merger

MCCORMICK & CO. LTD. $40 (New York symbol MKC; Income Portfolio, Consumer sector; WSSF Rating: Average) is thinking about acquiring a controlling stake in one of India’s biggest makers of spices and other foods. Demand for processed foods in India is growing strongly as average incomes rise. McCormick could use it to expand sales in other parts of Asia. The company has also raised its quarterly dividend 11.1%, from $0.18 a share to $0.20. The new annual rate of $0.80 yields 2.0%. But at 24 times earnings, the stock is vulnerable to a sharp drop on any earnings setback. McCormick is a hold....

BOMBARDIER INC. (Toronto symbols BBD.A $3.91 and BBD.B $3.90; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) is the world’s third-largest maker of commercial passenger aircraft behind Boeing and Airbus. The aerospace unit supplies roughly 55% of Bombardier’s revenue, and 60% of its profit. The remaining revenue and earnings come from Bombardier’s transportation division, which is the world’s largest maker of passenger railway cars. Overseas customers account for 95% of Bombardier’s total revenue. In its third fiscal quarter ended October 31, 2006, Bombardier earned $0.03 a share (total $53 million) from continuing operations (all amounts except share price in U.S. dollars). It lost nil per share ($1 million) in the year-earlier quarter, which included a $25 million pre-tax restructuring charge. Revenue rose 3.0%, to $3.4 billion from $3.3 billion....

FEDERATED DEPARTMENT STORES INC. $43 (New York symbol FD; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) has agreed to sell its 780 bridal and formalwear stores for $850 million. The company acquired these stores as part of its merger with May Department Stores, but would rather focus on its core Macy’s and Bloomingdale’s department store chains. In its third fiscal quarter ended October 28, 2006, Federated earned $0.03 a share (total $20 million) from continuing operations, down sharply from $0.87 a share ($424 million) a year earlier. If you exclude merger costs and other one-time items, per-share earnings grew 25.0%, to $0.20 from $0.16. Sales rose 5.4%, to $5.9 billion from $5.6 billion, while same-store sales rose 5.9%. Federated will probably use the cash to pay down its long-term debt of $8.0 billion (0.6 times equity), or buy back stock. In the first three quarters of its current fiscal year, Federated repurchased $1.1 billion worth of its stock....

WINDSTREAM CORP. $14 (New York symbol WIN; Income Portfolio, Utilities sector; WSSF Rating: Average) earned $0.43 a share in the three months ended September 30, 2006, up 59.3% from $0.27 a year earlier. The company took its present form on July 17, 2006 through the merger of Alltel Corp.'s traditional phone business with Valor Communications Group Ltd. On a pro forma basis and excluding one-time items, per-share profits were unchanged at $0.22. Pro forma revenue fell slightly, to $794.8 million from $797.0 million. Access lines in service fell 4.2% in the latest quarter. But Windstream is doing a good job getting its Internet users to upgrade to high-speed service. That should help it offset these lost customers, and let it maintain its $1.00 dividend (7.1% yield). Windstream is a buy....

MOLSON COORS BREWING CO. $70 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) took its present form in February 2005 through the merger of Adolph Coors Co. and Molson Inc., a Canadian brewer. It is now the world’s fifth-largest brewer by volume. Major brands include Molson Canadian, Coors Light and Carling. The two companies merged because they felt they were too small to compete effectively with global brewers that enjoy large economies of scale. The merged company’s main goal was to cut its annual costs by $175 million in the first three years. Molson Coors now feels it can save a further $75 million by the end of 2008. That would give it $250 million in annual savings. Thanks to these savings, Molson Coors earned $1.56 a share (total $135.8 million) in the third quarter ended September 24, 2006, up 23.8% from $1.26 a share ($108.2 million) a year earlier. These figures included special charges of $28.5 million in the most recent quarter, and $33.5 million in the year-earlier quarter. Sales grew 3.3%, to $1.58 billion from $1.53 billion....

MOLSON COORS BREWING CO. $70 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) took its present form in February 2005 through the merger of Adolph Coors Co. and Molson Inc., a Canadian brewer. It is now the world’s fifth-largest brewer by volume. Major brands include Molson Canadian, Coors Light and Carling. The two companies merged because they felt they were too small to compete effectively with global brewers that enjoy large economies of scale. The merged company’s main goal was to cut its annual costs by $175 million in the first three years. Molson Coors now feels it can save a further $75 million by the end of 2008. That would give it $250 million in annual savings. Thanks to these savings, Molson Coors earned $1.56 a share (total $135.8 million) in the third quarter ended September 24, 2006, up 23.8% from $1.26 a share ($108.2 million) a year earlier. These figures included special charges of $28.5 million in the most recent quarter, and $33.5 million in the year-earlier quarter. Sales grew 3.3%, to $1.58 billion from $1.53 billion....

FORD MOTOR CO. $9 (New York symbol F; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Extra risk) continues to lose sales to Toyota and Honda. Ford earns substantial profits on trucks and SUVs, and the recent jump in gas prices has hurt demand for these vehicles. Consequently, Ford lost $2.79 a share (total $5.2 billion) in the third quarter of 2006. One-time costs related to a major restructuring also hurt its earnings. It lost $0.31 a share ($583 million) a year earlier. Revenue fell 8.4%, to $37.1 billion from $40.5 billion. The company hopes its latest restructuring will help bring its costs in line with sales. It plans to close plants, phase out unprofitable models and cut 30% of its workforce. It also aims to simplify its operations by using the same parts in different models....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $81; Conservative Growth Portfolio, Consumer sector; SI Rating: Average) is a wholly owned subsidiary of Molson Coors Brewing Company (New York symbol TAP), which was formed in February 2005 through the merger of Molson Inc. and Adolph Coors Co. Its exchangeable shares are equivalent to common shares of the parent company. The families of the two founding companies control roughly 79% of the votes. Molson Coors is the world’s fifth-largest brewer by volume. Major brands include Molson Canadian, Coors Light and Carling. It sells its products in four of the world’s top eight beer markets: North America, Europe, Latin America and Asia. The main reason for the merger was economies of scale in an increasingly competitive industry. The new company set a goal to cut its annual costs by $175 million in the first three years (all amounts except share price in U.S. dollars). In 2005, it realized $59 million in savings, which exceeded its $50 million target....

Beer sales have slowed down in the past decade, as many baby boomers drink less as they get older. Many boomers are also switching to premium wines and spirits. This has led to a consolidation trend in the brewing industry. Bigger breweries can afford to spend more on advertising to improve their market share. Their size also makes it easier for them to cut costs, and pass along higher commodity and packaging prices to customers. The merger of Molson and Coors two years ago gave both companies the size they needed to survive. Now that the merged company has finished the bulk of its restructuring, it is beginning to realize the benefits of the merger....

WACHOVIA CORP. $56 (New York symbol WB; Conservative Growth Portfolio, Finance sector; WSSF Rating: Average) has used acquisitions to grow in the past few years, including the 2001 merger of First Union Corp. and Wachovia Corp. The company’s recent purchase of Golden West Financial Corp. increased its assets by $125 billion. It is now the fourth-largest bank in the United States, with assets of $700 billion. Wachovia offers a full range of banking services through roughly 3,400 branches in 21 states. It also provides brokerage and wealth management services....