of low-hanging fruit among US large-caps.”
The big question being asked by executives in the sector is whether the increased activist appetite will be healthy for the industry — stimulating faster change as it grapples with low growth and a shift in the way people buy food and household goods.
Or whether activists end up benefiting their funds more than the longer-term growth potential of the companies.
Mr Dudding said: “We tend to be agnostic about activists’ presence on shareholder registers. In the long run, consumer staples stocks do better when they reinvest cost savings in driving top line growth and shouldn’t be bullied into prioritising short-term profitability over long-term brand equity.”
The ideal is when both sides win. Mr Peltz in 2013 argued that PepsiCo was plagued by a “culture of sycophants”, pushing the company to split its drinks business from its faster-growing snacks unit. Indra Nooyi, chief executive, resisted but eventually agreed to add a Trian representative to the board.
PepsiCo shares gained 50 per cent over the course of the campaign, as the company aggressively cut costs and improved margins to take the edge off Trian’s pressure.
“In a slow-moving industry like consumer packaged goods, you have a good safety net so companies don’t blow up. So a lot of them have been complacent,” said Ali Dibadj, analyst at Bernstein. “It’s perfect for activism because they have the room to cut massive amounts of costs.”
Hedge funds regain lustre as assets hit record high
Returns were positive for eight months in a row in longest winning streak since 2004
Hedge funds are regaining their lustre after recording their eighth consecutive monthly gain in returns with assets under management rising to a record $3.1tn.
This is the longest winning streak since early 2004, according to Hedge Fund Research.
The withdrawal of money from hedge funds also came to a halt in the second quarter after six quarters of outflows, added HFR.
It suggests these groups are back in favour after several lacklustre years, where fund managers blamed anything from monetary policy to crowded trades for their poor performance.
Returns have continued to improve in 2017 as equity markets have rallied. Some managers have also acquiesced to investor complaints over high fees in the so-called “2 and 20” structures once charged in the industry.
HFR’s Fund Weighted Composite Index, which tracks hedge funds across all strategies, was up 3.6 per cent so far this year, compared with 5.4 per cent for all of 2016, and a drop of 1.1 per cent in 2015.
Money is also pouring into computer-driven strategies, which despite poor performance in recent years are seen as a hedge against a market downturn.
That is because many quantitative funds performed well in the immediate aftermath of the financial crisis and they are seen as having a low correlation to equity markets.
HFR’s systematic macro index fell 2.39 per cent so far this year, and declined 1.37 per cent last year and 2.4 per cent in 2015. Yet those funds received $3.1bn in inflows in the second quarter.
Equity strategies did even better, gaining $3.8bn in new investments in the same period. Event-driven funds were among the biggest losers, with $3.8bn in redemptions.
Activist funds have also mounted a comeback, led by funds including Dan Loeb’s Third Point and Mick McGuire’s Marcato Capital. HFR’s activist index was up 4.3 per cent in the first half, while the equity index was up just over 6 per cent.
Hedge funds received $6.7bn in new investments in the second quarter, compared with $5.5bn in redemptions in the first, according to HFR.
However, the number of hedge funds and funds that invest in hedge funds has been steadily falling since 2014, from a high of 10,142 to 9,691 in the second quarter.
The number of hedge fund closures also outpaced new fund launches in the first quarter for the sixth consecutive quarter.
Dow -0.13% S&P -0.02% Nasdaq +0.08% Russell +0.04%
US Market closed near the flat line. There were few surprises in the latest policy decisions from the European Central Bank and the Bank of Japan, with both central banks deciding to leave interest rates unchanged. ECB President Mario Draghi said in his post-decision press conference that the economy has continued to expand, but a substantial degree of accommodation is still necessary as underlying inflation remains subdued. Mr. Draghi didn't dispel the notion that the ECB might soon announce a tapering of the bank's asset purchase program, saying simply the ECB is not setting a date for a change to quantitative easing. The euro climbed 1.0% to 1.1627 against the greenback, sending the U.S. Dollar Index (94.09, -0.55) to an 11-month low. Like telecom services, the health care (+0.6%) and utilities (+0.7%) sectors outperformed, but, on the downside, a total of seven spaces finished in the red. The industrial space was one of the weakest performers, dropping 0.6%, as transports weighed. US after hours ATHN +5%, COF +4%, CTAS +2.5% higher following earnings/guidance, AEZS +19% following CEO/strategic evaluation news... MANH -9%, MXIM / NCR -6%, EBAY -5%, SWKS -3% lower following earnings/guidance. MSFT +1.9% ASIAN - Following the flattish session in the US, most of the equity markets in Asia are slightly weaker. Australia’s ASX 200 has somewhat underperformed amid some weakness in BHP, Woodside Petroleum and the banking sector.
