Fidelity National Financial sells a subsidiary for $560M cash

(Courtesy of Jacksonville Business Journal)

Jacksonville-headquartered Fidelity National Financial announced Monday it had signed an agreement to sell one of its subsidiaries for $560 million in cash to a New York-based private equity firm.

Fidelity purchased One Digital Health and Benefits about four years ago. The Atlanta-based company then purchased two Jacksonville-headquartered companies: Compass Consulting Group and Prospective Risk Management in June 2015. The company maintains an office in Jacksonville at 4348 Southpoint Blvd.

The company that has agreed t purchase One Digital is New Mountain Capital LLC.

Fidelity said it would use the proceeds from the sale to pay off debt. After all option payments to shareholders and minority equity investors are paid, the company expects the sale to result in $330 million in cash.

“We are excited to monetize One Digital at an attractive price for our shareholders and recognize a cash monetization of approximately $330 million,” said Fidelity’s Chairman William P. Foley II. “We have seen tremendous growth in One Digital in our roughly 4 year ownership and are proud of the success One Digital and FNFV have enjoyed together. We believe that One Digital will continue to flourish under its new ownership.”

Wells Fargo quietly discloses that its annual meeting will be in Jacksonville

(Courtesy of Jacksonville Business Journal)

Wells Fargo has revealed the site of its annual shareholders meeting: It will be at the Sawgrass Marriott in Ponte Vedra Beach, Fla., near Jacksonville, at 10 a.m. on April 25.

This would not be breaking news for most major corporations, where the announcement of details for the annual meeting is routine. Wells, however, has often played cat-and-mouse on the location of the meeting since 2012, when loud and raucous demonstrations against the bank disrupted the gathering in San Francisco. The bank’s meeting hasn’t been in its hometown since, instead taking place in places like Salt Lake City and San Antonio, Tex. The location has been usually announced in its proxy statement roughly a month in advance.

This year the annual meeting details come a bit earlier, amid a 15-page report filed Wednesday detailing steps Wells Fargo (NYSE: WFC) has taken to restore trust and fix its reputation in the wake of a sales scandal. In September, it was publicly disclosed that bank employees had opened up to 2 million accounts over several years without customer permission in a bid to meet stringent sales targets. The bank was fined $185 million by regulators and its culture came under intense scrutiny that culminated in the resignation of CEO John Stumpf.

The bank included a timeline of major events in the past six months including Stumpf’s departure in October, a new compensation plan in January and eliminating bonuses for top executives earlier Wednesday. The bank also eliminated product sales goals for retail bankers and established additional monitoring and controls to provide oversight of sales processes.

All that makes the first annual meeting since the scandal broke a high-profile event for both shareholders and critics alike. At least they’ll have a few more weeks to make travel arrangements.

Regency Centers closing merger with Equity One this week

(Courtesy of Financial News and Daily Record)

Shareholders of Regency Centers Corp. on Friday approved the company’s $4.6 billion merger with Equity One Inc., clearing the way to close the deal this week.

Regency will be the surviving company of the merger between the two companies that specialize in developing and operating shopping centers anchored by supermarkets. The company will remain headquartered in Jacksonville with Regency’s senior management continuing to run it.

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The merger is expected to be completed Wednesday.

Meanwhile, in light of the merger, S&P Dow Jones Indices is adding Regency to the Standard & Poor’s 500 index this week.

Inclusion in the bellwether stock index will increase the company’s visibility on Wall Street.

Regency is swapping places with pharmaceutical company Endo International, which will take Regency’s spot in the S&P MidCap 400.

“Post acquisition, Regency Centers is expected to have a market capitalization more representative of the large cap market space. Endo International is ranked near the bottom of the S&P 500 and has a market capitalization more representative of the mid-cap market space,” S&P Dow Jones said in a news release.

Regency will become part of the S&P 500 at the opening of trading Thursday.

‘Opposite day’ at CSX, Bloomberg columnist says

A Bloomberg News columnist had an interesting take on the ongoing effort of Hunter Harrison to become CEO of Jacksonville-based CSX Corp.

“It’s opposite day at CSX Corp., where an activist investor is fighting for — rather than against — a jumbo-sized executive pay package,” Brooke Sutherland wrote in her Bloomberg column last week.

Harrison, former CEO of Canadian Pacific Railway Ltd., is working with hedge fund Mantle Ridge to try to get the CSX job.

Current CEO Michael Ward announced last week he will retire May 31.

According to CSX, Harrison is demanding a compensation package that exceeds $300 million over four years. Mantle Ridge disputed that in a letter to CSX’s board but still described a package that exceeds $200 million.

“Even if you strip away all the extras and focus on the base salary, the $2.2 million a year that CSX says Mantle Ridge is seeking for Harrison is almost double what Ward received in 2015. It’s also more money than other CEOs of public U.S. railroads get, according to data compiled by Bloomberg,” Sutherland wrote.

“So essentially the argument is that CSX needs to be more aggressive about improving its profitability, but to do that it needs to balloon its CEO compensation expense,” she wrote.

