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Go-shop period ends without higher offer for LPS

by Mark Basch, Contributing Writer

Lender Processing Services Inc. last week announced that the "go-shop" period in its merger agreement with Fidelity National Financial Inc. expired without any other offers coming in.

When Fidelity announced its deal to acquire LPS in May, the companies included the go-shop provision that allowed LPS to solicit better offers until July 7.

LPS said it "engaged in an active and extensive solicitation" of 42 parties, with three of those parties eventually entering into negotiations with the company. However, in the end, LPS did not receive any "alternative acquisition proposals" before the go-shop period expired. So the two Jacksonville-based companies are proceeding with their proposed merger.

Fidelity is offering a combination of cash and stock originally valued at $33.25 per LPS share. The ratio of stock to cash is subject to adjustment and has already been altered once. Fidelity originally agreed to pay half of the total $2.9 billion price in cash and half in stock, but that was changed last month to two-thirds in cash and one-third in stock.

If the current ratio holds up, LPS stockholders would receive $22.30 in cash and 0.42948 shares of Fidelity stock for each of their shares.

Based on Fidelity's market price when the go-shop period expired, the value of the deal was $32.59 a share. LPS' market price was $32.40 at the time.

LPS was formerly a part of Fidelity, but the title insurance company spun off its financial processing businesses into a separate company called Fidelity National Information Services Inc., or FIS, in 2006. FIS then spun off LPS, which provides processing services for mortgage lenders, in 2008.

Analyst likes FIS

Speaking of FIS, Barclays Capital analyst Darrin Peller last week initiated coverage of the company with an "overweight" rating and a price target of $52.

FIS was trading at $43.63 when Peller issued his report Monday, which sent the stock up $1 to $44.63.

"Overall, we believe FIS should be considered a relative safe haven for investors who are looking for stocks with high recurring revenues, consistent earnings growth, strong capital return, and low volatility," Peller said in his report.

"In our view, a long-term secular trend toward financial outsourcing and FIS' ability to leverage its considerable size/scale (as the largest core banking software/services vendor by total revenue) for growth should provide a solid runway for secular expansion," he said.

Stein Mart sales up again

Stein Mart Inc. continued to show strong sales in June, sending its stock even higher.

The Jacksonville-based fashion retailer said last week that total sales for the five weeks ended July 6 rose 2.6 percent to $109 million and comparable-store sales – sales at stores open for more than one year – rose by 6.5 percent.

Stein Mart's stock rose as much as $1.24 to a 52-week high of $15 Thursday after the report.

Avondale Partners analyst Mark Montagna, who has a "market outperform" rating on Stein Mart, raised his price target on the stock from $16 to $17 after the sales report.

"We believe Stein Mart is a multi-year positive comp story with its revived branded offering at everyday value pricing," Montagna said in a research note.

Stein Mart Inc. also last week announced that its board of directors picked KPMG LLP as its independent auditing firm.

At the Jacksonville-based company's annual meeting last month, previous auditor PriceWaterhouseCoopers LLP declined to stand for re-election and Stein Mart said it was sending out requests for proposals to other auditing firms.

No reason was given, but Stein Mart's financial reports last year were delayed and the company had to restate its 2010 and 2011 earnings because of accounting revisions.

PriceWaterhouseCoopers had been Stein Mart's auditor since 1983.

ParkerVision shareholders approve proposals

Despite the efforts of one major shareholder to rally support against the proposal, ParkerVision Inc. shareholders last week approved a measure to divide its board of directors into three classes with staggered terms of office.

At last week's annual meeting, shareholders approved the proposal by a vote of 35 million shares to 25.9 million, according to a Securities and Exchange Commission filing. They also approved by a similar vote a measure that will only allow directors to be removed for cause.

The shareholders also voted 37.6 million to 23 million to approve a bonus plan for ParkerVision executives.

Daniel Lewis of Gem Investment Advisors, who controls 7.7 percent of ParkerVision's stock, had urged shareholders to reject those three proposals, calling them "shareholder-unfriendly."

Kroger buying Harris Teeter

The Kroger Co. last week announced a $2.5 billion agreement to buy Harris Teeter Supermarkets Inc.

For years, Cincinnati-based Kroger has been rumored to be interested in expanding into Florida, including longtime speculation that it might be interested in buying Winn-Dixie Stores

Inc.

The Harris Teeter deal does give Kroger an entry into Florida and Southeast Georgia, but it's not much of a foothold.

