Notes to myself: EssilorLuxottica

I have written about the EssilorLuxottica merger here.

The transaction would entail a strategic combination of Essilor’s and Luxottica’s businesses consisting of (i) Delfin contributing its entire stake in Luxottica (approx. 62%) to Essilor in return for newly-issued Essilor shares to be approved by the Essilor shareholders meeting, on the basis of the Exchange Ratio of 0.461 Essilor shares for 1 Luxottica share, and (ii) Essilor subsequently making a mandatory public exchange offer, in accordance with the provisions of Italian Law, to acquire all of the remaining issued and outstanding shares of Luxottica pursuant to the same Exchange Ratio and with a view to delist Luxottica’s shares.

 

EssilorLuxottica_chart.PNG

This is a Chart of bought companies from 16.01.2017 till today. Luxottica have performed poorer.

I have found no news on the deal “not going through”.

 

Some Math:

Essilor is at 108,226 Euro today

Luxottia is at 49,30  Euro today

“on the basis of the Exchange Ratio of 0.461 Essilor shares for 1 Luxottica share”

108,226 * 0.461 = 49.892 Euro …

Bottom Line:

Buy Luxottia at 49,30€ … get value of 49,89€ … 1,1% difference = minimal

 

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Bending the odds in your Favor?

A little excursion in the world of betting:

A german Betting-Agency is offering you 100€ if you create a new account. (I don’t say which because I don’t want to promote them). Maybe there is a way to bend the odds in my favor with that. Let’s calculate the probabilities on that.

 

The terms of that offer are:

  • if you pay in 100€ you will get additionally 100€ betting money for free
  • you have to be a new customer
  • you have to bet twice on a bet with a quote of min. Quote of 3,00 (!)
  • you have 90 days time for that
  • real money and your bonus money will be accounted separately (?)
  • money you made with the bonus money can’t be transferred to the real money account (???)
  • no long-term bets

 

(???) Really, whats the point then guys? The fake money you gave me should stay in a fake account you gave me untill I have lost it on some low probability bets? Then the sunk cost fallacy kicks in and I want to win my lost money back and you have created a new customer? Really? Is that your plan? Conclusion for me: always read the fine print!

But I still want to make the math on that:

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Realpage

RealPage is a leading provider of on-demand software solutions for the rental housing industry. RealPage was founded in 1998 with the acquisition of Rent Roll, Inc. Steve Winn is Chairman of the Board & Chief Executive Officer of RealPage Inc – he owns approximately 32,1% of the shares (looks like he is selling shares (link).

RealPage’s customers include Real Estate Investment Trusts (REITS), leading property management companies, fee managers, regionally based owner operators and service providers. Their customers currently include nine of the ten largest multi-family property management companies in the United States. Principally, all of their revenue is earned in the United States so the company has a dependence on US-housing market.

The Stock is now selling for 21,96 USD (Nasdaq)

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The New Coke: Coca-Cola European Partners

First I want to appologize that the last post came out unfinished. Thought it was a good Idea to release a post on the first day of trading. I edited the post several times over the day. I plan to not do that again.

As I have written here, Coca-Cola Enterprises, Inc., Coca-Cola Iberian Partners SA and Coca-Cola Erfrischungsgetränke AG, a wholly owned subsidiary of The Coca-Cola Company, have agreed to combine their businesses into a new company to be called Coca-Cola European Partners Plc (CCEP).

Coca-Cola Enterprises shareholders own 48% of the combined company, Coca-Cola Iberian Partners shareholders own 34%, and Coca-Cola – which owned Coca-Cola Erfrischungsgetränke – holds claim to the remaining 18%.

The European Bottling Market for Coke is splited up between the new CCEP and Coca-Cola HBC AG (Swiss, Austria, Italiy, Greece, Eastern Europe, Russia) while Coca-Cola European Partners Plc is the largest Anchor bottler.

The Coca-Cola System or what is a Bottler? The Coca Cola Company (KO) manufactures and sells concentrates, beverage bases and syrups to bottling operations, owns the brands and is responsible for consumer brand marketing initiatives. Coca-Cola bottling partners manufacture, package, merchandise and distribute the final branded beverages to customers and vending partners, who then sell the products to consumers.

 

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Bayer AG / Monsanto

The german chemical and pharmaceutical company Bayer want’s to buy U.S. agrochemical company Monsanto (link: press release Bayer)

Bayer has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto Company for USD 122 per share or an aggregate value of USD 62 billion

Note: The shares are trading at around 110 $, this still would be an upside of roughly 10% now – looks like the market sees some uncertainties. I see the undisturbed price for Monsanto at around 90 – 95$.

Monsanto rejects $62B Bayer bid, but still is open to talks (link)

Monsanto shares closed regular trading up 3.1 percent at $109.30 and gained another 1.5 percent in after-hours trading, rising to $111.

Meanwhile:

Werner Baumann, CEO of Bayer AG is buying stocks almost worth 1 million € (link news in german language)
Moody’s reviews Bayer’s ratings for downgrade on Monsanto acquisition announcement (link Moodys)
Random people throwing around random numbers (link)
Some Bayer shareholders don’t like the deal (link)
That could be a problem, with some saying Bayer’s proposal, at 15.8 times Monsanto’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ended Feb. 29, is already a stretch for the German company.

Let’s take a look at what Bayer is planning to pay for 62 bn

I looked at Monsantos 2015 annual report, which besides some nice photos of families marvel at corn presents us this numbers:  (link)

BAY-MON

Their 2024 Bond yields 3.24% (link morningstar)

From the 2Q2016 report (link)

Monsanto updated its fiscal year 2016 as-reported EPS guidance to be in the range of $3.72 to $4.48 per share, primarily due to a change in the expected timing for the accounting of restructuring expense. The company confirmed ongoing EPS guidance in the range of $4.40 to $5.10 per share.

Let’s be optimistic and assume that they can reach the $5.10 per share. At a price of 122 USD this would be a PE-ratio of 23.9 – not that cheap.

Bottom Line:

Like in mostly M&A activities this is an interesting case with some uncertainties and some chances. I don’t have deeper insight into this one but I will follow this from the sideline and hopefully will learn something from it. I’m planing to look at Bayer next.

Disclaimer: The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!

Hormel Foods 2Q 2016

Hormel Foods Corporation is an American food company based in Austin, Minnesota. Hormel sells food under many brands, including the Chi-Chi’s, Dinty Moore, Farmer John, Herdez, Muscle Milk, Jennie-O and many more.

From the Hormel Foods 2Q 2016 report

The company reported fiscal 2016 second quarter record net earnings of $215.4 million, up 20 percent from net earnings of $180.2 million last year. Diluted earnings per share for the quarter were $0.40, up 21 percent from $0.33 last year. Sales for the quarter were $2.3 billion, up 1 percent from last year.

The stock lost about 8,5% on that news – wall street is a crazy planet.

I played around with some numbers. I am calculating with an EPS of 2,11 US$ for 2020 which is a very conservative assumption. Considering a PE-ratio of 16 (decreasing ratio, this could be wrong) in the future the stock would sell at 33,76 US$ in year 2020 – which is lower than now.

Hormel 2Q16

 Effective May 16, 2016, the company paid its 351st consecutive quarterly dividend, at the annual rate of $0.58.

At 35,48 USD for the share the dividend yield is at 1,6%

Hormel Foods is without questions a high-quality business but for me it is selling at a to high price, even after the drop yesterday.

 

Disclaimer: The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!