St. Louis Corporate Mergers, Acquisitions & Relocations

New and changing stores, restaurants, and businesses in the City of St. Louis
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St. Louis corporations have been on a spending spree recently. Just in the last two weeks:

Emerson Electric's $1.5b offer for the Chloride Corporation (a UK maker of power supply systems) beat out the rival bidder ABB of Switzerland today. The bid is highly likely to be accepted by Chlorides board & shareholders.

Stifel Nicholaus's $318mm purchase of Thomas Weisel Partners, an investment bank headquartered in San Francisco, was completed today.

Ralcorp's $1.2b offer for the American Italian Pasta Company was accepted by that company's board (and the shareholders should follow shortly) on Monday June, 21st.

Boeing's $775mm purchase of defense engineering firm Argon ST was announced yesterday.

It's always great to see St. Louis companies being optimistic and opportunistic, and expanding and diversifying their operations.
Agree, One that went on the back burner that would be a boon to the St. Louis corporate image is Peabody's play on the Autstralian Firm (can't recall the correct name). That play is a major attempt to secure a significant part of supplying China.
As has been noted many times previously in our detriment, StL’s stock of public companies lacks in being HQ of many new, small companies in new industries. While I of course would like to see more companies like Stereotaxis grow and go public, I very much love seeing our established, strongest companies succeed, and especially in times like this.

When we see the local area’s large capitalization companies, with great cash reserves, able to be dynamic in environments like these, we can expect mergers and acquisitions in their favor. They are able to make huge bids for competitors and companies that can become competitive subdivisions. If a company has a strong dividend, then they are more apt to have the cash and creditworthiness to acquire others around the world. Look at how Peabody was in a bidding war with a Hong Kong company over competing bids for an Australian coal operation. Just recently, I think they made a JV deal in central China / Mongolia.

That does not preclude new companies with dynamic business plans from growing through acquisitions as well. I’m pretty sure that Express Scripts, recently proclaimed the largest metro company by total market capitalization, has experienced part of its growth through M&A.

Currently, the markets are really screwed up, and companies are being judged less for investment worthiness based on earnings alone. Today, something like 78% of all companies on the S&P 500 moved in a highly correlated fashion. I can say sincerely that these are some weird times going on, and there are few “safe havens” to put large chunks of money to work (Side note: As an investment guy, I’m really freaked out by a lot of things out there, from HFT & flash crashes to fair value worries of the S&P). Right now, this may be the best time to invest specifically in taking out one’s competition and making them your own strength.

Of course StL isn’t the only city seeing this. A company I follow named Celgene, in Summit, NJ, made a significant acquisition announced early Thursday, purchasing a company named Abraxis. This isn’t StL-related, but it does show that now is the time for good companies to get better through buyouts.

While we lament the acquisitions of some of our city’s formerly HQ’d companies being acquired by companies based outside of the metro area, such as May, A-B, AG Edwards, McDonnell Douglas, and TWA, our companies also take part in many acquisitions ourselves, and the counter-effects are felt where those companies acquired are based. Heck, even think of Richmond, VA after they had all their investment pros move to StL for Wachovia Securities, only to see the bank side of Wachovia go up in flames shortly thereafter. The great advantage to a local area of having a company bought out is that the preponderance of M&A buyouts are for great premiums to the regular trading prices, and with many individual shareholders living in the constituent metro area of the acquired company, they get fat money, and quickly. Honestly, for that $75/ share buyout premium, those locals who held BUD made a helluva lot on their money. (Why are they known to be so stingy? Part of that’s because they’ve got such a huge debt load afterwards, trying to sell Sea World and the parks, etc.)

What I really enjoy watching this is that many of the companies being acquired by our local companies are international in scope, many based fully outside the US. As the metro area sees more companies working in new markets, especially those in advancing economies, it provides new opportunity for substantial growth. Meanwhile, the Stifel buy of that San Fran firm helps my favorite local b/d firm increase its core strengths and offerings.

