The Zacks Analyst Blog Highlights: 3M, Ceradyne, Plains All American Pipeline, Enterprise Products Partners and Sunoco Logistics Partners
CHICAGO, Oct. 8, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include 3M Company (NYSE:MMM), Ceradyne Inc. (Nasdaq:CRDN), Plains All American Pipeline LP (NYSE:PAA), Enterprise Products Partners LP (NYSE:EPD) and Sunoco Logistics Partners L.P. (NYSE:SXL).
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Here are highlights from Friday's Analyst Blog:
3M Set to Acquire Ceradyne
3M Company (NYSE:MMM) recently announced its intention of acquiring Ceradyne Inc. (Nasdaq:CRDN), a global leader in the development and production of advanced technical ceramics, for $35 a share. The transaction is estimated at $860 million or $670 million net of cash, cash equivalents, short-term investments and debt.
As per the terms of the agreement, a subsidiary of 3M is expected to initiate a tender offer for the purchase of all outstanding shares of Ceradyne within a period of 10 days. The offer will be subject to the tender of a majority of Ceradyne's shares and other regulatory closing conditions. The deal is expected to be completed by the end of this year.
With the acquisition of Ceradyne, 3M is expected to develop new technologies and innovation for specifically designed materials requiring advanced ceramics. Post acquisition, Ceradyne will be integrated into the Energy and Advanced Materials division.
3M expects the transaction to be accretive to its earnings by one cent in the very first year, on pro forma basis. On a GAAP basis, the acquisition is expected to be accretive to earnings by 5 cents.
Based in Costa Mesa, California and with operations in the U.S., Canada, China and Germany, Ceradyne reported annual revenue of approximately $500 million. The company is a global leader in the development and production of advanced technical ceramics for demanding applications in the automotive, oil and gas, solar, industrial, electronics and defense industries. Therefore, this acquisition is a strategic fit with 3M's existing transportation, energy markets and defense businesses.
The 3M brand is recognized around the world. Household names like Nexcare, Post-it, Scotch, Scotch-Brite and Scotchgard are market leaders. The company remains focused on new product development, with its scientists and innovators enjoying an important competitive advantage worldwide. The company currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
Plains Raises Cash Distribution
Plains All American Pipeline LP (NYSE:PAA) upheld its practice of sharing more benefits with its unitholders by increasing the cash distribution rate once more. This distribution incidentally is the first one after the unit split. The partnership announced a new quarterly cash distribution rate of 54.25 per unit on all of its outstanding limited partner units.
The partnership has a long history of increasing distribution to unitholders. With this, the distribution rate climbed for the 13th straight quarter. Plains has also hiked the quarterly distribution to limited partners in 32 out of the past 34 quarters.
The new distribution reflects 1.9% growth over the quarterly distribution of 53.25 per unit paid in August 2012 and 9.0% growth from the quarterly distribution of 49.75 cents per unit paid in November 2011. This distribution will be paid on November 14, 2012, to unitholders of record as of November 2, 2012. The previous distribution rates are adjusted for the recently concluded two-for-one unit split.
Plains' cash distributions depend primarily on cash flow that includes cash flow from financial reserves and working capital borrowings. The cash distribution does not solely depend on profitability, which can be affected by non-cash items. Hence, the partnership can sustain its cash distribution even when it is incurring losses.
Plains reported strong second quarter results which surpassed the year-ago performance as well as our expectation. The partnership is optimistic about maintaining its growth momentum for the remainder of the year and expects to share more with unitholders by increasing the distribution rate by 8% to 9% in 2012. We believe the partnership is presently on track to meet its expected distribution growth.
EnterpriseProducts Partners LP (NYSE:EPD), a Plains All American peer, also increased its quarterly cash distribution rate in July 2012. The increased quarterly distribution of 63.50 cents per unit, paid in August 2012, represented growth of 4.9% over the quarterly distribution of 60.50 per unit paid in August 2011 and an increase of 1.2% from the quarterly distribution of 62.75 cents per unit paid in May 2012.
Plains All American Pipeline currently retains a short-term Zacks #3 Rank (Hold rating). The partnership competes with Enterprise Products Partners LP and Sunoco Logistics Partners L.P. (NYSE:SXL) among others.
Houston, Texas-based Plains All American Pipeline is engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The partnership is also involved in the development and operation of natural gas storage facilities.
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