ADT’s IPO called ‘a flop’ as stock falls below initial price

Boca Raton-based company has more than 3,000 workers in Jacksonville.
Jan. 29, 2018

Some viewed the security company’s initial public offering in harsher terms, such as The Wall Street Journal calling it a “flop” and CNBC pundit Jim Cramer calling it an “insult” to the market.

ADT said on Jan. 5 that it was expecting to price its IPO between $17 and $19 a share.

But when the deal was brought to the market  Jan. 18, the offering of 105 million shares was priced at $14.

The price continued dropping when trading began  Jan. 19, with the stock closing at $12.39 on its first day, and it traded as low as $11.12 last week.

ADT first became a public company in October 2012, when it was spun off by Tyco International Ltd.

The company was taken private in May 2016 by funds affiliated with Apollo Global Management LLC, which bought it for $6.9 billion.

Apollo retains control of the company after the IPO with 85.6 percent of the stock, according to a Securities and Exchange Commission filing.

In an interview on CNBC (not with Cramer) when the stock began trading, ADT Chief Executive Officer Timothy Whall was asked why the company rushed back to the market after less than two years as a private company.

Whall said the company had met Apollo’s five-year financial targets within two years, so there was no reason to wait.

The stock sale moved pretty fast, as ADT filed its first registration statement with the SEC in December and brought the IPO to the market less than a month later.

Apollo didn’t sell any of its 641 million ADT shares in the IPO. The company took in gross proceeds of $1.47 billion from the stock sale.

Boca Raton-based ADT is one of Jacksonville’s largest employers with more than 3,000 workers. The company employs about 18,000 people overall.

ADT says it is the largest security monitoring company in the U.S. and Canada with about $4 billion in annual revenue.

While the IPO was disappointing, Whall expressed confidence to CNBC that investors will be happy with the company’s performance going forward.

“If we put a few quarters under our belts I think the people will like what they see,” he said.

Proxy firms oppose J. Alexander’s deal

As shareholders meet this week to vote on J. Alexander’s Holdings Inc.’s proposed acquisition of the 99 Restaurant & Pub chain, two well-known proxy advisory firms are recommending they reject the deal.

Cannae Holdings Inc., the investment company recently spun off from Fidelity National Financial Inc., currently owns a majority stake in the 99 chain and would end up with a majority voting stake in J. Alexander’s as part of the complex deal.

J. Alexander’s operates several restaurant chains and also was spun off from Fidelity in 2015. The Jacksonville-based title insurance company has invested in several restaurant businesses over the years.

The historical ties between Fidelity, Cannae and the restaurant businesses are one reason the proxy firms are opposing the deal.

“The board does not appear to have thoroughly explored other alternatives, which is particularly concerning given the related party nature of the transaction and the tenuous strategic rationale for the proposed combination,” Institutional Shareholder Services said in its report.

“Moreover, market reaction has been sharply negative, implying limited downside risk of non-approval. Voting to oppose the merger is shareholders’ last chance to avoid becoming minority shareholders of a controlled, small cap company,” it said.

Glass, Lewis & Co. also expressed concerns that the board didn’t seek other alternatives and questioned the strategic fit between 99 and the more upscale J. Alexander’s restaurants.

“While we recognize there appear to be strategic merits to the proposed transaction, namely diversification and potential synergies, the transaction would also dilute the company’s focus on the upscale dining industry and expose shareholders to significant challenges facing the casual dining segment in which 99 Restaurants operates,” the Glass, Lewis report said.

J. Alexander’s last week disputed the reports by the two proxy advisors.

“Both recommendations surprisingly ignore the actions by the J. Alexander’s board of directors to establish an equitable process for the transaction, including specific negotiations for the transaction to be approved by disinterested shareholders,” the company said in a news release.

A second release by J. Alexander’s last week said two large shareholders controlling a combined 20 percent of the stock are supporting the deal.