All this comes as CSX says it will reduce costs by cutting 1,000 management jobs, with most coming from Jacksonville.

CSX is planning a special meeting to allow shareholders to vote on whether they want the company to pay Harrison. You have to wonder how many CSX managers are stockholders and how many votes they have.

Advanced Disposal earnings rise

After completing its initial public offering in October, Advanced Disposal Services Inc. last week reported fourth-quarter adjusted earnings of $17.2 million, up from $5.5 million the previous year.

For all of 2016, the Ponte Vedra-based waste management services company reported adjusted earnings doubled to $33.5 million. Revenue of $1.405 billion was slightly higher than 2015 revenue of $1.396 billion.

The company is projecting 2017 revenue of $1.45 billion to $1.475 billion.

“Advanced Disposal has undergone transformational changes during 2016,” CEO Richard Burke said in a news release.

“I am pleased we were able to improve our capital structure and begin the next chapter of our company’s history as a public company, while at the same time producing strong results for both fourth quarter and the full year 2016,” he said.

Creative Learning proxy fight ends

A proxy fight launched by the former CEO of St. Augustine-based Creative Learning Corp. has apparently failed.

Brian Pappas was terminated in October 2015 as CEO of the company, which offers educational and enrichment programs for children through franchisees.

Pappas, who still controls 19.5 percent of the stock, was seeking to remove the four current board members of Creative Learning and replace them with three of his own.

However, Creative Learning said in a Securities and Exchange Commission filing that Pappas did not deliver enough consent forms from other stockholders by a Feb. 7 deadline.

So, there will be no changes to the board, the company said.

“With the disruption of the proxy contest behind us, we are happy now to be able to concentrate all our energy upon several important initiatives to increase franchise sales, grow franchisee success and enhancing our wonderful brand and educational methods,” Chairman Chuck Grant said in a news release.

Duos Technologies plans reverse split

Duos Technologies Group Inc. shareholders last week approved a plan to lift the company’s stock price with a reverse split.

The measure allows Duos to enact the reverse split at a ratio of at least 1-for-5, meaning stockholders would get one share for every five they currently own. The ratio could go as high as 1-for-500, at the discretion of the board of directors.

Jacksonville-based Duos, which provides intelligent analytical technology solutions, is traded in the OTCQB market and is hoping a higher stock price will help it get a Nasdaq listing.

The stock was trading at just 3 cents a share when the company filed its proxy statement for the reverse split.

Convergys drops on earnings miss

Convergys Corp. dropped to a 52-week low Thursday after reporting revenue and earnings below expectations.

The outsourced customer service company’s adjusted fourth-quarter earnings of 47 cents a share were 6 cents lower than the previous year and a penny below the average analyst’s forecast, according to Yahoo Finance.

Revenue rose 1 percent to $758 million, but that was lower than the average forecast of $766 million.

Convergys forecast 2017 earnings per share will range anywhere from 3 percent lower than 2016 to 3 percent higher.

The company said in a news release it expects “seasonal sequential” drops in revenue in the first quarter and lower earnings in the second quarter, with results beginning to improve in the third quarter this year.

“Future actions to streamline the business and align costs to match anticipated revenue will likely require discrete actions in the first quarter of 2017, the costs of which are not included in this guidance,” it said.

Cincinnati-based Convergys has 1,350 employees in its Jacksonville office, where the workforce has fluctuated over the years along with contract wins and losses.

Its stock fell to a 52-week low of $22.22 Thursday before closing at $22.63, down $2.42 on the day.

Medtronic grows third-quarter revenue

Medtronic plc said revenue in its Jacksonville division — which produces surgical instruments for ear, nose and throat doctors — rose in the “low single digits” in its third quarter ended Jan. 27. However, it did not provide numbers.

The global medical device company said revenue in its entire specialty therapies group, which includes the ENT division, rose 4 percent to $370 million.

Total third-quarter revenue rose 5 percent to $7.28 billion and adjusted earnings grew by 6 cents a share to $1.12. That was a penny higher than the average analyst’s forecast, according to Zacks Investment Research.

Medtronic’s stock rose $1.68 to $80.56 Tuesday after the earnings report.

Renasant eyes local mortgage market

Renasant Corp. is a Mississippi-based banking company that appears to be the latest financial institution to have its sights on the Jacksonville market.

Renasant doesn’t have a bank branch in Jacksonville but it is looking to expand mortgage banking efforts in Northeast Florida.

During the company’s year-end conference call, Executive Vice President James Gray said Renasant is looking for mortgage growth in North Florida this year after an overall slowdown in mortgage activity at the end of 2016.

“We utilized this slowdown during the fourth quarter as an opportunity to amplify our recruiting efforts, which are already in effect, and we were able to bring on a producing manager, not just a nonproducing manager but actual producing manager in Jacksonville,” Gray said, according to a transcript of the call in a Renasant SEC filing.

“He is onboard and actively recruiting down in the Jacksonville/Gainesville and possibly over into the Orlando area. We anticipate dramatically increasing our production in the northern Florida market,” he said.

