Zacks_Analysts' Blog : Leucadia and Mueller Sign Deal - Analyst Blog

Leucadia National Corporation (LUK) and Mueller Industries Inc. recently signed a Standstill Agreement, which is due to expire on September 2, 2013.

Mueller Industries Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings along with fabricated tubular products. It primarily operates in the United States, Canada, Mexico, Great Britain, and China.

As per the agreement signed, Leucadia can hold up to 27.5% of Mueller's outstanding common stock and can appoint at most two directors to Mueller's Board of Directors. Besides, Leucadia is not permitted to sell Mueller's shares to any party holding more than 4.9% of the latter's common stock or engage into any corporate activities without permission from Mueller's appointed directors.  

Leucadia's Chairman, Ian M. Cumming, and its President, Joseph S. Steinberg, have already been nominated and elected to Mueller's Board of Directors.

Leucadia recently came out with its second quarter 2011 results, reporting earnings per share from continuing operations of 74 cents, compared with a loss of $1.01 in the year-ago quarter. Results were also slightly below the Zacks Consensus Estimate of 76 cents.

The current Zacks Consensus Estimate for the third quarter is 70 cents, representing a year- over-year decline of 34.58%. Estimates for the fiscal years 2011 and 2012 are $2.14 and 78 cents, reflecting annual decline of 72.06% and 63.55%, respectively.

Based in New York, Leucadia primarily engages in manufacturing, oil and gas drilling services, gaming entertainment, real estate activities, medical product development operations and various other investment activities in the United States. The company faces intense competition from various companies in different industries including Apollo Investment Corporation (AINV), The Blackstone Group (BX) and privately-held H Group Holding Inc.