Stocks in Motion: School Specialty
Shares of School Specialty (SCHS) were among Nasdaq's losers Monday, falling 19% after the company said backers of its going-private deal with LBW Holdings terminated certain financing for the acquisition. The educational products company also warned that fiscal 2006 earnings would fall well short of expectations.
The company said that Banc of America Securities, J.P. Morgan Securities and Deutsche Bank Securities terminated the $350 million in senior-notes because "certain conditions to their obligations under the senior notes purchase agreement have not been and cannot be satisfied," School Specialty said. The company said it believes the decision relates to "disappointing results in August and September and concerns about near-term financial and operating performance.
As a result of the debt-financing situation, the $1.5 billion merger, which was supposed to close on or about Sept. 30, won't close on time. The "drop dead date" under the transaction is Oct. 31. LBW Holdings and its financing sources, meanwhile, have asked for more time to perform supplemental due diligence into School Specialty's recent and near-term operating performance.
As for the company's financial performance, School Specialty now expects fiscal 2006 earnings, before items, of $2.17 to $2.31 a share on sales of $1.03 billion to $1.06 billion. Previously, the company predicted that it would earn $2.35 to $2.60 a share on sales of $1.04 billion to $1.07 billion. Analysts polled by Thomson First Call had been expecting earnings of $2.53 a share on sales of $1.06 billion. The company blamed the shortfall on difficulties related to the start-up of its new Lancaster, Pa., distribution center and a decline in order flow from PreK-12 customers. Shares were recently down $9.43 to $39.35.Lennar (LEN) rose 3% after Standard & Poor's said it would add the homebuilder to the S&P 500 Index after the close of trading Monday. Lennar will replace Gillette, which was acquired by Procter & Gamble (PG). Lennar shares rose $1.84 to $61.60.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV