For Immediate Release
Chicago, IL – September 28, 2010 – Zacks.com Analyst Blog features:Wal-Mart Stores Inc. (WMT), Motorola Inc. (MOT), Nokia Corp. (NOK), Siemens AG (SI) and Cisco Systems Inc. (CSCO ).
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Here are highlights from Monday’s Analyst Blog:
Wal-Mart Intends to Buy Massmart
Wal-Mart Stores Inc. (WMT) announced that it intends to acquire South Africa-based consumer goods distributor Massmart Holdings Ltd. for about $4.25 billion (ZAR 148 per share). The proposed acquisition is in line with Wal-Mart’s policy to accelerate growth and improve returns in its international business segment.
Management believes that Africa is among the high-growth developing markets of the world. The deal is subject to regulatory conditions and is an indicative and non-binding offer.
Further, management states that the deal, if successful, will offer Wal-Mart a convincing growth opportunity, as South Africa comprises attractive market dynamics, encouraging demographic trends and a growing economy.
Johannesburg-based Massmart is not only a leading distributor of consumer goods in Africa and but is also the largest retailer of general merchandise, liquor, home improvement equipment and supplies as well as the leading wholesaler of basic foods. The company currently operates 288 stores in 14 countries of Sub-Saharan Africa. The company also has nine wholesale and retail chains and one buying group.
In the recently reported quarter, Wal-Mart added almost 5 million square feet of retail space, with almost 60% growth in Wal-Mart International. Wal-Mart ended the second quarter of fiscal 2010 with free cash flow of approximately $4.5 billion, reflecting a 7.1% increase year-over-year.
Motorola Plans Reverse Stock Split
As part of the spin-off of its mobile-phone business, Motorola Inc. (MOT) has planned a reverse stock split to help increase the share price.
In this regard, the company will hold a special stockholder meeting on November 29, 2010 to seek approval for the move.
The proposed stock split ratio ranges from 1 for every 3 up to 1 for every 7 shares, with exact ratio to be determined by the Motorola board. If approved, the split would be implemented in first quarter 2011, immediately after the spin-off.
The company is proposing the reverse split as part of its plan to separate itself into two companies, Motorola Mobility and Motorola Solutions.
Motorola believes the reverse split will help improve the marketability and liquidity of the shares of Motorola Solutions, which will house Motorola’s enterprise mobility and legacy businesses. Motorola sold off its wireless networks business to Nokia Siemens Networks, a 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI), in July for $1.2 billion. New shares will be issued for Motorola Mobility, which will include the company’s handset unit and its set-top box division However, the move would result in a corresponding decrease in the number of authorized shares of Motorola common stock.
In August 2010, Motorola said in a regulatory filing that it will give $3.5 billion to Motorola Mobility to make it debt free. The cash will be used to operate and expand the businesses and will also facilitate acquisitions. Motorola continues to face stiff competition from Cisco Systems Inc. (CSCO), Nokia Corp. and Samsung Group.
We maintain our long-term Neutral recommendation on Motorola. It is currently a short-term Zacks #3 Rank (Hold) stock.
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CISCO SYSTEMS (CSCO): Free Stock Analysis Report
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WAL-MART STORES (WMT): Free Stock Analysis Report
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