merger
MONSANTO CO. $97 (New York symbol MON, Aggressive Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 467.8 million; Market cap: $45.4 billion; Price-tosales ratio: 2.7; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.monsanto.com) has dropped its takeover offer for Switzerland-based rival Syngenta AG, the world’s largest maker of pesticides, herbicides and other agricultural chemicals.
A merger would have let Monsanto and Syngenta jointly develop new genetically modified seeds for corn, soybeans and other crops. Syngenta’s expertise would also improve Monsanto’s pesticide products.
In addition, the new firm could cut costs and improve its efficiency by combining distribution networks. Monsanto recently increased its bid by 5%, to $47 billion in cash and shares.
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A merger would have let Monsanto and Syngenta jointly develop new genetically modified seeds for corn, soybeans and other crops. Syngenta’s expertise would also improve Monsanto’s pesticide products.
In addition, the new firm could cut costs and improve its efficiency by combining distribution networks. Monsanto recently increased its bid by 5%, to $47 billion in cash and shares.
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INTACT FINANCIAL CORP., $90.20, symbol IFC on Toronto, is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink and belairdirect. In the three months ended June 30, 2015, Intact’s revenue rose 6.0%, to $2.34 billion from $2.21 billion a year earlier. Revenue improved across all of the company’s insurance lines and geographic regions. The early 2015 acquisition of Canadian Direct Insurance for $197 million also added to sales. Canadian Direct offers home, auto and travel insurance, mainly in Alberta and B.C. Earnings rose 1.9%, to $210 million, or $1.56 a share, from $206 million, or $1.53. Intact continues to write more profitable insurance policies and cut its operating costs....
BOMBARDIER INC., Toronto symbols BBD.A $1.75 and BBD.B $1.63, has denied media reports that it’s planning to merge its passenger-railcar business (Bombardier Transportation) with Germany-based Siemens AG. However, the company still plans to sell shares in Bombardier Transportation through an initial public offering later this year—though it will continue to own a majority stake. Bombardier will probably use the cash from this sale to pay down its $8.9-billion U.S. long-term debt, which is a high 315% of its $3.7-billion (Canadian) market cap....
Aggressive growth has given CF Industries a strong position in natural gas fertilizers, but in this field our buy goes to a Canadian rival.
KRAFT HEINZ CO. $78 (Nasdaq symbol KHC; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 1.2 billion; Market cap: $93.6 billion; Price-to-sales ratio: n.a.; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.kraftheinzcompany.com) took its current form on July 2, 2015, through the merger of Kraft Foods Group (old Nasdaq symbol KRFT) and H.J. Heinz. The new firm is North America’s third-largest food and beverage company and the world’s fifth biggest. It will have $29.1 billion of annual revenue, including eight brands with over $1 billion in yearly sales. The stock trades at a high 27.5 times the $2.84 a share the new firm should earn in 2015. However, that multiple should improve in the next few years as the company starts to see savings from merging plants and combining distribution networks. The $2.20 dividend yields 2.8%....
CF Industries Holdings Inc., $58.42, symbol CF on New York (Shares outstanding: 235.3 million; Market cap: $13.9 billion; www.cfindustries.com), makes nitrogen-based fertilizers from natural gas.
The company has six plants: four in the U.S. and two in Canada. It also owns 75.3% of Terra Nitrogen, which makes nitrogen fertilizers at an Oklahoma facility, and operates fertilizer plants in the U.K. and Trinidad through joint ventures.
In March 2014, CF sold its phosphate mining and manufacturing operations to Mosaic Co., symbol MOS on New York, for $1.4 billion. That’s the main reason why its revenue declined 15.8% in the three months ended March 31, 2015, to $953.6 million from $1.1 billion a year earlier.
Earnings fell 62.9%, to $0.96 from $2.58 (all per-share amounts adjusted for a 5-for-1 stock split in June 2015). Excluding unusual items, such as a gain on the sale of the phosphate business, per-share profits were unchanged at $0.97.
CF recently agreed to pay $580 million for the 50% of a U.K.-based joint venture that it doesn’t already own. The deal will close later this year. This business accounts for 40% of the U.K.’s fertilizer market.
