The Basch Report: Wall Street expects another Web.com bid
Stock surges past $28 offered by Siris Capital Group to buy the Jacksonville-based company.
| 5:20 a.m. August 9, 2018
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To no one’s surprise, Web.com Group Inc. announced Monday that Siris Capital Group LLC increased its buyout price for the Jacksonville-based website services company.
It was no surprise because from the day the companies announced the buyout agreement at $25 per share, Web.com’s stock has traded above $25.
That means investors were expecting a higher bid to come in during the 45-day go-shop period, when Web.com was allowed to actively seek higher offers. Wall Street usually has a pretty good sense of those things.
So, we’re now waiting for a higher offer than Siris’ new agreement to buy Web.com for $28 a share.
Why? Well, Web.com’s stock jumped above $28 after the two companies announced the new price just before the market opened Monday.
Web.com said one party did make a higher offer than the original agreement of $25 during the 45-day period and while the new agreement does not include a go-shop clause, Web.com said it does allow the company to accept a higher offer than $28.
If Web.com agrees to an offer from another bidder, it would have to pay a $39.1 million termination fee to Siris.
Web.com has about 50 million shares outstanding, so every $1 increase raises the buyout price by $50 million.
The company said the total value of the original offer was about $2 billion, which included the assumption of debt.
Web.com’s stock rose $2.65 to $25.85 after the original agreement was announced June 21. The stock continued to trade between $25 and $26 in the 45 days after that.
The stock closed Friday at $25.40 but after the new agreement was announced, it opened Monday at $28.05 and traded as high as $28.30 that day.
Web.com also last week announced second-quarter earnings of 13 cents a share, 3 cents lower than last year, with revenue about unchanged from last year's second quarter.
Because of the buyout agreement, the company did not hold the customary conference call with analysts to discuss the results.
The buyout by Siris is planned to close in the fourth quarter. Based on Wall Street’s expectations, we’ll be watching for a higher price to come in before then.
Big FRP profit from property sale
After selling its portfolio of industrial warehouses for $359 million, FRP Holdings Inc. last week reported a big second-quarter profit of $120 million, or $11.87 a share.
That compares with earnings of $1.7 million, or 17 cents a share, in the second quarter of 2017 when there was no big property sale.
With all that money available to deploy into new assets, the Jacksonville-based real estate company isn't rushing into any new deals until the time is right, CEO John Baker said during FRP's conference call.
“The good news is that we believe we sold at peak values, but we certainly don't want to buy and redeploy our money at peak values,” Baker said.
Regency has faith in traditional retail
Despite warnings that the Internet is killing traditional retailers, Jacksonville-based shopping center developer Regency Centers Corp. continues to have faith.
“The best grocers and retailers are not standing still,” Regency CEO Hap Stein said in the company’s quarterly conference call last week.
“They are focused on meeting the evolving needs of today’s consumer by allowing customers to choose how, where, and when they will shop. A physical store presence remains a critically important channel where retailers connect and service their customers,” he said.
Regency owns all or part of 428 shopping centers across the country, most of which are anchored by supermarkets. Its properties were 95 percent leased as of June 30.
“Regency’s top grocers and retailers, including Publix, Kroger, Whole Foods, TJX, Ulta, Panera and Orangetheory Fitness, to name a few, are addressing the evolving landscape through significant investments in technology, in experience, in price and in many cases, significant store expansions,” Stein said.
Regency reported funds from operations of 93 cents in the second quarter, up from 84 cents the previous year.
Funds from operations basically are earnings excluding noncash charges such as depreciation and amortization expense, and are a key indicator of a real estate investment trust’s performance.
Publix sales, earnings rise
Publix Super Markets Inc. last week said second-quarter sales rose 4 percent to $8.8 billion, with comparable-store sales (sales at stores open for more than one year) rising 1.7 percent.
Sales rose despite a negative impact from the Easter holiday coming in the first quarter this year, the Lakeland-based grocer said.
Net income in the quarter rose by 19 cents a share to 84 cents.
Publix also said based on the latest appraisal, its stock price increased from $41.75 on May 1 to $42.55 on Aug. 1.
The stock is made available for sale only to employees and its stock price is determined by appraisals five times a year.
Rayonier profiting from Wildlight
Rayonier Inc. last week reported second-quarter earnings of 28 cents a share, 8 cents higher than last year, with sales up 22 percent to $245.9 million.
The Yulee-based timber and real estate company continues to profit from its growing Wildlight mixed-use development in Nassau Country.
“We're very pleased to see that our real estate strategy is yielding strong results and meaningfully augmenting our core timberland returns,” CEO David Nunes said in the company's conference call.
Rayonier AM expands in Nassau
Rayonier Advanced Materials Inc. also is hoping to profit from an expansion in Nassau County, the recent completion of a lignin plant in Fernandina Beach under a joint venture.
“This investment was important for our business not only because it will deliver strong returns of our capital in the high teens, but it also makes our Fernandina Beach cellulose specialties plant a more reliable facility by giving us the flexibility of using the lignin as energy or as a base raw material,” CEO Paul Boynton said in Rayonier AM's conference call.
The Jacksonville-based company, which more than doubled in size with the acquisition of Tembec Inc. last year, reported second-quarter adjusted earnings of 60 cents a share, up from 11 cents last year.
FIS earnings rise in second quarter
Fidelity National Information Services Inc. reported adjusted second-quarter earnings of $1.23 a share, up from $1.04 a share last year.
Revenue for the Jacksonville-based bank technology company rose 6.7 percent to $2.1 billion.
“We continue to see strong client engagement around investing for the future, signaling increasing demand for our solutions. Sales momentum continues to be strong with a solid pipeline and growth in our revenue backlog,” CEO Gary Norcross said in the company's conference call.
RiverTown deal fees help St. Joe
The St. Joe Co. more than doubled second-quarter earnings to $26.2 million, or 41 cents a share, helped by a payment related to the 2014 sale of its RiverTown development in St. Johns County.
St. Joe said Mattamy Homes, which bought the development, paid St. Joe $23.1 million that was due for impact fees for the RiverTown project, which is along the St. Johns River in the northern part of the county.
St. Joe previously was headquartered in Jacksonville but moved to Watersound in the Florida Panhandle in 2010.
New contract helps Advanced Disposal
Ponte Vedra-based Advanced Disposal Services Inc. reported second-quarter earnings rose by 3 cents to 19 cents a share, with revenue up 3.9 percent to $398.1 million.
CEO Richard Burke said in a conference call that the waste management company benefited from a large municipal contract that began in late 2017, which increased its residential business.