Regency Centers Corp. will retain its headquarters in Jacksonville and keep its management in place following its planned merger with Equity One Inc., but Equity One’s largest shareholder will become Regency’s largest stockholder.
Israel-based Gazit-Globe Ltd, which owns 34 percent of Equity One’s stock, will end up owning 13.2 percent of Regency after the merger.
Regency is issuing 0.45 shares of its stock for every Equity One share, putting the value of the deal at $4.6 billion when it was announced last Monday.
Gazit-Globe, like Regency, is a developer of mainly grocery-anchored shopping centers and owns all or part of development companies in North America, Europe, Israel and Brazil.
Gazit-Globe Chairman Chaim Katzman, who is also chairman of Equity One, will become vice chairman of Regency after the merger but it is not clear how much influence Gazit-Globe will have on Regency.
The companies said Gazit-Globe will be subject to a standstill agreement that would likely limit its ability to buy more Regency shares, but they said details of that agreement will come later.
Regency’s largest current shareholders are investment firms led by The Vanguard Group, which had a 14.1 percent stake as of Regency’s annual proxy filing in the spring.
The merger of Regency and Equity One is an “absolutely perfect fit,” Regency CEO Hap Stein said in a conference call with analysts after announcing the merger.
“We believe the merger is a unique opportunity that cannot be replicated given that Equity One and Regency are two extremely complementary companies,” he said.
“I also believe our organizations are culturally similar,” Equity One CEO David Lukes said in the conference call. The companies did not say if Lukes will stay with Regency after the merger.
The merged company will have 429 properties across the country. Although both Regency and New York-based Equity One have shopping centers in the Jacksonville area, Stein said the merged company’s biggest markets will be Southeast Florida, Southern and Northern California, the New York metropolitan area and the Baltimore-Washington, D.C., corridor.
Those five markets will account for about 50 percent of the company’s portfolio, he said.
The deal benefits Equity One stockholders, as Gazit-Globe said the value of the deal equals a 13.7 percent premium for Equity One shares.
Raymond James analysts Collin Mings and Paul Puryear upgraded their rating on Equity One from “underperform” to “market perform” after the merger.
“That said, we do not expect a competing bid to emerge and would not recommend short-term investors solely looking for a higher/better offer to jump into Equity One shares,” they said in a research note.
Regency’s stock fell $2.95 to $66.91 Tuesday after the late Monday merger announcement, which Mings and Puryear expected because of the price Regency is paying.
“Despite the pricing of the transaction (which we view as modestly dilutive to Regency’s net asset value), Regency will have enviable market and tenant exposure, as well as a healthy balance sheet following the deal,” they said.
Jefferies analyst George Hoglund also said in a research note that the price isn’t “cheap,” but “we view the transaction positively given expected earnings accretion (we estimate $0.10 - $0.15 in 2017), increased scale and the potential benefits from Regency’s development/redevelopment acumen applied to Equity One’s portfolio.
SunTrust Robinson Humphrey analyst Ki Bin Kim said in a research note he is “mildly positive” on the deal but wants to analyze it more.
“We fully understand Regency’s reasons to acquire Equity One, because Equity One has strong embedded organic growth and potential upside from development projects. Under Regency’s management, we think these development projects could be worth more because Regency has access to lower cost of capital and has a very extensive development team with a proven track record and capability,” he said.
Samsung revenue helps ParkerVision
ParkerVision Inc. often records no revenue at all in its quarterly reports, but the company did get revenue from its licensing agreement with Samsung Electronics Co. that brought it close to a break-even level in the third quarter.
Jacksonville-based ParkerVision, which has recorded net losses every year for more than two decades, reported an adjusted net loss of just $185,000, or 1 cent a share, in the third quarter after recording revenue of about $4 million.
“I think it’s an important takeaway from the revenue recognized this quarter that it does not take a large amount of revenue, especially compared with the license revenue potential that exists, to enable this company to become profitable, growing and a sustainable enterprise,” CEO Jeff Parker said in the company’s conference call with investors.
ParkerVision has numerous legal actions in place against major electronics manufacturers alleging they have been illegally using ParkerVision’s patented technology, which the company says improves the performance of wireless devices.
However, ParkerVision in July reached an agreement with Samsung to license the technology and settle its legal cases.
That agreement apparently accounted for the $4 million in third-quarter revenue, even though Parker talked around that in the conference call.
“Although the specific terms of our agreement with Samsung have to remain confidential, our financial statements show a $4 million increase in revenue this past quarter with margins you’d expect to see from a licensing program,” he said.
ParkerVision also has been testing a consumer product that it says improves in-home Wi-Fi performance, and Parker said it will hit the market soon.
“Our goal is to have a small number of these units available for purchase before the end of this year,” Parker said.
Between the Samsung deal and the consumer product, ParkerVision could be recording revenue on a regular basis going forward.
Stein Mart continuing younger strategy
Stein Mart Inc. on Thursday reported a net loss, as expected, for the third quarter ended Oct. 29, a quarter that was marked mainly by the abrupt departure of CEO Dawn Robertson after just six months on the job.
The Jacksonville-based fashion retailer reported a net loss of $11 million, or 24 cents a share, as total sales fell 0.4 percent to $299.5 million and comparable-store sales (sales at stores open for more than one year) dropped 4.6 percent.
Robertson, who had talked about attracting “younger attitudinal” customers to Stein Mart, resigned at the end of September amid concerns she was moving too quickly with new marketing strategies.
Interim CEO Hunt Hawkins, who took over when Robertson left, said in the company’s conference call Thursday that Stein Mart is continuing some of Robertson’s strategy.
“It is important that we evolve our merchandize assortments to attract a younger-thinking customer. As we began this in the spring and going into the fall, however, we did it too quickly, which alienated our loyal core customers. We have to be more thoughtful in how we change our assortments in the future,” he said.
Hawkins did not say if he is in line to become permanent CEO, but he did say the company is looking for a new president and chief merchandising officer.
“As you know, we are actively searching for an individual who can partner with our team members to develop and execute the tactics to drive to improve results. To that end, we have spoken with a number of very strong candidates and hope to update you with the results of our search soon,” he said.
Patriot earnings rise on property sale
Patriot Transportation Holding Inc. reported earnings of 63 cents a share for the fourth quarter ended Sept. 30, up from 48 cents the previous year. However, the earnings included a 24-cent gain from a previously announced sale of property in Tampa to the state of Florida by the Jacksonville-based trucking company.
“While I feel good about our team as we head into fiscal 2017, we still face some pretty tough operating conditions,” CEO Tom Baker said in Patriot’s conference call.
Those conditions include challenges of hiring and retaining drivers, which has impacted all trucking companies, and insurance costs, Baker said.
“I believe these challenges are also opportunities for us as we seek to provide our customers with safe and superior service that allows us to grow our business with them,” he said.
Dick’s Wings owner reports loss
ARC Group Inc., franchisor of the Dick’s Wings restaurant chain, reported a third-quarter net loss of $4,235. Revenue fell 26 percent in the quarter to $183,591, due to a decrease in royalties, the company said in its quarterly report filed with the Securities and Exchange Commission.
The company said in a news release it expects a significant increase in revenue from its planned acquisition of two franchised Dick’s Wings restaurants before the end of this year.
It expects those restaurants to increase revenue by more than $3 million a year.
All of the 24 Dick’s Wings restaurants are currently run under franchise agreements.