Hedge fund manager Mario Cibelli, whose funds control 6.3 percent of the stock, has publicly opposed it.

The shareholders meeting is scheduled for Tuesday afternoon in Nashville, Tennessee, where J. Alexander’s is headquartered.

Ameris Bancorp expands in Atlanta

Ameris Bancorp announced Friday it is expanding in the Atlanta market by acquiring Hamilton State Bancshares Inc.

Hamilton, based in Hoschton, Georgia, operates 28 bank offices, 24 of them in the Atlanta metropolitan area.

Ameris officially is headquartered in Moultrie in south Georgia, but its executive offices are in Jacksonville.

“Atlanta is the largest market in Georgia and one of the largest markets in the entire Southeast.  While we have had a small presence in Atlanta for a number of years, we have been looking for an opportunity to expand our presence in this important market,” Ameris CEO Edwin Hortman said in a news release.

Ameris agreed to buy Hamilton for a combination of stock and cash valued at $405.7 million. The company hopes to complete the deal in the third quarter this year.

Also Friday, Ameris reported adjusted earnings of 63 cents a share for the fourth quarter of last year, the same as the fourth quarter of 2016.

Because of the recent federal tax law, Ameris incurred a one-time $13.4 million expense in the fourth quarter related to the valuation of a deferred tax asset. That reduced final net income for the quarter to 24 cents a share.

Atlantic Coast Financial Corp. has tax-related loss

Ameris already has a deal pending to buy Jacksonville-based Atlantic Coast Financial Corp., which it hopes to complete in the second quarter.

Atlantic Coast Financial also incurred a tax charge, similar to Ameris, which resulted in a net loss of 4 cents a share in the fourth quarter.

The parent of Atlantic Coast Bank said the tax charge cost the company 11 cents a share in the quarter. 

Atlantic Coast Financial also incurred 3 cents a share in costs related to the Ameris merger.

Johnson & Johnson Vision care sales at $4 billion

Johnson & Johnson Vision Care Inc. reached $4 billion in sales in 2017, after the Jacksonville-based contact lens maker expanded with three acquisitions of other eye care businesses during the year.

Revenue from the contact lens business grew 9 percent last year to $3.04 billion, parent company Johnson & Johnson reported last week.

The medical products giant reported total sales for 2017 rose 6.3 percent to $76.5 billion, and it projects 2017 sales of $80.6 billion to $81.4 billion.

Johnson & Johnson reported a fourth-quarter net loss of $10.7 billion, because of a $13.6 billion tax charge associated with the recent federal income tax reform legislation.

Excluding the tax bill and other one-time charges, adjusted earnings rose by 16 cents a share to $1.74.

Convergys CEO Andrea Ayers leaving

Convergys Corp. said Thursday that President and CEO Andrea Ayers is leaving the company.

Ayers has spent nearly 30 years with Convergys and became chief executive in October 2012.

The board of directors has begun a search for a successor and Ayers will stay on “as long as necessary for transition purposes,” the company said in a news release.

Cincinnati-based Convergys has a large customer care operation in Jacksonville.

Employment at its Jacksonville office has varied over the years as contracts are won and lost, but JAXUSA Partnership lists the number of employees at 700.

MatrixOneSource is bought by GPB

New York-based investment firm GPB Capital Holdings said it acquired a majority stake in MatrixOneSource, a Jacksonville-based provider of professional employer organization services.

Terms of the deal were not disclosed.

GPB said it will provide capital and strategic and operational assistance to help MaxtrixOneSource expand its presence, including possible acquisitions.

Brightway written premiums jump 12 percent in 2017

Jacksonville-based Brightway Insurance said its annualized written premium rose 12 percent last year and passed $500 million. Its policies in force grew 12 percent to more than 334,000.

Brightway, which markets property and casualty insurance, said it expanded into eight more states in 2017, bringing the number of states in which it has franchises to 19.