Nikkei -0.19% Hang Seng +0.08% CSI -0.14% Shanghai -0.03% Shenzen +0.15%
Eur$ 1.1635 CNH 6.7603 CNY 6.7650 JPY 111.94 GBP 1.2981 CHF 0.9510 RUB$ 58.9684 WTI$ 46.94 +0.04%
S&P +0.01% EuroStoxx +0.03% Dax +0.10% FTSE +0.01% SMI +0.22%
Macro :
- Merkel to Block Defense Exports to Turkey as Links Sour: Bild
- Nasdaq in Danger Zone Again after 10-day Rally, JPMorgan Says
- EU Wants Cars W/Manipulated Emissions Retrofitted by Yr End: SZ
Keep an eye on :
- ABI BB : AB InBev Buying Energy Drinks Maker Hiball: WSJ
- ADS GY : Adidas Is Said to Have Agreed Sale of CCM Brand for $100m: NYP
- AIR FP : Boeing Had Six New Orders Since Last Update
- AKZA NA : PPG Says No Interest in Renewed Akzo Nobel Bid After CEO Change
- AKZA NA : Akzo’s Vanlancker Legally Not in Charge of Company, FD Reports
- BPI PL : Banco BPI Concludes Job Cut Program
- BION SW : BB Biotech First Half Net Income CHF478 Mln
- EN FP : Bouygues ’S Colas Wins EU29M Tramway Contract in Morocco
- 1COV GY : Covestro could make acquisitions in the Coatings, Adhesives and Specialities segment, Rheinische Post reported.
- EO FP : Faurecia Lifts 2017 Targets; Sees 2017 EPS Above EU4
- FINGB SS : Fingerprint Cards 2Q Operating Income Misses Lowest Estimate
- FDR FP : Fonciere des Regions 1H Rec. Net EU2.71/Shr; Raises FY Forecast
- RMS FP : Hermes 2Q Sales Match Estimates; Leather Goods Up 9.7%
- HDD GY : Heidelberger Druck Wants to Resume Dividend Mid-Term
- HSY US : The Hershey Company denies rumors on sale of Shanghai Golden Monkey Food
- HUH1V FH : Huhtamaki Second Quarter Net Sales Miss Estimates
- KINVB SS : Kinnevik Second Quarter Net Asset Value Per Share SEK298
- LAND SW : Toshiba’s Landis+Gyr Prices Shares at CHF78 Apiece in Swiss IPO
- LIGHT NA : Philips Lighting Second Quarter Revenue Misses Estimates
- METSO FH : Metso Second Quarter Net Sales Miss Estimates
- OKDBV FH : Oriola 2Q Adj. Ebit, Net Sales Miss Analyst Estimates
- PAYS LN : *PAYSAFE GETS PRELIM 590P/SHARE PROPOSAL FROM CVC, BLACKSTONE
- UG FP : PSA To Hire 70 Full-Time Employees At French Sochaux Site: AFP
- POM FP : Plastic Omnium First Half Revenue EU3.46 Bln
- RAIVV FH : Raisio Revises 2017 Ebit Guidance
- RUI FP : Rubis Buys Fuel Distributor Galana in Madagascar
- SFSN SW : SFS First Half Net Income CHF56.9 Mln
- SHP LN : Shire Lower as Competitor Prices HAE Drug at Discount: Cowen
- SKFB SS : SKF Second Quarter Adjusted Operating Profit Beats Estimates
- SOT FP : Somfy 2Q Revenue Climbs 8.3%; Co. Sees Slight Drop in 1H Profit
- SNAP US : Snap Has Further Downside As IPO Lockup Expiry Nears: JPMorgan
- TIE1V FH : Tieto Second Quarter Adjusted Operating Profit Misses Estimates
- UHR VX : Swatch 1H Operating Profit Slightly Below Ests; Sees Positive 2H
- TKTT FP : Tarkett Sees FY Loss After EU150m Charge in Antitrust Probe
- O2D GY : Telefónica Deutschland Names New CFO, Extends Management Board
- VOW3 GY : EU Cartel Watchdogs Probe Audi Docs for AdBlue Collusion: HB
>>> Up
* Essilor Raised to Outperform at MainFirst, PT EU135
* GAM Holding Raised to Outperform at MainFirst, PT CHF17
* Krones Raised to Hold at Kepler Cheuvreux, PT EU101
* Scana Raised to Neutral at Goldman
* Swiss Re Raised to Overweight at Morgan Stanley, PT CHF104.30
* TomTom Raised to Buy at AlphaValue
>>> Down
* ABB Cut to Equal-weight at Morgan Stanley, PT CHF25
* Assa Abloy Cut to Neutral at Goldman
* Iberdrola Cut to Neutral at MedioBanca, PT EU6.80
* Metro Downgraded to Hold at M.M. Warburg, PT EU10.60
* Munich Re Cut to Equal-weight at Morgan Stanley, PT EU196
* Nostrum Oil & Gas Cut to Sell at Citi, PT 331p
* Somfy Cut to Hold at SocGen, PT EU88
>>> Initiation
* Alfa Laval New Hold at Kepler Cheuvreux, PT SEK196
* AMS New Neutral at JPMorgan, PT CHF72
* Basler New Buy at Berenberg
* Drillisch New Overweight at Morgan Stanley, PT EU66
* Nordex New Underperform at MainFirst, PT EU10
* Tullow New Buy at SocGen, PT 208p
>>> Call
Adidas laces up $100M hockey brand sale
Adidas has agreed to sell its CCM hockey equipment brand for roughly $100 million to Canadian private equity firm Birch Hill Equity Partners, The Post has learned.
