Thursday, February 11, 2016

POSTED: Monday, February 1, 2016, 1:33 PM

The number of U.S. private placements and public stock offerings, to raise capital for growing firms, fell from 200 in the third quarter to just 152 in the last three months of 2015, lowest since mid-2013, writes Janney Montgomery Scott investment banker Benjamin McKean, in a report for the Association for Corporate Growth's Philadelphia chapter.

McKean cited 'the effects of growing market uncertainty" including China demand and Fed interest-rate unknowns. But slow growth won't stall all dealmaking, he added: The "lack of alternative growth opportunities" will press continued corporate consolidations. Indeed, the count of mergers and acquisitions, at 302, was within the quarterly range for 2015 and above 2013-14 levels. 

ACG includes private equity investors, venture capitalists, and the lawyers, accountants and other specialists who work on their deals. Philadelphia has one of the group's most active chapters.  See ACG's list of 28 recent deals by local member firms and McKean's note here.

POSTED: Monday, February 1, 2016, 1:23 PM
File photo: Zhang Qiyue. (Getty Images)

China's Ambassador Zhang Qiyue runs the People's Republic's consulate-general in New York, the nation's biggest. (She's not Ambassador to the U.S. -- she was Ambassador to Belgium and kept the title.) Zhang was in Philadelphia on Friday at an event hosted by real estate investment manager Richard Oller (of Gold Oller), who tells me he wants to add Asia-based investors to his Middle Eastern and American clients. Zhang addressed a few questions:

You know Philadelphia? -- I was here three times last year. You have a vibrant society. And you have one of the most beautiful Chinatowns, with that arch.

You're comparing us to New York, seriously? -- Oh, there are many people from China in business here. And all the Chinese students, you have more than 3,000 at Penn, Wharton, Drexel and your other schools. And of course in China we remember Philadelphia, from your philharmonic Orchestra, and Eugene Ormandy, who came to China at the opening of relations (in the 1970s). 

POSTED: Thursday, January 28, 2016, 4:18 PM

Shares of Triumph Group, the $4 billion (yearly sales) Chesterbrook-based aircraft parts and construction company serving Boeing, Airbus, Gulfstream and other big manufacturers, dropped nearly 12 percent today, closing below $30 for the first time since 2010, after reporting a quarterly loss and a small drop in sales. Financial report here.

New chief executive Daniel J. Crowley, who joined Triumph from Raytheon last month, told investors he's making progress on a reorganization plan to cut costs and boost sales. Triumph reported an $88 million fourth-quarter loss after writing off $229 million of the $1.4 billion it paid Carlyle Group for Boeing supplier Vought Aircraft Industries in 2010, and cited weaker jet construction revenues.

"What went wrong?" asked analyst Ron Epstein of Bank of America Merrill Lynch in a conference call with Crowley. "We're not a broken company," Crowley said (corrected). But "there hasn't been enough replacement" of old contracts with new deals in recent years. 

POSTED: Thursday, January 28, 2016, 3:16 PM

Wisconsin-based Quad/Graphics says it will close its 455,000-square foot commercial printing works in Atglen, western Chester County, by the end of February, idling around 150 workers. 

Quad/Graphics prints advertisements inserted into newspapers. The company has been buying rival operations in recent years, consolidating and upgrading newer plants as it closes others. Printers that serve newspapers have suffered as more readers access news online. Quad/Graphics announced plans to close its plant in East Greenville, Montgomery County, last fall. The company has 56 remaining U.S. plants, spokeswoman Nicole Mosca told me.

"This is disappointing for the the employees and Atglen community. It is another reminder that our economy is shifting and we need to help train people for the family sustaining jobs of the 21st century," Guy Ciarrocchi, president of the Chester County Chamber of Business & Industry, told me. 

POSTED: Thursday, January 28, 2016, 1:23 PM

DuPont Co.'s Protection Solutions unit says it is adding two more fireman-shaped Thermo-Man sensor-laden testing dummies and fire-resistant-fabric development centers, in Singapore and Brazil, to the three now in service in Switzerland, the United Arab Emirates, and Spruance, Va.  

The new labs are a sign DuPont still invests in product development, as it shaves $250 million from its $1.9 billion-a-year research budget and cuts 5,000 jobs as it prepares to merge with Dow Chemical. 

