Before TIAA agreed to buy Jacksonville-based EverBank Financial Corp. for $2.5 billion, EverBank initiated negotiations by seeking out TIAA and several other potential acquirers.
According to a preliminary proxy statement filed by EverBank, the company and its investment banker, UBS, contacted TIAA and six other parties in April to gauge their interest.
TIAA came back in May and said it was interested and the talks moved forward. An agreement was eventually reached in August.
The process of selling EverBank actually began in December 2015 during a board of directors meeting, with UBS in attendance, to discuss the company’s business plan.
Several strategic alternatives were discussed including a sale of individual business lines “which other parties had previously indicated a potential interest in acquiring,” the proxy said.
As the board considered deals to sell certain business lines, it also was approached by an unnamed “banking organization” about a possible merger of the companies.
In light of that bank’s interest, “challenges associated with the sale of certain company businesses” and other market factors, the board in April decided to investigate a possible merger of the entire company.
TIAA in early June indicated it was interested in buying EverBank at a price of $19 to $20 per share. Two of the other six parties contacted also expressed interest, but they apparently never offered a price.
EverBank may have been able to find a higher offer but after the market turbulence caused by the United Kingdom’s Brexit vote in late June, “the shares of financial services firms declined significantly,” the proxy said.
A month later, news of the buyout negotiations leaked out in a Bloomberg News story and EverBank confirmed it was negotiating a deal at $19.50 a share.
EverBank officials realized the company was unlikely to find a better price when “no other parties approached the company to suggest a transaction at a higher price” after the news leaked.
The bank points out in the proxy the $19.50 price was 25.8 percent higher than its closing market price on July 22, the last trading day before the Bloomberg story.
EverBank accepted the buyout deal at $19.50 a share on Aug. 7.
The proxy statement was issued for a meeting of EverBank shareholders to vote on the buyout, but the date of the meeting has not been set.
Besides shareholder approval, the deal also will require approvals from the Federal Reserve Board and the U.S. Office of the Comptroller of the Currency. The companies hope to complete the merger in the first half of 2017.
Financial services company TIAA plans to merge its bank subsidiary into EverBank, with the headquarters of the merged bank remaining in Jacksonville.
CSX upgraded by Barclays
Barclays analyst Brandon Oglenski last week upgraded his rating on Jacksonville-based CSX Corp. from “equal weight” to “overweight.”
“We know CSX has been plagued by coal challenges for several years; but a much lower coal base and increased management focus on margin opportunity could support meaningful value creation in the long run,” Oglenski said in his report.
“We note that coal has been a significant headwind for CSX in the past few years, surpassing management’s purported efficiency gains in operating earnings,” he said.
“With coal now representing only 15 percent of revenue, we suspect management initiatives to improve margins could become more visible in earnings looking forward.”
Coal shipments used to account for more than 30 percent of CSX’s revenue but a sharp drop in demand in recent years has severely cut the business.
The CSX upgrade was part of an overall look at the transportation industry. Oglenski said industry fundamentals seem to be stabilizing after two bad years.
“While our view is slightly improved, we remain neutral on the sector given increasing evidence that 2017 is shaping up to be another year of slow growth within industrials,” he said.
Yom Kippur impacts CSX
CSX on Wednesday sent out a news release saying it would release its third-quarter earnings report late Tuesday, Oct. 11, and hold its regular conference call with analysts the next morning.
However, that schedule would have coincided with the Jewish holiday Yom Kippur, which is observed this year from sundown on Oct. 11 through sundown on the 12th.
So, CSX on Thursday said it is revising its schedule and will now release the earnings report late in the day Oct. 12 and hold the conference call the morning of the 13th.
Analyst upgrades Rayonier AM
RBC Capital Markets analyst Paul Quinn last week upgraded his rating on Rayonier Advanced Materials Inc. from “underperform” to “sector perform” but maintained his price target of $10, with the stock trading at $11.09.
Rayonier AM’s floundering stock had begun to move up this year as its financial results improved, but it fell back last month after the company announced a sale of preferred stock that can be converted into common stock.
“We view the recent sell-off in shares post issuance of the $173 million of mandatory convertible prefs as more of a sign that investors were disappointed with the deal terms,” Quinn said in his research note.
“On a positive note, use of proceeds is consistent with Rayonier AM’s goal to deleverage and the announcement of a potential $135 million lignin joint venture with Borregard,” he said.
Jacksonville-based Rayonier AM last year announced plans for the joint venture with Norway-based Borregard to build a plant to produce lignin adjacent to its plant in Fernandina Beach.
Lignin is a natural component of wood that can be used in construction, agriculture and other industrial applications.
Rayonier AM is still experiencing weak demand for some of its cellulose specialties products, but Quinn said “the company has done a commendable job with cost-reduction initiatives over the past several years.”
International Baler has small profit
International Baler Corp. reported a small profit of $20,417 in the third quarter ended July 31, according to its quarterly report filed with the Securities and Exchange Commission.
The Jacksonville company, which makes balers used for recycling and waste disposal, saw sales decline by 8 percent to $3.3 million.
The company said in the report the lower revenue resulted from “significantly lower shipments of balers and conveyors, seventeen in the third quarter of fiscal 2016 versus twenty-four in the third quarter of fiscal 2015.”
That was partially offset by the shipment of two rubber balers, compared with none in the third quarter of fiscal 2015.
TapImmune Inc. announces reverse split
As part of its plan to apply for listing on the Nasdaq Capital Market, Jacksonville-based TapImmune Inc. last week announced a 1-for-12 reverse split of its common stock.
Shareholders will receive one share of TapImmune stock for every 12 they own. The split reduces the number of shares outstanding from 100.5 million to 8.375 million.
TapImmune, which is developing treatments for cancer, trades on the Over-the-Counter Bulletin Board. It is seeking more visibility by applying for a Nasdaq listing.
The company’s stock closed at 43 cents Thursday and the OTC listed its price at $5.16 Friday morning after the reverse split.
Shipwreck salvage company re-emerges
Blue Water Ventures International Inc. has been very quiet for a couple of years, not filing any new SEC statements since 2014.
However, the Fleming Island-based company, which seeks to recover cargo and artifacts from shipwrecks, re-emerged with a news release last week.
The release said the company has restructured its balance sheet, converting debt into equity.
“While the levels of our outstanding payables and debt as of the end of our second quarter are still higher than we would like, our efforts to further reduce our liabilities and debt are ongoing and we expect to make further progress in the upcoming quarters,” CEO Keith Webb said in the news release.
Blue Water Ventures said it is conducting survey and recovery operations off the coasts of Florida and the Carolinas.