The German sports apparel and athletic footwear brand, looking to concentrate on its core businesses, is selling off peripheral units.
CCM, based in Weston, Ontario, generates roughly $10 million in Ebitda.
Adidas tried unsuccessfully to sell CCM in 2013 for $150 million.
This sale comes a few months after Adidas agreed to sell its TaylorMade golf division for about $200 million in cash — although the price could go higher if the unit hits certain earnings goals. Those goals, however, are hard to reach, sources said.
Adidas had originally sought more than $500 million for its golf unit.
The CCM apparel license was not included in the sale. Adidas, which owns the NHL uniform license, will replace its CCM and Reebok logos on the uniforms with its Adidas logo , sources said.
Similar moves will occur with NHL-licensed T-shirts and other apparel items. CCM will still be seen on NHL helmets and sticks.
Reebok bought CCM in 2004, a year before Adidas acquired Reebok.
Birch Hill, a former division of TD Capital, in 2016 raised a $1.3 billion fund and limits its acquisitions to Canadian companies.
Adidas declined comment. Birch Hill did not return calls.
Asia Mid-Session Market Update: Antipodean currencies dominate action in Asia, AUD falls close to 1% on RBA comments; Kiwi supported by remarks by NZ Finance Minister
***Asia Summary***
- Following the flattish session in the US, most of the equity markets in Asia are slightly weaker. Australia’s ASX 200 has somewhat underperformed amid some weakness in BHP, Woodside Petroleum and the banking sector.
***Key economic data***
- (NZ) New Zealand June Credit Card Spending M/M: 0.2% v 0.9% prior; Y/Y: 8.3% v 7.6% prior
- (NZ) NEW ZEALAND JUNE NET MIGRATION SA: 6.4K V 5.9K PRIOR
- (JP) JAPAN FOREIGN BOND BUYING: 947.8 ¥ V ¥839.5B PRIOR; STOCK BUYING ¥438.6B V ¥324.9B PRIOR - WEEK ENDED JULY 14TH; Foreign Buying of Japan Bonds ¥413.7B v -¥408.5B prior; Foreign Buying of Japan Stocks ¥341B v -¥35.0Be prior
- (KR) South Korea July Exports 20 Days Y/Y: 22.4% v 24.4% prior; Imports: 13.3% v 20.7% y/y
***Speakers and Press***
Australia
- (AU) RBA ASSIST GOV DEBELLE: NO SIGNIFICANCE IN BOARD DISCUSSING NEUTRAL RATE; Higher Aussie works against benefits of faster global growth
China
- (CN) China said to ask state owned enterprises (SOE)s to avoid blind financial investments - Chinese Press; Also, asks SOEs to strengthen financial risk management.
Japan
- (JP) Japan Fin Min Aso: Reiterates no change to goal of reaching primary balance surplus; Want to continue trend of issuing fewer govt bonds; Discussion to 'pick up' on consumption tax.
- (JP) Japan Foreign Minister Kishida: UK Foreign Sec Boris Johnson promised to minimize Brexit impact on corporate activity
Other
- (GR) IMF confirms approval of $1.8B conditional loan for Greece (as expected)
- (KR) South Korea urges North Korea to respond to military talks offer which is valid until July 27th - Korean press
- (NZ) New Zealand Fin Min Joyce: 'Unperturbed' by NZD strength, kiwi dollar strength reflects strong economy; Domestic firms dealing 'well' with Kiwi at current levels.
