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2/15/2019

Premier Foods Drops Plans to Sell Dessert Brand Ambrosia

Reuters (02/15/19) Hussain, Noor Zainab

Premier Foods Plc (PFODF) said it has decided not to sell its Ambrosia rice pudding and custards brand to reduce debt of more than 500 million pounds ($645 million), citing a difficult business climate that could have hurt the deal value. Ambrosia was put up for sale in November, when company leader Gavin Darby stepped down under pressure from an investor; Darby had failed to halt a share price decline since a proposed takeover by U.S. spice company McCormick & Co. Inc. (MKC) fell apart two years ago. "The Board has concluded that in the present business climate the process will not result in a satisfactory financial outcome. As a result, these discussions have now concluded," Premier Foods said in a statement. Premier Foods has been reducing costs as part of a two-year plan launched in 2017 by laying off people and streamlining its warehousing and distribution network. Its plan to sell only Ambrosia was at odds with Oasis Management's demand that it divest its Batchelors soup brands.

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2/15/2019

After Review, Brookdale Will Not Split Company in Two

Nashville Business Journal (02/15/19) Stinnett, Joel

Brookdale Senior Living Inc. (BKD) on Feb. 14 said it will not spin off its company owned real estate into a separate investment trust, rejecting repeated calls from investors to do so. Brookdale CEO Cindy Baier made the announcement during the company's fourth quarter earnings call, saying the management team came to the decision after a "comprehensive review." She said tax, valuation, capital, and existing lease concerns were all factors in Brookdale's decision not to spin out a separate REIT. She said Brookdale was assisted in the review by an outside financial adviser who was suggested by an investor that has called for the company to spin off its real estate. "Ultimately ... we simply did not see a path to unlocking value through implementation of this type of transaction at this time," Baier said. "The best way to create shareholder value is through executing our operational turnaround strategy. ... The reality is that we are a senior living health care operator that intentionally owns real estate." Land & Buildings Investment Management LLC Chief Investment Officer Jonathan Litt has been the most vocal proponent publicly urging Brookdale to sell off or spin out its real estate holdings. Litt's firm has a 3.2% stake in Brookdale. Litt has sent numerous letters addressed to shareholders with ideas to boost shareholder value and calls for structural change at the company. Bloomberg in December said that Litt approached Brookdale's management team with the notion of splitting the company into a separate REIT and senior-housing operator. Litt said moving the company's premiere properties into a separate REIT would add value to Brookdale's share price but no agreement was reached on whether to seek a split, according to Bloomberg. It's not clear whether Litt was the investor who recommended the outside financial adviser that aided with the review.

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2/15/2019

Carl Icahn Builds 10% Stake in Caesars

Financial Times (02/15/19) Fortado, Lindsay; Indap, Sujeet

Carl Icahn has amassed a 10% stake in Caesars Entertainment (CZR) and is pushing the casino chain to sell itself. A source says Icahn contacted Caesars on Feb. 14 to say he had built a stake that exceeds 10% when derivatives transactions are included. He also told the company he might seek a board seat but has not yet decided; he must make that decision by early March. The source also noted that the board is open to a sale or merger but is waiting for the right opportunity.

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2/15/2019

Exclusive: Portugal Government Sees Elliott's Plan for EDP Brazil as 'Unfortunate'

Reuters (02/15/19) Goncalves, Sergio

On Feb. 15, Portuguese Environment and Energy Transition Minister João Matos Fernandes called Elliott's plan for EDP-Energias de Portugal (EDPFY) to sell its Brazilian operations "unfortunate," indicating that the company would be leaving a fast-growing market. EDP's board rejected a 9 billion euro ($10.13 billion) bid from Chinese state-owned CTG, its largest shareholder with a 23% stake, calling the 3.26 euros per share offer too low. In what it calls a "superior" alternative to CTG's bid, Elliott—which has a 2.9% stake in EDP—proposed raising 7.6 billion euros from a sale of the utility's Brazilian operation, Iberian thermal holdings, and minority stakes in Spanish and Portuguese networks. According to Fernandes, "EDP is free to make the decisions it wants but selling the Brazil operation does not seem to be important for what EDP represents for the national economy."

