Markets

Financial Sector Update for 05/04/2015: MCGC,HCHC,PFLT,FNHC,WBK

Top Financial Stocks

JPM +1.40%

BAC +1.37%

WFC +0.71%

C +0.47%

USB +1.21%

Financial stocks were mostly higher, with the NYSE Financial Sector Index rising 0.4% and the S&P Financial 100 Index adding over 0.7%.

In company news, MCG Capital Corp ( MCGC ) advanced an 18-month high Monday after HC2 Holdings ( HCHC ) made a $175 million buyout offer for the private equity firm, contending its bid was superior a similar stock-and-cash takeover proposal last week by PennantPark Floating Rate Capital ( PFLT ).

According to a letter made public this morning, the HC2 offer values MCG Capital at $5 a share, with HC2 paying exchanging 0.434 of a share of its common stock or 0.191 of a share of the company's newly created cumulative perpetual preferred stock for each MCGC share. MCG Capital shareholders also would receive $0.226 in cash from HC2 for each of their shares.

PennantPark on Friday also proposed a $5-a-share buyout of MCG Capital, offering $167 million in stock and the remaining $8 million in cash. The stock portion of PennantPark's proposal would value MCGC shares at $2.52 each. It also would pay 22.6 cents per share in cash and contribute up to 25 cents more if PennantPark's share price is trading under its net asset value.

In its letter detailed its proposal, HC2 requested a reply from MCG Capital by Wednesday, May 6, also stating it wanted " to emphasize to you the seriousness of this proposal and our commitment to completing a transaction with you. We are prepared to engage immediately."

MCGC shares were up more than 2% at $4.65 each, earlier reaching its highest share price since Oct. 29, 2013, at $4.74 a share and adding to a 7.5% gain on Wednesday when market talk of a deal first emerged. Through Friday's close, the stock had fallen almost 14% over the past 12 months.

HCHC stock was up 1% at $11.11 a share in mid-day trade, while PFLT shares were little changed, rising just 0.1% to $14.33 apiece.

In other sector news,

(+) FNHC, (+3.7%) Raised to Strong Buy from Outperform at Raymond James, which also maintained its $36 price target for the stock.

(-) WBK, (-4.5%) Announces plans to raise $1.6 billion to bolster its Tier 1 capital. Also declares dividend of A$0.93 per share, a penny under market expectations. Reports six-month profit of A$3.78 bln, little changed from last year and trailing analyst consensus by A$70 mln. Goldman Sachs downgrade to Neutral from Buy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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