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Alex Behring, managing partner at 3G and chairman of Heinz, will become chairman of Kraft Heinz.
Jax Daily Record Monday, Mar. 30, 201512:00 PM EST

Investors expect cost cutting from new Maxwell House parent

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by: Mark Basch Contributing Writer

Last year, Kraft Foods Group Inc. demonstrated its commitment to its Maxwell House coffee plant in Downtown Jacksonville by promising to add 10 new jobs to its 227 employees, in exchange for $425,000 in city incentives.

However, Kraft last week announced a mega merger with H.J. Heinz Co. that will put the company in the hands of an operator known for slashing costs, including job cuts and plant closings.

Heinz was acquired in 2013 by Warren Buffet’s Berkshire Hathaway and Brazilian investment firm 3G Capital. Under the merger agreement announced Wednesday, the new Kraft Heinz Co. will be a publicly traded company, but Berkshire Hathaway and 3G will own 51 percent and current Kraft shareholders will own the other 49 percent.

The company’s management will be led by 3G officials. Alex Behring, managing partner at 3G and chairman of Heinz, will become chairman of Kraft Heinz. Bernardo Hees, a 3G partner who became CEO of Heinz in 2013, will be CEO of Kraft Heinz.

Companies run by 3G have a reputation for immediate cost cutting, and not just at the headquarters level. According to Reuters news service, when that group took over Heinz, they cut 7,000 jobs in 18 months and closed down six factories.

The Wall Street Journal told the story last month of a Heinz frozen-food plant in Idaho that was considered a “model factory,” but was closed down by the new owners. According to the newspaper, 3G decided the logistics of the factory in that remote state made it too costly.

Besides losing jobs, 3G-run companies also have a reputation for deep-level cost cuts. Reuters said one austerity measure at Heinz is a policy that limits employees to 200 pages per month on company printers.

The companies said they expect to cut combined costs by $1.5 billion a year by 2017 after the merger.

Kraft Heinz will produce a wide range of well-known consumer food products and Maxwell House will be one of its iconic brands, so it’s hard to imagine that the new operators would even think of closing down the Jacksonville plant.

Besides the plant at 735 E. Bay St., which celebrated its 100th birthday in 2010, the company only has one other U.S. coffee roasting plant in California, according to last year’s incentives application.

Twenty-five years ago, Maxwell House did decide it was going to close down one of its two East Coast plants, and city leaders took big steps to keep the Jacksonville plant open with a “Keep Max in Jax” campaign. The company instead closed its plant in Hoboken, N.J.

Hopefully, there will be no need for another “Keep Max in Jax” campaign as 3G takes over.

 

Behring has a history in Jacksonville

Behring, the Kraft Heinz chairman, is a familiar face to one group of Jacksonville executives.

In 2008, 3G and another hedge fund, The Children’s Investment Fund Management LLP, engaged in a high-profile proxy fight with Jacksonville-based CSX Corp. that resulted in four representatives of the two funds getting elected to CSX’s board of directors.

Behring was one of the new directors who joined the CSX board.

TCI and 3G together only owned 8.7 percent of CSX’s stock, so they did not have control over the company.

Behring stayed on the board until 2011, when he informed CSX that he would not stand for re-election. According to CSX, Behring decided to leave the board because of increased demands on his time after another major 3G acquisition, Burger King Holdings.

 

CSX meeting scheduled in May for Richmond

CSX will be getting some new board members this year, but there likely won’t be any drama this time around.

Two new directors have been nominated for election to fill vacant seats on the 13-member CSX board, according to the company’s proxy statement filed last week.

The new nominees include Oscar Munoz, who was promoted to president of the company in February. Michael Ward, the chairman and CEO, is the only CSX executive on the board of directors.

The other nominee is David Moffett, former CEO of the Federal Home Loan Mortgage Corp., commonly known as Freddie Mac.

CSX will be holding its annual shareholders meeting on May 6 in Richmond, Va., which should bring back some memories.

The railroad company moved its corporate headquarters from Richmond to Jacksonville in 2003 after Ward succeeded John Snow as CEO, but the company moves its annual shareholders meeting around to different cities every year.

CSX last held its annual meeting in Jacksonville in 2004. Last year’s meeting was in Boston.

Even when the company was headquartered in Richmond, its railroad operating headquarters were in Jacksonville and it had far more employees in Jacksonville than in Richmond, so it made sense to move the Fortune 500 company’s main office here.

The proxy statement shows the value of Ward’s total compensation package fell from $12.4 million in 2013 to $10.1 million in 2014, due to a lower value of stock awards last year.

 

FirstAtlantic declares first dividend

FirstAtlantic Financial Holdings Inc., which just became a public company a month ago, declared its first cash dividend last week.

The parent company of FirstAtlantic Bank said it will pay an annual 10-cent-a-share dividend to stockholders next month.

“We believe the ability to return value to our shareholders is an indication of the company’s financial strength and our positive outlook for the future,” CEO Mitchell Hunt said in a news release.

FirstAtlantic did not sell any shares as it went public but its stock became available for trading on the OTCQX market Feb. 23.

Data from the OTC Markets show the stock did not trade at all for the first month it was listed but was finally traded for the first time on Wednesday at $8.50 a share.

 

Atlantic Coast Financial names new CFO

Atlantic Coast Financial Corp. last week said in a Securities and Exchange Commission filing that it is hiring Tracy Keegan as executive vice president and chief financial officer.

The Jacksonville-based banking company has been searching for a new CFO since John Lent resigned in January after less than a year on the job.

Keegan has more than 27 years of banking experience, Atlantic Coast Financial said. She came to Florida in 2006 as CFO of Bank of Florida Corp., which was acquired by Jacksonville-based EverBank Financial Corp. in 2010. She then served as director of investor relations for EverBank during the transition and integration of the Bank of Florida offices into EverBank.

 

Analyst rates Regency at ‘neutral’

Robert W. Baird analyst R.J. Milligan began covering Jacksonville-based Regency Centers Corp. last week with a “neutral” rating, based on its stock’s valuation.

“Fundamentally, the company is firing on all cylinders,” Milligan said in his research note.

“Regency is posting solid SSNOI (same-store net operating income) growth and healthy leasing spreads and has an attractive development pipeline that will deliver much better yields vs. peers looking to grow externally through acquisitions,” he said.

However, Milligan has a $66 price target for Regency’s stock, which was trading at $69.60 at the time of his report. So “we are remaining on the sidelines until a more attractive entry point,” he said.

 

FNFV buying back shares at $15

Fidelity National Financial Ventures completed its “modified Dutch auction” by accepting for purchase about 12.3 million shares of FNFV stock at $15 each.

FNFV is a tracking stock created by Fidelity National Financial Inc. to represent the company’s non-real estate related investments.

Fidelity officials said last month it wanted to use some of FNFV’s excess cash to buy back stock and said it would pay between $14.30 and $15.40 a share in the Dutch auction process.

Shareholders who were interested had to pick a price within that range at which they were willing to sell, and Fidelity said it would buy FNFV shares at the lowest price that enabled it to spend $185 million.

FNFV’s stock was trading at $14.32 when the company announced the Dutch auction.

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