acquisition
ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed.
These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand.
This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.
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These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand.
This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.
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ATLANTIC TELE-NETWORK $79.45 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 16.4 million; Market cap: $1.3 billion; Dividend yield: 1.6%) is mainly focused on growing in the U.S., but it has just expanded further in the Caribbean. The company already has operations in Guyana, Bermuda and parts of the Caribbean islands.
Atlantic Tele-Network just agreed to pay $145 million for the Innovative group of companies, which operate cable TV, Internet and land-line services, primarily in the U.S. Virgin Islands and St. Maarten.
To put the acquisition in perspective, Innovative’s annual revenue is about $110 million. In the three months ended June 30, 2015, Atlantic’s revenue was $90.3 million, up 8.5%, from $83.3 million a year earlier.
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Atlantic Tele-Network just agreed to pay $145 million for the Innovative group of companies, which operate cable TV, Internet and land-line services, primarily in the U.S. Virgin Islands and St. Maarten.
To put the acquisition in perspective, Innovative’s annual revenue is about $110 million. In the three months ended June 30, 2015, Atlantic’s revenue was $90.3 million, up 8.5%, from $83.3 million a year earlier.
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ALCOA INC., $9.52, New York symbol AA, plans to split itself into two separate firms. One will focus on Alcoa’s upstream operations, which include mining bauxite ore and refining it into bulk aluminum products. This business will be the world’s fourth-largest aluminum producer, with $13.2 billion of annual revenue and gross earnings of $2.8 billion. The other company will focus on engineered aluminum products, such as components for cars and jet engines. This firm has $14.5 billion of annual revenue and gross earnings of $2.2 billion....
ENBRIDGE INC., $51.21, Toronto symbol ENB, has received regulatory approval to reverse the flow of crude oil on its Line 9 pipeline between Sarnia, Ontario, and Montreal. Under the plan, oil will now flow from Sarnia to Montreal. Enbridge will also increase the line’s capacity so it can handle heavy crude from Alberta’s oil sands. It took longer than expected for regulators to sign off, so the project’s cost jumped to $800 million from the company’s original estimate of $100 million. To put that in context, Enbridge earned $505 million, or $0.60 a share, in the three months ended June 30, 2015. The company still needs to finish some technical preparations, so it didn’t say when crude would start flowing through the line....
This Canadian REIT is growing fast by acquisition, which adds risk, but all of its properties are in the fastest-growing part of the U.S.
Drug stocks operate under distinct negatives. For example, new drugs take years to win regulatory approval, if ever. As well, they face increasing litigation and aggressive competition from generics. However, we feel Pfizer will continue to overcome these challenges. Its high research spending is letting it replace drugs whose patents are expiring. The company also recently acquired Hospira, an innovative firm that’s successfully developing and selling a new class of drugs called biosimilars. These treatments give Pfizer a new source of growth to offset sales lost to generic drug makers. The stock is up 65.0% for us since we first recommended it in our July 2011 issue, but we feel it still has plenty of gains ahead....
These three small-cap manufacturers continue to dominate their niche industries. They’re staying ahead of the competition by developing innovative products or building their businesses through timely acquisitions. But all three operate in cyclical industries, and their share prices have fallen lately as economic growth slows. The high U.S. dollar is also hurting the contribution from their overseas operations. We feel they’ll need signs of improving global growth to move higher. TENNANT CO. $55 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.3 million; Market cap: $1.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www. tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also manufactures cleaning gear for garages, stadiums, parking lots and city streets....
INTERNATIONAL FLAVORS & FRAGRANCES INC. $105 (New York symbol IFF; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 80.7 million; Market cap: $8.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.iff.com) makes over 36,000 compounds that improve the taste of food and the smell of consumer products. IFF recently paid $311 million for Lucas Meyer Cosmetics, a Quebec-based company that supplies ingredients to makers of cosmetics and personal care products. It also acquired Henry H. Ottens Manufacturing, a private Philadelphia-based firm that makes flavourings for major food makers. IFF paid $199.2 million for this business....
TEXAS INSTRUMENTS INC. $47 (Nasdaq symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $47.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 3.2%; TSINetwork Rating: Average; www.ti.com) has increased its quarterly dividend by 11.8%, to $0.38 a share from $0.34. The new annual rate of $1.52 yields 3.2%. It has now raised its payout annually for the past 12 years. In addition, the chipmaker has increased its share repurchase authorization by $7.5 billion. As a result, it can now buy back up to $9.3 billion of its shares, which is equal to 20% of its market cap. There are no time limits for these repurchases. Since 2005, it has bought back 40% of its outstanding shares. Texas Instruments is a buy....
