Loews Corporation L recently completed the buyout of Consolidated Container Company (“CCC”) enabling the Multi line insurer to further boost and diversify its operations and strengthen its network of manufacturing locations throughout the U.S. The company paid approximately $1.2 billion for the buyout, which has been funded by cash and debt equally. The transaction was announced on Apr 11, 2017.
Consolidated Container is an Atlanta-based rigid plastic packaging manufacturer, which offers packaging solutions for beverages, food and household chemicals. Notably, the packaging manufacturer will now become part of New York-based Loews Corp.’s newly formed business – Loews Packaging Group.
The addition of Consolidated Container will be a significant value addition to Loews Corp.’s already diverse portfolio. The buyout marks the company’s first foray into the packaging industry. The conglomerate’s other businesses include hotels, energy and financial services.
Loews Corp.’s decision to buy Consolidated Container was taken after careful analysis of the packaging industry for a considerable period of time. The Multi line insurer believes that Consolidated Container will be a perfect fit for its portfolio. Given that the packaging industry is highly fragmented without any major players and scope for solid cash flow generation, the company believes that the packaging manufacturer will not be subjected to any major technological disruption. Furthermore, Loews Corp. expects the latest transaction to accelerate its overall growth.
The buyout will offer Loews Corp. a platform for growth, organically and through prudent acquisitions. In addition, the company will be able to extend its services and improve the same, which will enable it to serve clients, more efficiently.
Share Price Movement
Shares of Loews Corp. lost 1.80% since the release of its first-quarter 2017 results, underperforming the Zacks categorized Multi line Insurance industry’s decline of 0.92%. We expect the company’s solid operational performance, prudent acquisitions and a robust capital position to help the stock turn around in the near term.
Zacks Rank
Currently, Loews Corp. carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the same space include Cigna Corporation CI, James River Group Holdings, Ltd. JRVR and Old Republic International Corporation ORI. Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cigna Corp., which operates as a health services organization, offers insurance and related products and services in the United States and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 1.35%.
James River Group provides specialty insurance and reinsurance services in the United States, which delivered positive surprises in all of the last four quarters with an average beat of 9.47%.
Old Republic International engages in the insurance underwriting and related services business primarily in the United States and Canada. The company delivered positive surprises in two of the last four quarters with an average beat of 11.37%.
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Cigna Corporation (CI): Free Stock Analysis Report
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Zacks Investment Research
May 23, 2017 at 09:18PM
from Zacks Equity Research
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