These buys really show the strategic intelligence of our local companies’ principal leadership. I bet we’ll see more of these for the next little while (although I’m very scared of what the fall holds for the global economy in total, but that’s another time).
Ralcorp had a string of smaller purchases as well. Canadian cracker companies and such.

It's really strange that they sold their branded cereals to General Mills on the idea that they were a non-branded company working only in generic 'Schuncks Brand' foods, only to turn around and purchase Post, a branded cereal company. Any chance Post might be sold or spun-off? Any chance Ralcorp might go into branded foods more?

What are some other big private label food companies? Richelieu Foods, Senaca Foods, and ...?

Food processing is supposed to be one of the major niche industries for St. Louis. It's hard to say if this is really much of a niche though considering the competition. Minneapolis is a food giant with Cargill, General Mills, Pillsbury, Jolly Green Giant, etc. Chicago has Sara Lee and Kraft. Other major companies are spread about the country: Heinz in Pittsburgh, Del Monte in SF, etc. Everybody has something.
Ralcorp, Brown, Emerson spur $7 billion spending spree by St. Louis firms - St. Louis Business Journal

http://stlouis.bizjournals.com/stlouis/ ... tml?page=1
DaronDierkes wrote:

Food processing is supposed to be one of the major niche industries for St. Louis.


I lost my ass a few years ago when Aurora Foods went down the tubes. :evil:
Framer wrote:
DaronDierkes wrote:

Food processing is supposed to be one of the major niche industries for St. Louis.


I lost my ass a few years ago when Aurora Foods went down the tubes. :evil:


Depending on how that's read, it could be either an indictment of their stock prices or the quality of their food...

:)

-RBB
Bloomberg: Stifel may be considering buying Memphis-based investment bank Morgan Keegan from Regions Bank
Source: http://www.bloomberg.com/news/2011-07-0 ... l-m-a.html

Should they be able to pull it off, this would be the biggest acquisition in the company's history and would make them a much bigger player throughout the Southeast. This could happen most for Stifel because they're one of the only brokerages out there with the cash and overhead rates to make such a buyout, although there would be multiple redundancies for analyst coverage and operations.

As an aside, I have worked professionally with both Stifel Financial and Morgan Keegan, and I know people at the upper ends of both companies. As far as corporate cultures go, I think this could be a real good match. Plus, with the companies being only 250 miles away from each other along the Mississippi, I see the businesses better able to work together than, say, Morgan Keegan and Morgan Stanley Smith Barney.

Side note is that Morgan Keegan has one of the biggest towers in Memphis, and I'm not expecting a full corporate relocation. However, with all the acquisitions Stifel's made in the last few years, you've got to think their impending corporate relocation to the first tower at Ballpark Village may need a few more floors added to it.

Other interested parties:
BB&T (Winston-Salem, NC)
Wells Fargo Advisors (1 North Jefferson, 63103)
wabash wrote:
Boeing's $775mm purchase of defense engineering firm Argon ST was announced yesterday.

It's always great to see St. Louis companies being optimistic and opportunistic, and expanding and diversifying their operations.


Boeing isn't a St. Louis company. :)
gone corporate wrote:
Bloomberg: Stifel may be considering buying Memphis-based investment bank Morgan Keegan from Regions Bank
Source: http://www.bloomberg.com/news/2011-07-0 ... l-m-a.html

Should they be able to pull it off, this would be the biggest acquisition in the company's history and would make them a much bigger player throughout the Southeast. This could happen most for Stifel because they're one of the only brokerages out there with the cash and overhead rates to make such a buyout, although there would be multiple redundancies for analyst coverage and operations.

As an aside, I have worked professionally with both Stifel Financial and Morgan Keegan, and I know people at the upper ends of both companies. As far as corporate cultures go, I think this could be a real good match. Plus, with the companies being only 250 miles away from each other along the Mississippi, I see the businesses better able to work together than, say, Morgan Keegan and Morgan Stanley Smith Barney.