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2/14/2019

PG&E Governance Brownout Calls for a Jump Start

Breakingviews (02/14/19) Silva Laughlin, Lauren

California utility PG&E (PCG) wants to replace half of its board members with independent candidates. However, shareholder BlueMountain Capital Management is preparing to nominate a full slate of new directors to replace the current board at the troubled company. The move by BlueMountain, which owns little more than 2% of PG&E, is likely a negotiating ploy because companies rarely lose their entire board in a single move, writes Breakingviews columnist Lauren Silva Laughlin. Several board members were around in 2010 when a pipeline explosion resulted in a felony conviction for PG&E. Wildfires in the past two years have led to short-term liquidity problems that have prompted PG&E to file for bankruptcy, which suggests significant lapses in financial and risk management. While the bankruptcy complicates matters, BlueMountain's other stakes in PG&E suggest that its interests might not be aligned with those of other shareholders. A compromise, like what happened last year at Campbell Soup (CPB) when Third Point called for a new slate of directors, is the most likely outcome, according to Laughlin.

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2/14/2019

Nestle Cuts the Meat in Bid to Build Healthier Food Giant

Bloomberg (02/14/19) Gretler, Corinne

Nestle SA's (NSRGY) troubled Herta lunch-meat business will be sold as CEO Mark Schneider attempts to boost sales growth through acquisitions and divestments. The world's largest food company saw its shares rise as much as 3.7% to a record as it forecast improved sales. The Swiss company also said it would cede control of its dermatology unit by the middle of the year. Under pressure from investor Dan Loeb, Nestle forecast 700 million francs of restructuring costs this year. Further, the company is accelerating its share buyback to complete the 20 billion-franc program six months early. Schneider indicated that the company is not excluding further mergers or acquisitions. "Acquisitions could easily be financed," he said. "We have strong cash generation, and one of the strongest balance sheets in the industry." Meanwhile, after criticism from Loeb that the company's board lacks consumer-goods expertise, it proposed Dick Boer, former CEO of Dutch grocer Ahold (ADRN), and Dinesh Paliwal, CEO of car-stereo maker Harman, as new directors.

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2/14/2019

PPG to Shutter Automotive Coatings Facility in Michigan

Pittsburgh Post-Gazette (02/14/19) Gannon, Joyce

PPG (PPG) plans to shutter in June an automotive coatings services plant in Livonia, Mich. Layoffs could start prior to the closure, according to a notice the company filed with the state of Michigan. The company said in its fourth-quarter earnings report released in January that sales of automotive original coatings declined by 5% because of lower demand in its China and Europe markets and an overall slowdown in global automobile production. PPG said in a statement that the closure is "part of ongoing efforts to optimize operations and better service customers." The company is considering whether to split its industrial coatings business, which includes original automotive coatings, from its architectural segment, which includes house paints. Separating the operations was among changes called for by Nelson Peltz whose Trian Fund Management has a 3% stake in the company. PPG anticipates finalizing its study of whether to separate the units by the end of this year's second quarter.

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2/14/2019

Carl Icahn to Push Casino Operator Caesars to Consider Selling Itself

Wall Street Journal (02/14/19) Lombardo, Cara

Sources say Carl Icahn plans to pressure Caesars Entertainment Corp. (CZR), of which he owns 10%, to consider selling itself. The sources note that Caesars has received at least two approaches in recent months, from Eldorado Resorts Inc. (ERI) and Golden Nugget LLC (GDEN). Talks with Eldorado went nowhere, and Caesars rejected Golden Nugget's proposed combination, according to the sources. They say Icahn believes Caesars would be better managed in the hands of a rival and wants the company to allow shareholders, rather than the board, to decide if it should be sold. They added that Icahn's 10% stake is through swaps that do not give him control of the shares but allow him to benefit from any price increase. Further, the sources say Icahn got involved after a handful of shareholders asked him to help get the company sold. He reportedly has not ruled out launching a proxy fight, but the deadline for doing so is March 1.

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2/14/2019

Prominent Investors Stock Up on eBay, Then Hedge Funds Flex Muscle

Reuters (02/14/19) Herbst-Bayliss, Svea

Several prominent hedge funds either established new or added to existing positions in EBay Inc. (EBAY) in late 2018, because they are convinced that change is on the horizon despite the company's stock price having slumped for most of the year. New investments were made by Baupost Group and BlueMountain Capital. Hudson Bay Capital Management and Adage Capital Partners expanded their bets during the fourth quarter, and UBS AG (UBS), Citigroup Inc. (C), JPMorgan Chase (JPM), and Morgan Stanley (MS) purchased millions of new shares as well. Observers note that eBay's nearly 30% gain in share price during the first seven weeks of trading this year likely was fueled by behind-the-scenes moves by Elliott Management and Starboard Value, which built stakes in the company recently. A regulatory filing from Elliott showed that it made a new bet on eBay in the fourth quarter, listing call options on 8.5 million shares. Although eBay was not listed on Starboard's filing, sources say the hedge fund also built a stake and contacted management. Meanwhile, on Feb. 14, eBay announced a restructuring plan that will unite geographic regions under a global segment and said senior executive Scott Cutler will leave the company.

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