LONDON, UK / ACCESSWIRE / March 14, 2017 / Active Wall St. blog coverage looks at the headline from Blackstone Group L.P. (NYSE: BX) and NCR Corp. (NYSE: NCR) ("NCR"). NCR announced on March 13, 2017, that it had signed an agreement with private equity firm Blackstone Group, wherein NCR releases Blackstone from the investment lock-in period. In the same announcement, NCR also revealed its financial guidance for 2017 and announced an additional share buyback plan as a result of the sale of Blackstone's holdings. Register with us now for your free membership and blog access at:
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The transaction will unlock value for Blackstone while the extended lock-in period for the remaining 51% of its holdings will ensure extended financial stability for NCR. This transaction will enable NCR to save on the dividend payable on these preferred convertible shares, strengthen its capital structure and increase shareholders' value.
Commenting on the deal, Bill Nuti, Chairman and CEO of NCR said:
"This transaction is more accretive to our stockholders than further open market purchases, eliminates the ongoing dividend costs on the preferred shares, is accretive to EPS, and reduces our financial leverage."
Greg Blank, Managing Director, Private Equity, of Blackstone added:
"We are pleased to continue to partner with NCR and are absolutely committed to the ongoing success of the Company. After this transaction, we will continue to own close to our original investment amount in the Company, at over $720 million."
Details of the sale of Holdings by Blackstone
As a result of the early release, Blackstone will be allowed to sell nearly half of its holdings in the Company. The Blackstone holdings had a lock-in period up to early June 2017. At present, Blackstone's 49% holdings represent 14.4 million shares once converted. Out of these Blackstone plans to convert 90,000 preferred shares into 3 million common stocks. NCR will buyback these shares from Blackstone for which the former has increased its allocation for share buyback from $300 million to $350 million.
For the remaining 51% of the holdings, Blackstone has agreed to extend the lock-in period till December 01, 2017. Blackstone will continue its representation in NCR's Board with two members.
In 2016, NCR has already bought approximately 4.4 million shares for $204 million. On March 12, 2017, NCR's Board approved a new share purchase program for 2017 and allocated $300 million for the same. Once the current transaction with Blackstone is completed the entire allocation for the share buyback will be depleted.
History of Blackstone's investment in NCR
In November 2015, NCR had partnered with Blackstone wherein Blackstone associates would invest approximately $820 million in the Company. NCR would issue perpetual convertible preferred shares to Blackstone associates in lieu of this investment which is nearly 17% stake in the Company.
As per terms of the partnership agreement between NCR and Blackstone, these convertible preferred shares could be converted to shares of NCR's common stock at $30.00 per share. These preferred shares will be eligible for dividend at 5.5% which would be payable in kind for four years after they are issued to Blackstone. Blackstone had the option of converting these preferred shares into NCR's common stock at any time. NCR could repurchase these preferred shares from Blackstone after a certain period. In the event that the share prices of NCR reached certain levels, the preferred stock would be compulsorily converted to NCR's common stock.
As part of the deal, two directors representing Blackstone were added to NCR's Board.
NCR's Guidance for 2017
NCR increased its non-GAAP EPS guidance for FY17 to the range of $3.27 to $3.37 from the earlier projection of $3.25 to $3.35. The GAAP EPS for FY17 would be lower by $0.10 and the GAAP EPS for Q1 2017 will be lower by $0.50 as a result of the one-time impact due to the conversion of the preferred shares.
At the close of trading session on Monday, March 13, 2017, Blackstone's share price finished the trading session at $30.35, advancing 4.87%. A total volume of 12.49 million shares exchanged hands, which was higher than the 3 months average volume of 4.75 million shares. The stock has advanced 19.76% and 16.53% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 14.00%. The stock is trading at a PE ratio of 19.42 and has a dividend yield of 6.19%. At Monday's closing price, the stock's net capitalization stands at $35.91 billion.
On Monday, NCR Corp.'s stock closed the trading session at $43.29, tumbling 10.69% from its previous closing price of $48.47. A total volume of 10.75 million shares have exchanged hands, which was higher than the 3-month average volume of 876.60 thousand shares. NCR Corp.'s stock price surged 4.64% in the last three months, 35.58% in the past six months, and 61.23% in the previous twelve months. Furthermore, on a year to date basis, the stock rallied 6.73%. Shares of the company have a PE ratio of 28.42. In addition, the stock currently has a market cap of $5.35 billion.
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