Side note is that Morgan Keegan has one of the biggest towers in Memphis, and I'm not expecting a full corporate relocation. However, with all the acquisitions Stifel's made in the last few years, you've got to think their impending corporate relocation to the first tower at Ballpark Village may need a few more floors added to it.

Other interested parties:
BB&T (Winston-Salem, NC)
Wells Fargo Advisors (1 North Jefferson, 63103)


Gone Corporate, hate to think this way but with a tower already high in the Memphis sky do see any outside chance that Stifel would pull up the stakes and head down river a few miles to a city with still a semblence of an airport hub intact (even though Delta is cutting 25% of flights)?
the central scrutinizer wrote:
wabash wrote:
Boeing's $775mm purchase of defense engineering firm Argon ST was announced yesterday.

It's always great to see St. Louis companies being optimistic and opportunistic, and expanding and diversifying their operations.


Boeing isn't a St. Louis company. :)


Their defense system work is here, so perhaps this could be a good thing for St. Louis.
^^ Memphis isn't any more of a passenger hub than St. Louis and as much as I'm sure Stifel uses FedEx, I think it would work just fine here. What's good for St. Louis is that the people holding the cash are here in St. Louis. Relocation would pull dozens of senior managers and partners out of their homes, children out of their schools, etc. That's a big disincentive to relocation.
Alex Ihnen wrote:
^^ Memphis isn't any more of a passenger hub than St. Louis and as much as I'm sure Stifel uses FedEx, I think it would work just fine here. What's good for St. Louis is that the people holding the cash are here in St. Louis. Relocation would pull dozens of senior managers and partners out of their homes, children out of their schools, etc. That's a big disincentive to relocation.


And Kruszewski is from South Bend, which would be much harder to get to from Memphis. 8)
bonwich wrote:
Alex Ihnen wrote:
^^ Memphis isn't any more of a passenger hub than St. Louis and as much as I'm sure Stifel uses FedEx, I think it would work just fine here. What's good for St. Louis is that the people holding the cash are here in St. Louis. Relocation would pull dozens of senior managers and partners out of their homes, children out of their schools, etc. That's a big disincentive to relocation.


And Kruszewski is from South Bend, which would be much harder to get to from Memphis. 8)


thanks Bonwich, Devil is in the details. Always nice to know that a few details are in your favor once in a while.
Dredger: First off, let's all remember that this is still rumor & speculation, not yet merger & acquisition.

There are a few ways a sale of MK could pan out:
1. Bought out from a big money pile, such as a P/E fund in Stamford, CT or a sovereign wealth fund.
Odds: Eh, not so high. Not much money in piles that big fully free to acquire at will (i.e. Open Mandate).
2. Bought by a bank wanting their own Broker-Dealer.
Odds: Perhaps, but why not just buy Regions in total?
3. Bought out by an existing B/D who wants them to stay in Memphis as-is.
Odds: Somewhat. There's bound to be redundancies, and there's still system integration and corporate culture issues to cross.
4. Fully acquired, move much of the HQ to the new location.
Odds: Highest I can see.

For Stifel: There's redundancies. Both companies are similarly sized, and there'd be redundancies in administration throughout. Also: SF is becoming well known for their analyst coverage; you wouldn't need 2 people tracking the same stock, only 1. If there's a SF buyout, you can expect layoffs in Memphis. What's curious would be the impact to a future Stifel HQ tower, i.e. how big it'd be. Still, I'd not be surprised to hear they're keeping a strong Memphis presence, kind of like how they've maintained Legg Mason's presence as strong as it is in Baltimore.
For Wells Fargo Advisors: Basically the same thing. The main difference is the HQ consideration, and WFA is still expanding into their campus' Western buildings. After all, this is one of the main draws for WFA towards AGE/Wachovia, the extra capacities along One North Jefferson for future expansions.
I don't know enough about BB&T to really comment on them smartly, but I'd assume the same: buyout means relocating to NC.

