WOOOO, check out that stock price on the possibility of a sale!! I guess all the glee everyone out there was having wore off over the weekend. OK, I admitt, I just watch and comment, no idea of how or why things happen in the financial community. So, someone please explain to me the market dynamics at work here, as I though the stock would go up more? Or is it that there are those waiting to see who gets TMG??? Any guess as to who the lucky company is?? Rumors - anyone?? tap tap tap -
hell hell hell o o o, an echo? this place is a grave yard!
Longtime stock investor, but I can't understand the company. With 10 billion of annual revenue, the company has profit margins slimmer than that of any company I have ever seen, even supermarket companies. It's got significant assets but earns an anemic return on those assets and on its sales. Its gross margin is astonishingly small. The company has tepid analyst coverage and trades on the backwater exchange, the AMEX.
Notwithstanding the negatives, the company has many positives. Solid asset base with pipelines and terminals in strategic regions, especially in So Florida. The economic upturn and increase in demand for petroleum products should augment its profitability. If ever the company could improve its operating margins, even just a bit, its stock price would move markedly.
Will be interesting to see the earnings for the year that ended June 30, 2994. Company historically reports its annual earnings around the time it files its SEC Form 10-K, i.e., 90 days after the end of its fiscal year. Curiously the opinion of KPMG, its independent auditors, is dated a few days before the filing. Most public companies have their audited financials signed off about 30-45 days after year-end. The new Sarbox requirements will require the company to file its 10-K within 60 days, not 90 days, after its year-end.
suspect this closely held stock is worth perhaps upwards of 10-12 dollars per share on buy out. A suitor would likely have to pay a significantly higher premium to the control group than the normal 40% premium paid to acquire widely held target companies.
It is probably best to step back a little.
Bringing in an outside firm to "explore strategic alternatives," can result in one or more of a number of results. ONE of those would be the POSSIBILITY of the sale of the company. Others could include but would not be limited to: a strategic partner buying a portion of the firm; significant retirement of debt, (although admittadely I've not reviewed the balance sheet); a buyback of shares to reduce outsider holdings and/or to allow insiders to cash out; acquire all or part of another company; take the company private; and more.
It is highly likely that the goal would be to benefit aging senior management at a time when estate planning and all the stuff we all face during the "winters" of our lives, is the driver of this activity or "exploration."
As far as a significant jump in price as the result of this announcement, the stock is extremely thinly traded and has always been, at least during the last five years. Also, it is followed by virtually no one out there on Wall St. So, the company is relatively unknown, thus little interest. That said however, the share price has been trading about 15% higher than it was the few weeks prior to the announcement.
What might happen? If there is a total or partial buyout, or if the company goes private, there will be a premium, but as the stock has been flat for the past three quarters and more, while the market has increased, in my opinion it is unlikely that the shares would be priced much above $8.
At the end of the process, the final decision as to accepting the direction of the strategy, and any share price, (if a buyout of any kind), will rest with the insiders of any closely held, thinly traded company. For me personally, I am in TMG at $4.25 and have been for a few years. Eight bucks is close to a "double," so I guess IF it happens, it was worth the wait.
The strategic options could include any of those you had mentioned, but the most logical and likely scenario is a sale of the company. Taking it private seems the next most likely scenario.
The company has substantial insider ownership that would require a control premium to the market, not just the customary 35-40% premium paid for widely held companies. Often thinly traded, closely held public companies have takeover premiums of 60% or more.
Whatever the strategic option chosen, TMG will trade at a higher price and shareholders will be rewarded.
Why in the world would a large integrated oil company want to buy TMG, when much of the company is composed of terminals these integrated oil companies sold and don�t want? ConocoPhillips is unloading terminals due to the merger, and Valero or Sunoco could potentially use a few of the terminals, but not the entire company.
Exactly. The majors aren't going to want them, however, some of the MLP's will definately be interested! Sunoco has an MLP as does Valero. ConnocoPhilips has an interest in an MLP via Teppco, but Teppco is probably not a party interested in TMG. My original guess was Martin Midstream Partners, and it remains my first guess and most likely candidate based on the similarity in many of the business plus the location of many of their assets are close to TMG's. Size, scale and location make it seem logical. Kinder Morgan is of course, a possibility with the multitude of storage along Plantation etc...
Appreciate the concerns about high leverage of the company. Leverage is fine if managed carefully. Take a look at Tesoro Petroleum, which had a voracious apetite for debt a few years ago. I looked at it (but foolishly didn't buy,as I thought it would go Chapter 11) two years ago at 1.50; now it's the 20s. Still holding my breath for 9 or 10 on TMG.
TMG has to file its 2nd qtr 2004 form 10-Q no later than next Monday, and so it will be releasing its quarterly results very soon. I suspect the results will be positive.