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Jax Daily Record Monday, Mar. 9, 201512:00 PM EST

Icahn ends proxy fight with Gannett

by: Mark Basch Contributing Writer

Billionaire Carl Icahn’s proxy fight with Gannett Co Inc. didn’t last very long.

Five weeks after Icahn announced he was taking on Gannett’s board of directors, the two sides announced they have come to an agreement on corporate governance rules for Gannett’s newspaper publishing business.

Gannett is planning to spin off the publishing division, which includes USA Today and 81 daily U.S. newspapers, as a separate company.

The remaining company would be a broadcasting and digital business that operates Gannett’s 46 television stations, including WTLV TV-12 and WJXX TV-25 in Jacksonville.

Icahn, who has a long record of shareholder activism, controls 6.6 percent of Gannett’s stock. He had expressed concern that the new publishing company may not be receptive to a possible takeover bid that would benefit shareholders, but the two sides agreed to governance rules that will make it easier for another party to make a bid.

“Over the past month, we have had a number of meetings with representatives of Gannett in which we have explained at length the importance of shareholder friendly corporate governance at newly spun-off companies. We are therefore very pleased with the agreement we entered into with Gannett yesterday, which we believe yielded a great result for Gannett shareholders,” he said in a statement.

“With this agreement, Gannett ensured that SpinCo (the publishing company) shareholders will truly have a say in what happens at their company, including the ability to decide for themselves whether to accept an offer for SpinCo if one is made,” he said.

The new rules also include provisions that all members of the board of directors stand for re-election annually.

As part of his proxy fight, Icahn nominated two directors of his own to Gannett’s board, but he withdrew those nominations as part of the agreement.

“Establishing an appropriate governance profile for the new publishing company has been a top priority for the board as we prepare for the separation later this year. The details we are announcing today reflect productive conversations we’ve had with Mr. Icahn and other shareholders, and are consistent with Gannett’s shareholder focus and track record of responsible corporate governance,” Gannett Chairman Marge Magner said in a news release.

Most large Jacksonville malls doing well

Regency Square Mall may be struggling to find tenants, but the other major shopping centers in the Jacksonville area seem to be doing quite well, according to the mall owners’ annual reports.

Simon Property Group, which owns 50 percent of the St. Johns Town Center, reported that the property’s 1.39 million square feet of space was 100 percent occupied as of Dec. 31.

The Avenues mall, which is 25 percent owned by Simon, had 97.6 percent of its 1.114 million square feet occupied.

Simon also fully owns the St. Augustine Premium Outlets, with 328,539 square feet that was 96.5 percent occupied.

Simon used to own the Orange Park Mall, but last year it spun off a group of its malls into a separate company called Washington Prime Group.

Washington Prime reported that the 959,181-square-foot Orange Park Mall was 98.1 percent occupied.

One large property with no ties to Simon, the 557,087-square-foot River City Marketplace in North Jacksonville, was 99.4 percent occupied according to its owner, Ramco-Gershenson Properties Trust.

Equity One Inc. reported that its largest Northeast Florida property, the 307,873-square-foot South Beach Regional plaza in Jacksonville Beach, was 96.6 percent occupied after the opening of Trader Joe’s there last year.

CSX coal shipments still dropping

Coal shipments remain CSX Corp.’s biggest business, but the volume of coal transported on the company’s rail lines continues to drop.

At an investor conference last week, Chief Financial Officer Fredrik Eliasson said CSX expects its domestic coal volume to decline by at least 5 percent this year, according to a company news release. The decrease reflects relatively mild weather and low natural gas prices, it said.

Eliasson also said growth in crude oil shipments will likely be slower than expected, because of low oil prices.

On the other hand, CSX expects its merchandise and intermodal markets to grow faster than the overall economy, he said.

“We continue to expect strong earnings growth in the first quarter as merchandise and intermodal customers see growth opportunities and recognize the value and efficiency of freight rail service,” Eliasson said.

“By leveraging price and efficiency gains combined with expected volume increases, we continue to target double-digit earnings growth for the full-year 2015, though achieving that goal will be more challenging with the expected decline in coal movements,” he said.

Analysts are projecting CSX to report earnings anywhere between $1.92 and $2.30 a share this year, with an average forecast of $2.15 among the 30 analysts covering the company, according to Thomson Financial. The company earned $1.92 a share in 2014.

The week before that investor conference, Eliasson and other CSX officials met with BMO Capital Markets analyst Fadi Chamoun, a positive meeting that prompted Chamoun to raise his rating on the company from “market perform” to “outperform.”

“We believe that CSX enjoys a significant cost reduction opportunity, improving pricing environment, and robust demand in the merchandise and intermodal segments,” Chamoun said in his report.

“While the coal market continues to represent a headwind, we believe that the downside risk is moderate, particularly when compared to the past three years, while the cost reduction opportunity and pricing growth environment are markedly better than they have been in the past several years,” he said.

Chamoun increased his price target on the stock, which was trading at $34.31 at the time, from $38 to $40 and said shareholders could see other gains.

“We expect that with improved margins, cash flow generation should also rise supporting higher distributions to shareholders (in terms of both dividend and share buyback),” he said.

Stein Mart sales still rising

Stein Mart Inc. continued to increase sales as its new fiscal year began.

The Jacksonville-based fashion retailer last week reported total sales for the four weeks ended Feb. 28, the first month of its fiscal year, rose 4.9 percent to $84.5 million. Comparable-store sales, or sales at stores open for more than one year, rose 2.6 percent.

Stein Mart operated 269 stores at the end of February this year, compared with 264 a year earlier.

By the way, you may have noticed last Monday that Stein Mart’s stock dropped $3.63, or 22.1 percent to $12.81, but there was a good reason. That was the first trading day after Stein Mart paid out its special $5-a-share dividend to stockholders.

This demonstrates why it’s always better to measure a stock’s performance by its total return, instead of the change in its stock price. After the price drop last Monday, Stein Mart’s stock price was down 12.4 percent since the beginning of 2015.

However, when you measure its total return, which includes dividend payments plus the increase or decrease in trading price, Stein Mart actually produced a big 21.8 percent return for shareholders in the first two months of this year.

In comparison, the Standard & Poor’s 500 index produced a 3.2 percent total return over that period. So it’s been a good year so far for Stein Mart stockholders.

Stein Mart is scheduled to report its earnings for the fiscal year ended on Jan. 31 on Thursday.

Publix produces strong return

Publix Super Markets Inc. stockholders are also seeing strong returns, at least as far as the appraised value of the supermarket chain’s stock is concerned.

The Lakeland-based company’s stock is only made available for sale to Publix employees and is not publicly traded. However, five times a year, Publix gets an appraisal of the value of its stock, based on the company’s financial performance and market value of comparable publicly-traded companies.

Publix last week said the most recent appraisal put the value of its stock at $39.05 a share as of March 1, up from $33.80 at the previous appraisal on November 1.

When you add in the 37-cent-per-share semiannual dividend payment made on Dec. 1, that’s a total return of 16.6 percent for Publix shareholders over the last four months. That’s well above the 5.1 percent total return for the S&P 500 in that period.

Publix, which has about 175,000 employees, has about 166,000 shareholders, according to its annual report. The shareholders include former employees who still own stock.

Publix also announced fourth-quarter earnings rose 7.4 percent to $453.3 million, or 58 cents a share. Total sales in the quarter rose 6.9 percent to $7.9 billion, and comparable-store sales rose 6.4 percent.

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