As far as corporate cultures go, I'd see Stifel having the best advantages here. Plus, it fits their strategic needs towards increasing retail presence while acquiring an excellent municipal bond underwriting group focused in the South.

Airports are not a consideration.
gone corporate wrote:
Dredger: First off, let's all remember that this is still rumor & speculation, not yet merger & acquisition.

There are a few ways a sale of MK could pan out:
1. Bought out from a big money pile, such as a P/E fund in Stamford, CT or a sovereign wealth fund.
Odds: Eh, not so high. Not much money in piles that big fully free to acquire at will (i.e. Open Mandate).
2. Bought by a bank wanting their own Broker-Dealer.
Odds: Perhaps, but why not just buy Regions in total?
3. Bought out by an existing B/D who wants them to stay in Memphis as-is.
Odds: Somewhat. There's bound to be redundancies, and there's still system integration and corporate culture issues to cross.
4. Fully acquired, move much of the HQ to the new location.
Odds: Highest I can see.

For Stifel: There's redundancies. Both companies are similarly sized, and there'd be redundancies in administration throughout. Also: SF is becoming well known for their analyst coverage; you wouldn't need 2 people tracking the same stock, only 1. If there's a SF buyout, you can expect layoffs in Memphis. What's curious would be the impact to a future Stifel HQ tower, i.e. how big it'd be. Still, I'd not be surprised to hear they're keeping a strong Memphis presence, kind of like how they've maintained Legg Mason's presence as strong as it is in Baltimore.
For Wells Fargo Advisors: Basically the same thing. The main difference is the HQ consideration, and WFA is still expanding into their campus' Western buildings. After all, this is one of the main draws for WFA towards AGE/Wachovia, the extra capacities along One North Jefferson for future expansions.
I don't know enough about BB&T to really comment on them smartly, but I'd assume the same: buyout means relocating to NC.

As far as corporate cultures go, I'd see Stifel having the best advantages here. Plus, it fits their strategic needs towards increasing retail presence while acquiring an excellent municipal bond underwriting group focused in the South.

Airports are not a consideration.


MK is somewhat toxic from what I've heard.

The major difference between MK and Stifel's deal with Legg Mason is that in that instance, Stifel merely acquired the capital markets arm of Legg Mason, and there was relatively little overlap. The intent of that deal was to add talent, so the intention was to maintain a major presence in Baltimore all along. In the case of Morgan Keegan, there would be a substantial amount of overlap in terms of personnel and geographic coverage. There wouldn't be much of a reason to maintain a major presence in Memphis.

Stifel could actually be better off letting someone else acquire Morgan Keegan and then recruiting their brokers, who would likely not be as happy working for the likes of Wells Fargo or some other major banking/brokerage operation.
^The real key to any MK deal would be access to its connections in the SE for municipal bond underwriting. So long as the company's fixed income team is by-and-large secured, it's an attractive offer. Yes, the company's kind of toxic right now, but of course that's one of the reasons why it's for sale: not just a sale for cash, but a distancing from brand affiliation from farking around with some awful mortgage backed securities and auction rate securities (lost lawsuits for both).

I agree with your assessment of the Stifel-Legg Mason deal. My point is that, should Stifel acquire Morgan Keegan, they may not be apt to immediately shut down the Front Street tower and move everyone up to North Broadway. There's some real value working with an acquired company that maintains its own residual HQ, at least at M&A initiation. It recognizes the hometown roots of the acquired's employees, allows for branding transitions to progress gradually (amidst internal integration) and thus keeping geographic affinities in place, and it capitalizes on the physical asset of the building itself. Same time, should an acquisition take place, I see long-term consolidation in StL (and with it perhaps a larger tower in BPV).
Biz Journal: Kellwood (& majority owner Sun Capital Partners) acquires Amsterdam-based Scotch & Soda

Source: http://www.bizjournals.com/stlouis/news ... l?page=all

As the article notes, this is part of a string of acquisitions by Kellwood, whose brands now include: Sag Harbor, Adam, ISIS, Vince, BLK DNM, Baby Phat, Phat Farm, Briggs NY, and Jolt. The company's rumored as well to be vying for the brand Catherine Malandrino.