Thermo-Man -- the name recalls Burning Man, the annual tech punk party in the Nevada desert, as well as the accidents DuPont is paid to help prevent -- is "a life-sized, instrumented mannequin covered with heat sensors," which DuPont says it developed "with the U.S. Government to help protect military personnel from burns." It also shows off DuPont flame-resistant fabrics like Nomex.

POSTED: Thursday, January 28, 2016, 10:25 AM

As Harold Brubaker notes in today's Inquirer: John McNulty was from Southwest Philly, son of Irish immigrants. Anne Welch grew up out in Springfield, Delco. They met as students at Cardinal O'Hara High School. Anne went on to be valedictorian at Villanova. John was class president at St. Joseph's University. They married, got their MBAs at Wharton, and joined Goldman Sachs, where they rose to Managing Directors.

Anne went on to help found JBK Partners. John made a pile heading the Special Investments Group during the 1990s boom years, and retired in 2001, setting up a New York foundation to start giving it away. He died, just 52, in 2005.   

Wharton now says Anne Welsh McNulty has donated $10 million to what will now be known as the "Anne and John McNulty Leadership program." Villanova announced she gave an additional $5 million to set up a new Institute for Women's Leadership.

POSTED: Tuesday, January 26, 2016, 4:41 PM
DuPont Co. CEO Edward Breen.

After another disappointing earnings report, master corporate carver and kingmaker Edward Breen -- CEO of the DuPont Co., among his other jobs -- took questions Tuesday morning from stock analysts in advance of DuPont's planned merger with Dow Chemical Co. and their proposed split into 3 companies: materials (mostly Michigan-based Dow), mixed specialty products (mostly Wilmington-based DuPont) and farm pesticide and seed sales (with headquarters to be announced, maybe in the Midwest, where both companies have labs.) 

"Hey Ed, I know you were busy this weekend also, with Johnson Controls-Tyco." cracked Wells Fargo Advisors analyst Frank Mitsch, citing Monday's $20 billion sale announcement by Tyco International, which Breen chairs, to Johnson Controls (see my story here) . "But you've also been busy (upsizing DuPont) cost reductions: 2016 goes from $700 million to $730 million; run rate (yearly savings), was $900 million, to a billion.

"That's after one month -- you rolled those numbers out one month ago. And you and Andrew (Liveris, the Dow boss) rolled out a $3 billion number a month ago in terms of synergies for combined entities." So, will that keep going up, too? Mitsch asked. -- DuPont's "$1B cost reduction is separate from the Dow DuPont $3 billion," Breen replied evenly. "We're moving as fast as we can. We did identify more."

POSTED: Tuesday, January 26, 2016, 1:48 PM

Mike Krauss, from the Public Banking Institute, writes to applaud Philadelphia City Council's unanimous vote last Thursday "taking the first step toward formation of a public bank for the city," modeled on the Bank of North Dakota, the lone survivor of what were once a constellation of state- and city-owned banks. (S&P cut Bank of North Dakota's stand-alone credit rating by a notch, to A, last fall, citing "revenue instability and asset quality deterioration" at the energy-dependent state-run lender, according to this report on the bank's own Web site.)

Philadelphia's resolution "was introduced by veteran council members Curtis Jones, Jr. and newly elected councilman-at-large Derek Green" and backed by President Darrell Clarke "and a coalition of Philadelphia neighborhood, civic, business, labor and religious organizations," Krauss adds. Their goal: "Stimulating economic development and job creation, reducing municipal debt service, expanding the tax base through local lending at below-market rates, developing local commercial corridors and small businesses, and generating funds for the city school district."

And who doesn't want all that? But who will make it happen? Council is taking guidance from "Emma Chappell, a prominent Philadelphia banker, former municipal treasurer and a leader of the Pennsylvania Project, the citizens’ group spearheading the drive for a public bank." Remember Chappell, who used city pension funds to help finance United Bank of Philadelphia?  Taxpayer deposits, private borrowers, politicians in charge, private borrowers -- what could possibly go wrong?

About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, 215.854.5194, @PhillyJoeD. Read his blog posts at http://www.philly.com/PhillyDeals and his Inquirer columns at http://www.philly.com/philly/columnists/joseph-distefano/. Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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