- (PH) Philippines Central Bank (BSP) Deputy Gov Guinigundo: Very little reason to start mulling raising rates
- (TW) Taiwan President's Office denies report that Premier to resign
- (US) US President Trump said to ask lawyers about pardoning abilities in relation to Russia probe – US press
- (US) President Trump said to have made changes to legal team – CNN; Trump’s longtime personal attorney Marc Kasowitz said to be taking a lesser role with regards to the US special counsel Mueller’s probe into Russia.
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.3%, Hang Seng -0.2%, Shanghai Composite -0.2%, ASX200 -0.2%, Kospi +0.3%
- Equity Futures: S&P500 flat ; Nasdaq -0.2% , Dax flat, FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1637-1.1620; JPY 112.08-111.81; AUD 0.7960-0.7876; NZD 0.7429-0.7394
- Aug Gold -0.1% at 1,244 /oz; Aug Crude Oil flat at $46.91/brl; Sept Copper flat at $2.72/lb
- GLD SPDR Gold Trust ETF daily holdings unchanged at 816 tonnes
- (AU) Australia sells A$500M in 2.0% Dec 2021 bonds, avg yield 2.1996% v 2.1693 prior, bid to cover 6.58x v 5.46x prior
- (CN) China PBOC OMO injects CNY140B in 7 and 14 day reverse repos v CNY60B prior
- (CN) PBOC SETS YUAN REFERENCE RATE AT V 6.7415 V 6.7464 PRIOR
- (CN) China MOF sells 30-year bonds at avg yield 4.05%, bid to cover 1.7x
- Australia 3-year bond yield declines over 8bps as RBA’s Debelle plays down Neutral Rate comment in recent RBA minutes
***Equities notable movers***
Hong Kong/China
- BYD, 1211.HK H1 Guidance; +1.5%
- CK Instructure, 1038.HK H1 net earnings and raised dividend; +4.5%
Japan
- Yaskawa Electric, 6506.JP Q1 earnings speculation; +10%
- Nikon, 7731.JP Positive broker commentary; +2%
***US markets on close: Dow -0.1%, S&P500 flat, Nasdaq +0.1%, Russell flat ***
- Best Sector in S&P500: Utilities +0.7%
- Worst Sector in S&P500: Materials -0.7%
- At the close: VIX 9.58 (-0.21 pts); Treasuries: 2-yr 1.356% (flat), 10-yr 2.266% (-0.2%), 30-yr 2.831% (-0.7%)
***US Market Summary***
- Stock markets were quiet today, with mixed sentiment showing little volatility in price, although the Nasdaq still managed to post a new all-time high. The Transports underperformed notably for the second straight session as traders appear to be ready to take profits in those names. Stocks dropped on the initial news that Special Counsel Mueller is investigating President Trump's financial dealings, but pared its losses within a half-hour. The VIX index continued to decline, falling by 2% to 9.60.
***US Afterhours Movers***
-ATHN Reports Q2 $0.51 v $0.40e, Rev $301.1M v $298Me; Affirms FY17 Rev $1.21-1.25B v $1.24Be (prior $1.21-1.25B) ; +9.8% afterhours
-COF Reports Q2 $1.94 v $1.90e, Rev $6.70B v $6.7Be; +4.6% afterhours
-MSFT Reports Q4 $0.98 v $0.71e, Rev $24.7B v $24.2Be; Productivity and Business Processes Rev $8.4B, +21% y/y, +23% constant FX ; +1.9% afterhours
-V Reports Q3 $0.86 v $0.80e, Rev $4.57B v $4.36B; Affirms FY17 op margin mid 60's% (prior mid 60's%) ; +1% afterhours
-SKX Reports Q2 $0.38 v $0.44e, Rev $1.03B v $966Me
- Guides Q3 $0.42-0.47 v $0.56e, Rev $1.05-1.08B v $1.06Be; -1.5% afterhours
-EBAY Reports Q2 $0.45 v $0.45e, Rev $2.33B v $2.31Be; approves $3B buyback (7% of market cap)- Guides Q3 $0.46-0.48 v $0.48e; R$2.35-2.39B v $2.32Be ; -2.6% afterhours
-MXIM Reports Q4 $0.63 v $0.62e, Rev $602M v $608Me; Raises quarterly dividend by 9.1% to $0.36/shr (indicated yield 3.01%)- Guides Q1 $0.52-0.58 v $0.58e, R$555-595M v $596Me, adj gross margin 65-68%; -5.5% afterhours
-NCR Reports Q2 $0.80 v $0.75e, Rev $1.59B v $1.61Be; Guides Q3 $0.88-0.93 v $0.93e, R$1.66-1.70B v $1.73Be ; -7.2% afterhours
-MANH Reports Q2 $0.50 v $0.48e, Rev $154.1M v $154Me; Cuts FY17 $1.85-1.89 v $1.90e, R$590-600M v $611Me (prior $1.89-1.93, R$606-620M); -8.3% afterhours
- Earnings from GE expected in the New York morning.