Also in the news right now...
- Peabody Energy's in deep talks to acquire Australia-based Macarthur Coal. This bid comes in partnership with ArcelorMittal, a significant shareholder, with whom Peabody has formed a JV ostensibly to acquire the whole of Macarthur.
- Monsanto's in "advanced discussions" with China-based Sinochem for cooperative affiliations. The WSJ says that the most likely forms of partnership between the two would be...
1. A (very) large joint venture;
2. The sale of a minority stake of the company (read as Sinochem making a partial sale to Monsanto); or
3. Sinochem assumes a principal role in marketing Monsanto to the Chinese marketplace.
gone corporate wrote:
Biz Journal: Kellwood (& majority owner Sun Capital Partners) acquires Amsterdam-based Scotch & Soda

Source: http://www.bizjournals.com/stlouis/news ... l?page=all

As the article notes, this is part of a string of acquisitions by Kellwood, whose brands now include: Sag Harbor, Adam, ISIS, Vince, BLK DNM, Baby Phat, Phat Farm, Briggs NY, and Jolt. The company's rumored as well to be vying for the brand Catherine Malandrino.


Also in the news right now...
- Peabody Energy's in deep talks to acquire Australia-based Macarthur Coal. This bid comes in partnership with ArcelorMittal, a significant shareholder, with whom Peabody has formed a JV ostensibly to acquire the whole of Macarthur.
- Monsanto's in "advanced discussions" with China-based Sinochem for cooperative affiliations. The WSJ says that the most likely forms of partnership between the two would be...
1. A (very) large joint venture;
2. The sale of a minority stake of the company (read as Sinochem making a partial sale to Monsanto); or
3. Sinochem assumes a principal role in marketing Monsanto to the Chinese marketplace.


Speculuation on my part as usuall. But it sure would be nice to see Kellwood on Wash Ave or maybe in another refurbished Cupples Warehouse (Koman, got anymore tricks up your sleeve?) in the near future.
Peabody's moves in the world coal market this week is pretty impressive

Peabody, ArcelorMittal sweeten Macarthur offer

St. Louis Business Journal
Date: Thursday, July 14, 2011, 6:44am CDT

http://www.bizjournals.com/stlouis/morn ... rthur.html

Peabody inks deal for large Chinese mine

St. Louis Business Journal - by Kelsey Volkmann

http://www.bizjournals.com/stlouis/news ... -mine.html
May be deserving of it's own thread, but a huge aquisition for Express Scripts.

Express Scripts will buy rival Medco for $29.1 billion

Express Scripts and Medco Health Solutions, the largest U.S. pharmacy benefits management companies, said Thursday they will combine in a deal worth $29.1 billion in cash and stock.

The companies manage prescription drug benefits and look for ways to cut costs for health plan sponsors and members. Combined, they handled more than 1.7 billion prescriptions in 2010 and reported almost $110 billion in revenue.

Express Scripts of St. Louis, Missouri, will buy its rival for $71.36 per share. Medco's shareholders will get $28.80 per share in cash and 0.81 shares of Express Scripts for each share they own. That's a premium of 27.9 percent based on Medco's closing price of $55.78 Wednesday. Shares of the New Jersey company have traded between $43.45 and $65.39 in the last year.
Medco has 1700 employees at their NJ HQ. Anxiously awaiting to see how many move here.
Antitrust, anyone? If AT&T is getting resistance for buying T-Mobile, I can't imagine this one isn't going to get some heavy-duty regulatory attention.
moorlander wrote:
Medco has 1700 employees at their NJ HQ. Anxiously awaiting to see how many move here.


Doesn't Express have a history of outsourcing jobs overseas?
Maybe but I'm not sure how that applies here.