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The company has six plants: four in the U.S. and two in Canada. It also owns 75.3% of Terra Nitrogen, which makes nitrogen fertilizers at an Oklahoma facility, and operates fertilizer plants in the U.K. and Trinidad through joint ventures.
In March 2014, CF sold its phosphate mining and manufacturing operations to Mosaic Co., symbol MOS on New York, for $1.4 billion. That’s the main reason why its revenue declined 15.8% in the three months ended March 31, 2015, to $953.6 million from $1.1 billion a year earlier.
Earnings fell 62.9%, to $0.96 from $2.58 (all per-share amounts adjusted for a 5-for-1 stock split in June 2015). Excluding unusual items, such as a gain on the sale of the phosphate business, per-share profits were unchanged at $0.97.
CF recently agreed to pay $580 million for the 50% of a U.K.-based joint venture that it doesn’t already own. The deal will close later this year. This business accounts for 40% of the U.K.’s fertilizer market.
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ALAMOS GOLD $4.36 (Toronto symbol AGI TSINetwork Rating: Speculative) (604-681- 2802; www.alamosgold.com; Shares outstanding: 127.4 million; Market cap: $1.5 billion; No dividends paid) is the company formed by the merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold. The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which will sharply increase its costs. Alamos Gold holds cash of $358.0 million, which it will use to fund the Young-Davidson mine and boost the combined firm’s gold output from 400,000 ounces this year to 700,000 in 2018....
MICROSOFT CORP., $44.61, Nasdaq symbol MSFT, paid $9.5 billion for Nokia’s mobile phone operations in April 2014. If you exclude the cash this business held, the purchase price was $8.0 billion. Nokia is the only major phone maker using Microsoft’s Windows Phone software. Microsoft believed this purchase would help it sell more of its phones and encourage developers to write more apps for the platform. However, sales of Windows Phone devices continue to suffer in the face of intense competition from the iPhone and Android-powered devices. Smartphones running Windows account for just 3% of global sales....
KRAFT HEINZ CO. $78 (Nasdaq symbol KHC; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 1.2 billion; Market cap: $93.6 billion; Price-to-sales ratio: n.a.; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.kraftheinzcompany.com) took its current form on July 2, 2015, through the merger of Kraft Foods Group (old Nasdaq symbol KRFT) and H.J. Heinz.
The new firm is North America’s third-largest food and beverage company and the world’s fifth biggest. It will have $29.1 billion of annual revenue, including eight brands with over $1 billion in yearly sales.
The stock trades at a high 27.5 times the $2.84 a share the new firm should earn in 2015. However, that multiple should improve in the next few years as the company starts to see savings from merging plants and combining distribution networks. The $2.20 dividend yields 2.8%.
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The new firm is North America’s third-largest food and beverage company and the world’s fifth biggest. It will have $29.1 billion of annual revenue, including eight brands with over $1 billion in yearly sales.
The stock trades at a high 27.5 times the $2.84 a share the new firm should earn in 2015. However, that multiple should improve in the next few years as the company starts to see savings from merging plants and combining distribution networks. The $2.20 dividend yields 2.8%.
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ALAMOS GOLD $4.36 (Toronto symbol AGI TSINetwork Rating: Speculative) (604-681- 2802; www.alamosgold.com; Shares outstanding: 127.4 million; Market cap: $1.5 billion; No dividends paid) is the company formed by the merger of Alamos Gold and Stock Pickers Digest recommendation AuRico Gold.
The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which will sharply increase its costs.
Alamos Gold holds cash of $358.0 million, which it will use to fund the Young-Davidson mine and boost the combined firm’s gold output from 400,000 ounces this year to 700,000 in 2018.
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The combined firm owns the Mulatos mine in Mexico and the Young-Davidson project in northern Ontario, which holds as much as 5.6 million ounces of gold. Young- Davidson started up in 2013 and will reach full production in 2016. But meanwhile, it’s moving from open-pit to underground mining, which will sharply increase its costs.
Alamos Gold holds cash of $358.0 million, which it will use to fund the Young-Davidson mine and boost the combined firm’s gold output from 400,000 ounces this year to 700,000 in 2018.
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