Harris Teeter operates one supermarket in Fernandina Beach and another in St. Simons, Ga., but those are the company's only stores in Florida and Georgia.

The nearest Kroger supermarket to the Jacksonville market is in Waycross, Ga.

However, Kroger indicated it will remain committed to the Harris Teeter locations. The company last week said in its news release it has no plans to close stores and that Harris Teeter will operate as a subsidiary of Kroger.

Harris Teeter started to make a push into the Jacksonville market in 1998, opening stores in Ponte Vedra Beach and Mandarin before opening in Fernandina Beach in 2000. However, it closed the Mandarin store in 2004 and the Ponte Vedra Beach store in 2006.

The acquisition will give Kroger a total of 2,631 stores in 34 states. Harris Teeter has 212 stores, with the majority in North Carolina. The company is headquartered in Matthews, N.C.

Flowers receives antitrust clearance for Hostess deal

Flowers Foods Inc. last week said it received antitrust clearance from the federal government to proceed with its acquisition of 20 bakeries and five bread brands from Hostess Brands Inc.

Thomasville, Ga.-based Flowers submitted the winning bid in U.S. Bankruptcy Court earlier this year to buy most of Hostess' bread business, which includes a shuttered bakery in Jacksonville.

Flowers already owns one Jacksonville bread bakery and has not said if it intends to operate both once the Hostess deal is complete. Flowers officials have said they wouldn't discuss their plans for Hostess until the regulatory review was complete.

Now that the government has signed off on the deal, hopefully we'll have some details soon.

Flowers said it expects to complete the acquisition "in the coming weeks."

Speculation sends ADT stock higher

ADT Corp.'s stock jumped higher Tuesday on speculation that a well-known hedge fund manager might buy a large stake in the Boca Raton-based security company.

Bloomberg News reported William Ackman of Pershing Square Capital Management LP is raising money to buy a stake in a large U.S. company, and an analyst who follows ADT said the company meets all of Ackman's criteria.

The speculation sent ADT's stock up by $2.07 to $42.02 on Tuesday.

ADT, which employs about 2,000 people in Jacksonville, was spun off from Tyco International Ltd. last October.

The stock began trading at $37.18 after the spinoff and reached as high as $50.37 in the spring, before recently falling back.

Jacksonville TV stations look attractive

A couple of big deals in the television industry recently are – in a roundabout way – putting the spotlight on the attractiveness of Jacksonville's local stations.

Gannett Co. Inc., which owns WTLV TV-12 and WJXX TV-25, last month announced a $2.2 billion deal to buy Belo Corp. That deal will increase Gannett's portfolio of television stations from 23 to 43.

Two weeks ago, Tribune Co. announced a $2.7 billion deal to buy 19 stations from Local TV Holdings LLC, giving the Tribune Co. 42 stations.

According to a New York Times story last week, a key rationale behind these deals is the opportunity to acquire more television stations in election swing states.

Political advertising has become big business for stations in Florida and other swing states. Media industry consulting firm BIA/Kelsey reports that television station revenue rose by 13.2 percent last year, mainly driven by increased political ad spending.

The revenue growth was huge in some battleground markets. BIA/Kelsey said Wisconsin stations increased revenue by 40 percent and Ohio stations jumped 38 percent.

This is of course good news for Jacksonville stations as Florida continues to be a hotly contested state in presidential and other elections.

This year is quiet but we can look forward to a governor's race in 2014, a mayor's race in 2015 and of course a long presidential campaign in 2016.

Most of us will want to throw bricks through the TV as we are inundated with ads, but you can be sure the local stations will be rubbing their hands with glee.

Corr named head of Rayonier's real estate business

Rayonier Inc. last week announced Chris Corr, a former executive with The St. Joe Co., will become head of its real estate business.

Corr was named senior vice president of real estate for Rayonier and president of TerraPointe Services Inc.

TerraPointe is the real estate subsidiary of Jacksonville-based Rayonier. The forest products company formed TerraPointe in 2005 to explore opportunities for land it owned that was better suited for development than for timberlands.

Corr's tenure at St. Joe was closely aligned with former St. Joe Chief Executive Peter Rummell.

He worked with Rummell at Walt Disney Imagineering before joining St. Joe in 1998. He left St. Joe shortly after Rummell retired as CEO 10 years later, when his position was eliminated in a corporate restructuring. Corr was executive vice president and chief strategy officer when he left.

Corr replaces Charles Margiotta, who retired from Rayonier last month.

mbasch@baileypub.com

(904) 356-2466

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