On the Street

Months of negotiations have come to a head for John Q. Hammons Hotels (AMEX: JQH) officials and JQH Acquisition LLC. A merger valued at about $132 million was agreed upon June 15, giving Hammons Hotels shareholders $24 a share. The merger is conditional on, among other things, approval by the company’s stockholders at a special meeting. Hammons, who owns 76 percent of the stock and favors the merger, would continue to hold equity ownership in the business. New York investor Jonathan D. Eilian formed JQH Acquisition in January. Shares of JQH closed the day of the merger announcement at $23.67, a record end-of-day high.

Sinking cigarette tax

Missouri’s cigarette tax of 17 cents per pack is the 48th lowest in the nation after Kentucky increased its cigarette tax from 3 cents to 30 cents June 1. Missouri also trails heavy tobacco-growing states Virginia and Tennessee; both states charge 20 cents per pack.

The national average is 84 cents per pack, according to the Missouri Budget Project, which is calling for a modest cigarette tax increase. The Missouri cigarette tax was last increased in 1993. Economists at the Missouri Budget Project say that a 13-cent per pack increase – equaling that of Kentucky’s new tax – would generate about $70 million for the state.

O’Reilly ‘buy’

A.G. Edwards analysts held O’Reilly Automotive stock at a “buy” rating last week, while raising their earnings-per-share estimates for the Springfield-based company. The company reached its highest growth ever in May, with a 10.3 percent increase in automotive parts, accessories and tires sales.

The company had record quarterly earnings of 59 cents per share in the first quarter. It acquired Midwest Auto Parts Distributors Inc.’s 71 stores for $61 million May 31. O’Reilly stock closed June 15 at $58.99 a share, a 52-week high.

Unemployment tax looms

Missouri must repay its federal debt or be granted “avoidance” before Nov. 10 in order to sidestep an increase on federal unemployment taxes imposed on employers. According to an Associated Industries of Missouri press release, employers statewide would be charged 37.5 percent more, or $60 million, in federal unemployment taxes if the state’s $380 million federal debt is not partially paid by the deadline. The federal tax, retroactive to Jan. 1, would equal $21 per employee.

Associated Industries officials have been working with Missouri’s Department of Labor to find a solution. The criteria to be met: improve solvency of the state unemployment trust fund, make a partial payment to the federal government and do not borrow additional funds between Nov. 10 and Jan. 31.

AIM officials have been told that Missouri is close to qualifying for partial repayment.

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