Dan Caplinger (TMFGalagan)

May 6, 2019 at 11:10AM

After a long upturn, stock market investors got cold water thrown in their face on Monday morning, as comments from President Trump seeking to escalate tariffs against China dashed hopes for a quick resolution to the long-standing trade tensions between the U.S. and its most important source of imports. As of just before 11 a.m. EDT, the Dow Jones Industrial Average(DJINDICES:^DJI) was down 251 points to 26,254. The S&P 500 (SNPINDEX:^GSPC) fell 30 points to 2,916, and the Nasdaq Composite (NASDAQINDEX:^IXIC) dropped 95 points to 8,069.

As you’d expect on a down day for the market overall, many individual stocks were lower, but Anadarko Petroleum (NYSE:APC) managed to avoid the pressure after getting even more favorable attention from one of the companies seeking to acquire the energy specialist. Meanwhile, Kraft Heinz (NASDAQ:KHC) gave some additional information concerning its financials, announcing that it will restate results going back several years in an attempt to remedy potential misstatements.

Four oil pumps in a row on a sunny day in an arid landscape.

Raising the ante on Anadarko

Anadarko Petroleum saw its shares rise 3% after the latest chapter in the energy company’s ongoing merger and acquisition drama played out. Occidental Petroleum (NYSE:OXY) decided over the weekend to amend its offer to buy out its energy counterpart as it attempts to outbid rival Chevron (NYSE:CVX).

Originally, Occidental had offered $38 per share in cash and 0.6094 shares of Occidental stock to Anadarko shareholders, trying to overcome Chevron’s bid of $16.25 per share in cash and 0.3869 Chevron shares. However, some noted that it might be reasonable for Anadarko to consider Chevron stock to be a more valuable consideration than Occidental shares.

In response, Occidental boosted its proposal to $59 per share in cash plus 0.2934 shares of Occidental stock. The new offer still keeps the total per-share value at about $76 per Anadarko share, but it gives the deal more likelihood of success as it arguably takes away the right of Occidental shareholders to hold a vote on the deal before it would become final.

Meanwhile, Chevron should have a chance to make its own sweetened offer at some point. Whether it actually will remains uncertain, but if Anadarko makes a final determination that Occidental’s bid is superior, the ball will be squarely in Chevron’s court to figure out what to do next.

Kraft Heinz will restate past financials

Meanwhile, shares of Kraft Heinz were roughly flat after having fallen near the open on Monday morning. The food giant said that it will have to restate its financial results for 2016 and 2017, as well as for the first nine months of 2018, and it will also have to delay further its release of final full-year 2018 numbers.

The news follows Kraft Heinz’s February announcement that the U.S. Securities and Exchange Commission had opened an investigation regarding the company’s procurement operations. As part of the response disclosed Monday, Kraft Heinz said that it had determined that several employees working on procurement had indeed engaged in misconduct. The company intends to take personnel actions to address the situation.

Meanwhile, Kraft Heinz will take steps to correct misstatements to financials made in connection with the event. The company said that it doesn’t expect any of the misstatements to be material in terms of financial impact, but it will nevertheless restate financials to correct the misstatements in order to avoid investors inferring any incorrect conclusions from qualitatively erroneous information.

With everything going on at Kraft Heinz, the departure of CEO Bernardo Hees in favor of incoming chief executive Miguel Patricio will be an opportunity for the company to get a full reboot. It won’t be easy, but if it’s successful, Kraft Heinz will be able to move forward in new and exciting directions to maximize its chances for growth and profit.


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