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Basch Report
Jax Daily Record Monday, May 14, 201806:30 AM EST

Foley steps back at Cannae as hockey team advances

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Owners of NHL expansion team will no longer will serve as an executive officer at  Cannae Holdings Inc.
by: Mark Basch Contributing Writer

As his hockey team advances in the National Hockey League playoffs, Bill Foley is stepping back from some of his other business activities.

In a Securities and Exchange Commission filing last week, Cannae Holdings Inc. said Foley no longer will serve as an executive officer. 

Bill Foley

Foley had been executive chairman of the investment company, which was spun off from Jacksonville-based Fidelity National Financial Inc. last year. He will now serve as nonexecutive chairman of the board.

Cannae is headquartered in Las Vegas, where Foley relocated after he was granted an NHL expansion franchise that began play this season.

Foley’s Las Vegas Golden Knights have delivered unprecedented success for a team in its first year of play, winning two rounds of playoffs and advancing to the NHL Western Conference finals.

While the offices are about 2,000 miles from Jacksonville, executives of Fidelity continue to run Cannae, with Executive Vice President Brent Bickett serving as Cannae president.

Foley also is chairman of Fidelity’s board and serves as executive chairman of another Jacksonville-based company spun off from Fidelity, Black Knight Inc.

Black Knight CEO not focused on deals

New Black Knight CEO Anthony Jabbour has some experience with mergers and acquisitions in his previous job as chief operating officer of Fidelity National Information Services Inc., or FIS.

So, during his first quarterly conference call with Black Knight last week, Jabbour was asked about an acquisition strategy for the company, which provides technology for mortgage lenders.

Jabbour said that question has come up often, but “I wouldn’t say I’m coming in with a recipe that I think needs to be followed.”

While Black Knight may pursue small deals, “I just want to be clear. I didn’t come in to do acquisitions. It’s one of the things that we’ll look at,” he said.

Black Knight reported adjusted first-quarter earnings of 43 cents a share, 13 cents higher than last year and above analysts’ forecasts, which ranged from 38 cents to 42 cents, according to Yahoo Finance.

“We’re off to a solid start to the year and are on target with our operational and sales initiatives,” said Jabbour, who took over at the beginning of the second quarter.

Main Street America announces merger

The Main Street America Group, a Jacksonville-based property and casualty insurer, announced a merger agreement with American Family Insurance Group.

Main Street America will become a subsidiary of Madison, Wisconsin-based American Family Insurance, but the companies said they don’t expect “major employee or operational changes” after the merger.

Main Street America employs about 900 while American Family Insurance has about 11,300 workers.

American Family Insurance ranks 315th on the Fortune 500 list of the largest U.S. companies with $8.8 billion in revenue last year. Main Street America had more than $1 billion in premiums in 2017.

Both companies are mutual holding companies, meaning they are owned by their policyholders. The merger will require approval of policyholders and state insurance regulators, and is expected to be completed by the end of this year.

“With a heavy concentration on the East Coast, Main Street America will help extend the reach of the American Family group. American Family, in turn, will help bring new products and technology to Main Street America and its policyholders,” American Family CEO Jack Salzwedel said in a news release.

ACFC-Ameris merger approved

Atlantic Coast Financial Corp. reported slightly lower earnings during what was likely its last full quarter before it merges into Ameris Bancorp.

The Jacksonville-based parent company of Atlantic Coast Bank said it has received regulatory approvals for the merger. 

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

Atlantic Coast Financial reported first-quarter earnings of 9 cents a share for the quarter, a penny lower than last year. The company said noninterest income was lower than the first quarter of 2017, mainly because of lower gains on the sale of loans.

Proxy advisory firm opposes CSX pay

Shareholders of CSX Corp. last year overwhelmingly approved a big pay package for new CEO Hunter Harrison, who died in December.

Pay packages for Harrison’s successor, James Foote, and other current CSX officers are less controversial, but proxy advisory firm Institutional Shareholder Services recommends shareholders vote against their compensation at this week’s annual meeting.

The advisory vote at the meeting is nonbinding and is unlikely to impact anyone’s pay, even if shareholders disapprove.

ISS said in its report that it is concerned about “pay-for-performance” clauses.

“Short-term incentives were paid above-target despite setting the operating income target below 2016 performance. Shareholders generally expect payouts to be lowered when goals are set lower than the prior year’s performance,” it said.

Harrison’s estate forfeited stock options potentially worth $116 million when he died. But ISS saw his option package as excessive because it “represented an outsized pay opportunity that was not in line with market, even when annualized over the four-year agreement term. The lack of performance criteria on half of that award is concerning in light of its sheer size.”

ISS also expressed concerns about “problematic severance arrangements” for executives who left CSX during the management upheaval last year.

CSX issued a response in an SEC filing last week saying its increase in earnings and its stock price last year justified the pay packages. It also said its pay policy going forward is fair.

“We have established annual incentives for 2018 and long-term incentives for 2018-20 that include challenging targets to support our pursuit of exceptional returns for our shareholders,” the company said.

CSX also said another prominent proxy advisory firm, Glass Lewis & Co., recommends shareholders vote for the executive pay proposal.

CSX will hold its annual shareholders meeting Friday at the Prime Osborn Convention Center.

Rayonier AM earnings below forecast

Rayonier Advanced Materials Inc. last week reported first-quarter earnings of 38 cents a share, well above last year’s earnings of 15 cents, after the company’s late 2017 acquisition of Tembec Inc.

“Our first quarter results demonstrate the benefit scale and diversification resulting from our acquisition of Tembec,” CEO Paul Boynton said in Rayonier AM’s conference call.

While earnings rose, they came in below analysts’ forecasts which ranged from 39 cents to 51 cents, according to Yahoo. Rayonier AM’s stock fell $1.80 to $18.49 Tuesday after the earnings report.

On the bright side, Vertical Research Partners analyst Chip Dillon said the sell-off created an “attractive entry point” and upgraded his rating on the cellulose specialty products company from “hold” to “buy” on Wednesday.

“We admit that we were disappointed by Rayonier Advanced Materials’ first-quarter soft showing. However, we exit the quarter with an increased confidence in the company’s earnings outlook following a more comprehensive review of its operations post-Tembec,” Dillon said in a research report.

FRP property sale vote is Monday

FRP Holdings Inc. last week reported first-quarter earnings of 15 cents a share, a penny higher than last year.

The Jacksonville-based real estate developer’s operations will change drastically during the second quarter after FRP agreed to sell a portfolio of 41 industrial properties to an affiliate of Blackstone Real Estate Partners for $358.9 million.

Shareholders are scheduled to vote on that deal at FRP’s annual meeting Monday and if approved as expected, the deal could close within a week.

FRP has said it expects to invest the proceeds from the sale in other projects.

“Cash is a wonderful asset and we will treat it dearly. We will look for opportunities to develop properties or buy aggregate assets,” CEO John Baker said in the company’s conference call Tuesday.

“If unsuccessful we may buy stock back or we many return the cash to our investors as dividends,” he said.

Blackstone buying Gramercy for $7.6B

Blackstone announced a bigger real estate deal week, agreeing to buy Gramercy Property Trust for $7.6 billion.

New York-based Gramercy’s large industrial real estate portfolio includes several Jacksonville properties.

According to Gramercy’s first-quarter report, it owns three fully leased warehouses in Jacksonville totaling 1.84 million square feet of space occupied by Dr Pepper/Seven Up Inc., Conopco Inc. and Haier U.S. Appliance Solutions.

It also owns five office properties totaling 420,127 square feet that are 78.3 percent leased, including three buildings at the Gramercy Woods office park on the Southside.

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