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Steven Cohen and Point72 Asset Management's 1Q 2014 positions

Part 6
Steven Cohen and Point72 Asset Management's 1Q 2014 positions (Part 6 of 9)

Point72 Asset Management sells its shares in Foster Wheeler

Point72 Asset Management and Foster Wheeler

Point72 Asset Management added new positions in BlackBerry (BBRY), Liberty Global (LBYTK), Estée Lauder Companies (EL), and Discovery Communications (DISCA). The main positions the fund sold include Foster Wheeler (FWLT) and Broadcom (BRCM). The fund’s top position increases include Yahoo (YHOO) and Baidu (BIDU).

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Steven Cohen’s Point72 Asset Management disposed its position in Foster Wheeler (FWLT) that accounted for 0.93% of the fund’s U.S. long portfolio, as per the company’s 4Q 2013 filing.

Foster Wheeler AG is a global engineering and construction company and power equipment supplier delivering technically advanced, reliable facilities and equipment. The Switzerland-based Foster Wheeler operates through two business groups, the Global Engineering and Construction Group and the Global Power Group. The Global E&C Group designs, engineers, and constructs onshore and offshore upstream oil and gas processing facilities, LNG facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical, petrochemical, pharmaceutical, and biotechnology facilities, and related infrastructure—including power generation facilities, distribution facilities, gasification facilities, and processing facilities associated with the minerals and metals sector. The Global Power Group designs, manufactures, and installs steam generators and auxiliary equipment for electric power generating stations, district heating and power plants, and industrial facilities worldwide.

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Foster Wheeler to be acquired by AMEC 

In January, the British oil and gas engineering firm AMEC agreed to acquire Foster Wheeler. Under the terms of the acquisition, as announced on January 13, 2014, Foster Wheeler shareholders will receive 0.8998 new AMEC securities and $16.00 in cash for each Foster Wheeler share. The deal is valued at approximately $3.3 billion and is payable 50% in cash and 50% in AMEC securities.

The cash component of the possible offer ($1,595 million) is expected to be financed by a combination of AMEC’s existing cash resources and new debt financing. AMEC expects to pay the remainder by issuing new AMEC shares to Foster Wheeler shareholders, some or all of which may take the form of American Depositary Receipts. Post-completion, Foster Wheeler shareholders will own shares representing a 23% stake in AMEC’s enlarged share capital. AMEC will seek a U.S. listing in connection with the transaction.

The transaction will position AMEC to serve across the whole oil and gas value chain, adding midstream and downstream capabilities to the company’s existing upstream focus and bringing new customer relationships. The deal is expected to enhance AMEC’s geographic footprint, increasing its Latin America exposure and bringing scale benefits. The deal could create annual cost synergies of at least $75 million, with additional significant tax and revenue synergies. The acquisition is expected to be completed in the second half of 2014.

Foster Wheeler’s 1Q results came in below estimates

Foster Wheeler’s results were below expectations for 1Q 2014. Adjusted income from continuing operations in the first quarter of 2014 was $19.1 million, or $0.19 per diluted share, compared to $18.9 million, or $0.18 per diluted share, in the same quarter a year ago. Foster Wheeler said its adjusted income was below the average for 1Q13 due to a 17% decline in operating EBITDA from continuing operations and a higher effective tax rate. Operating revenues for the quarter fell to $733.70 million from $790.14 million in the same quarter last year. The company saw a net loss attributable to non-controlling interests of $2.12 million, compared to a profit of $3.27 million last year.

The Global E&C Group experienced a decrease in operating revenues of 6% to $553 million in the first three months of 2014 compared to the same period in 2013, driven by decreased flow-through revenues of $53,600. The Global Power Group saw a decline in operating revenues to $180 million due to a fall in volume of business and a change in the operations and maintenance fee structure at one of Foster Wheeler’s build, own, and operate projects in the U.S.

Foster Wheeler said, “While both of our business groups have been impacted by unfavorable economic growth rates in most of their respective global markets in recent years, global economic activity has strengthened since the latter portion of 2013 and we believe that it will continue to strengthen during 2014.”

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