Renasant entered the Florida market in 2015 by acquiring HeritageBank of the South, which had bank branches in Ocala and Gainesville. A year before that deal, HeritageBank had acquired Ocala-based Alarion Bank, which had a mortgage office in Jacksonville.

Renasant, headquartered in Elvis Presley’s hometown of Tupelo, had assets of $8.7 billion at the end of 2016. The bank reported earnings rose 34 percent last year to $90.9 million, or $2.17 a share.

Wall Street Is Hiring … in Florida (The nearshoring strategy is aligned with President Trump’s push to keep jobs in the U.S.)

(courtesy of Bloomberg)

When Deutsche Bank sent senior Wall Street executive Leslie Slover to run its expanding outpost in Jacksonville, Fla., she wasn’t entirely ready for the lifestyle. Gone were the skyscrapers and subways. In their place was a corporate campus with a pond and vast parking lots, flanked by rows of new town houses, some inhabited by employees. The on-site culinary options? A cafeteria and some food trucks. Suddenly, Slover had to relearn to drive.

“It’s hard—it’s not Manhattan,” says Slover, 52, who spent her career in the Northeast before becoming the regional head of the bank’s operations in Jacksonville and Cary, N.C. “Indian food at 11:30 at night does not exist.”

Deutsche Bank

Transplants from the city that never sleeps may feel at first like aliens in this northern Florida city 35 miles south of the Georgia border, but their numbers are growing. Global financial companies including Frankfurt-based Deutsche Bank and Sydney-based Macquarie Group have been moving executives here and hiring locally, even while paring staff elsewhere.

It’s part of a Wall Street trend known as nearshoring, in which banks are moving operations away from expensive financial centers like New York to places such as Jacksonville and North Carolina’s Research Triangle. Also in Jacksonville are more than 19,000 employees of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Meanwhile, Goldman Sachs has established operations in Salt Lake City, and UBS has a site in Nashville. It’s a way to improve profitability without going overseas. Conveniently, it also happens to comport with President Trump’s demands that employers keep good jobs on U.S. soil.

In the early days, investment banks mainly transplanted back-office workers such as accountants, technology staff, and lawyers. But in Deutsche Bank’s case, the Jacksonville campus has grown into the company’s second-largest U.S. location. The bank has about 2,000 employees there—up from 1,400 in 2013—and plans to add more in 2017.

Increasingly, the site is a microcosm of its U.S. business, even the trading functions. On campus, in a building alongside the man-made pond, a young team recruited from universities such as Emory and Vanderbilt sells securities in tandem with their counterparts in New York. When a client calls in an order, a Jacksonville salesman glances at a live video feed of desks at 60 Wall St., finds a trader standing by, and relays the order. Slover says the technology allows the two locations to function like one seamless floor. She’s come to enjoy living in Florida, noting it has more elbow room than Manhattan and the people are unusually nice.

According to Jones Lang LaSalle, high-end corporate office space in Jacksonville can be leased for about $22 a square foot, cheaper than all but four major U.S. cities tracked by the company. That’s about a quarter the rate in New York. Banks pay Jacksonville employees about 30 percent less on average than those in New York, according to Cathy Chambers, a senior vice president with the JaxUSA Partnership, a division of the local chamber of commerce. A financial analyst, for example, might earn $67,000 in Jacksonville, compared with $99,700 in New York. The local and state governments also offer tax incentives to lure companies.

For Anthony Glenn, who runs an office Macquarie opened in Jacksonville last year, advantages include escaping for late-afternoon surf sessions at a local beach. Another perk is his 15-minute drive to work. He says his office includes people from 21 countries, plus big U.S. cities such as Houston, New York, and Philadelphia. Many of them came to escape punishing commutes from far-flung suburbs.

“In most cases, it’s been a lifestyle decision,” Glenn says. “They’re weighing a compensation change vs. a huge increase in quality of life.” Macquarie’s Jacksonville office employs people whose jobs might otherwise have been filled in India. It provides a support staff that’s more convenient for its U.S.-based employees, while its Indian operation continues to focus on the Asia business.

Jerry Mallot, president of JaxUSA, brushes aside criticism that Jacksonville can’t cater to big-city tastes. “We’re not New York, but we wouldn’t want to be New York,” he says. He points out that the city has its own NFL team, craft breweries, and “more golf courses than you could play in 10 years.” There’s a Tesla Motors store, too. Companies are eager to establish operations in a place with year-round sunshine and no state income tax, Mallot says. They typically start by transferring managers to the region, then build staffs by hiring from the area. The salaries are attractive by Jacksonville standards.

The influx of financial-services and other white-collar jobs has brought money and diversity to the area and may even be influencing the political landscape, says Michael Binder, an associate professor of political science at the University of North Florida in Jacksonville. In a county that George W. Bush carried by more than 15 percentage points in two presidential elections, Trump beat Hillary Clinton by just over 1 percentage point. “In a lot of ways, Florida is the inverse of America: The more north you get, the more South you are,” Binder says, referring to cultural and political preferences. “But slowly this is changing, like a lot of the urban cities in the New South.”