RLJ Lodging TrustRLJ had disclosed bid this week without naming private-equity firmBlackstone Group BX -1.44% LP recently made a roughly $3 billion bid to acquire RLJ Lodging Trust , RLJ -1.71% a move that if successful would end RLJ’s agreement to acquire rival hotel investorFelCor Lodging Trust Inc. FCH -1.66%RLJ said in a securities filing Monday that it had rejected a $24-a-share offer from an unnamed private-equity firm. That party was Blackstone, people familiar with the matter said Thursday. It’s not clear if Blackstone intends to make another offer.RLJ and FelCor, both real-estate investment trusts, in April agreed to merge in a deal that would create an entity worth about $4.2 billion and house about 160 hotels.RLJ, which owns which owns about 120 hotels with brands like Marriott and Hilton, disclosed that it had received the unsolicited proposal on June 12 from a private-equity investor that offered to buy the lodging company without FelCor.After RLJ rejected the bid as “not reasonably likely” to be superior to its plan to acquire FelCor, the private-equity firm twice raised its offer, eventually reaching $25.50 a share on June 23, the filing said. RLJ’s board then said it would consider the offer.But after the private-equity firm conducted an additional examination of RLJ, it resubmitted its bid on July 6 at the original price of $24. RLJ’s board rejected that offer.RLJ shares surged Monday on news of the bids, but have since given back most of the gain and closed Thursday at $20.17.RLJ is expected to put its all-stock acquisition of FelCor to a shareholder vote in August.FelCor, owner of about 40 hotels including New York City’s Knickerbocker Hotel at Times Square and the Fairmont Copley Plaza in Boston, had fended off a hostile bid from Ashford Hospitality Trust Inc.,another upscale hotel owner, before agreeing to be bought by RLJ.
After Hours Summary: ATHN +5%, COF +4%, CTAS +2.5% higher following earnings/guidance, AEZS +19% following CEO/strategic evaluation news... MANH -9%, MXIM / NCR -6%, EBAY -5%, SWKS -3% lower following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ATHN +5%, COF +4.2%, CTAS +2.5%, ETFC +2.3%, PBCT +2%, DGI +1.9% (light volume), V +0.6%
Companies trading higher in after hours in reaction to news: AEZS +18.9% (names new CEO, forms special committee to consider and evaluate various strategic and financing alternatives), APVO +12.4% (Aptevo Therapeutics and Alligator Bioscience to co-develop novel bispecific antibody for tumor-directed immunotherapy), ZN +9.4% (continues active drilling operations at its Megiddo-Jezreel #1 well in Israel; successfully raises sufficient funds to drill and test MJ #1 well to proposed total depth), BKMU +9.2% (Associated Banc-Corp [ASB] to acquire Bank Mutual in all stock transaction is valued at ~$482 mln), SGLB +7.8% (thinly traded; announces publication of US patent application for Additive Manufacturing Processes), CLXT +3.6% (continued strength), ANW +2.9% (ticking higher; appoints Jonathan Mcilroy as President, effective immediately), HON +2.5% (ahead of earnings tomorrow before the open)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: MANH -9.3%, MXIM -6%, (also announces new share repurchase authorization $1 bln, raises dividend), NCR -6%, EBAY -5.2%, SWKS -2.9%,
Companies trading lower in after hours in reaction to news: VRAY -5.4% (continued weakness), SVU -5.3% (announced 1-for-7 reverse split of common stock, effective as of the close on August 1, 2017), CVM -2.5% (thinly traded; filed for ~1.787 mln share common stock offering by selling shareholders before the close), SBLK -1.4% (files for $1 bln mixed securities shelf offering and approx 39 mln common share offering by Selling Shareholders), SBLK -1.4% (ticking lower; files for $1 bln mixed securities shelf offering and ~39 mln common share offering by Selling Shareholders), ANET -1.2% (attributed to unfavorable ruling for import ban against Cisco)