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Consumer Products and Services

Failed merger drifts have message in scrap heap

20 Apr 2023

Clothing retailer Lululemon may be mulling a sale of its smart fitness Mirror three years after buying it. Peloton has had a similar problem. Bold acquisitions that stray from a company’s knitting are exciting when funding is cheap but come at a high price when markets turn.

Bank chiefs move fluttering interest-rate needle

19 Apr 2023

Morgan Stanley’s James Gorman and JPMorgan’s Jamie Dimon both warned that sticky inflation may prompt the Fed to hike rates to 6%. While not a prediction, the figure exceeds what investors and the central bank itself expect. When CEOs sitting ringside weigh in, it pays to listen.

Netflix clears streaming hurdle, by a hair

18 Apr 2023

The video service added fewer subscribers than hoped, but has levers to pull to increase value, like $6 bln from a shared account crackdown in North America. They’re small gains in a tough market, but as rivals struggle to control spending, Netflix has a competitive edge.

Apple’s store push marks its big Indian wedding

18 Apr 2023

Dhol drums – a high-decibel feature of marriage celebrations – played in Mumbai as Tim Cook opened the company’s first store. A retail presence is mostly a symbolic gesture given India’s lower-middle income status. Yet selling more iPhones isn’t the only thing Cook has to gain.

Merck treats its migraine with half headache pill

17 Apr 2023

With its star cancer remedy close to going off patent, the pharma giant has shifted into digestive disease with an $11 bln bid for Prometheus. If the biotech’s drugs are approved, Merck will have a slice of a $49 bln sector. If not, the patent cliff will be even more precipitous.

Baijiu is fiery palate cleanser for Hong Kong IPOs

17 Apr 2023

A KKR-backed Chinese liquor group’s $800 mln listing is the city's largest this year. Beijing is directing funding onshore to strategic industries, and that will force more consumer companies to Hong Kong. Investors will be alert to see if that pushes more risk their way too.

Capital Calls: AI goes back to school

17 Apr 2023

Concise views on global finance: Chegg’s sagging shares perked up on news that the education software developer is working with ChatGPT maker OpenAI to create a safer automated tutor. For companies at risk of obsolescence, working with chatbots is a better bet than beating them.

Big Tech breakups: more antitrust than Alibaba

13 Apr 2023

The Chinese company’s six-way separation plans are renewing questions about the sprawl at Amazon, Alphabet and Meta. There’s less obvious strategic or financial upside to carving out AWS, YouTube or the metaverse. Competition authorities have their own agendas, however.

Only the big will crack the $1 trln LBO code

12 Apr 2023

Buyout barons have a collective 13-digit sum to spend, but little borrowing available to juice returns. As lenders tiptoe back, deals will rely on more upfront cash and extra elbow grease in credit markets. It adds up to slower activity and greater industry concentration.

Tech IPO freeze will thaw soon

11 Apr 2023

Late-stage tech companies such as Instacart and Reddit are procrastinating going public. But investors are antsy to cash out, employees are owed, and bankers are motivated. History suggests the window won’t stay shut past this fall, even if companies debut at lower valuations.

J&J’s sweetened talc settlement still unsettling

4 Apr 2023

The healthcare giant’s attempt to limit legal claims to a unit that declared bankruptcy was shot down by courts. It’s trying again with a $7 bln bigger pot and more plaintiffs on board. That may appease the aggrieved. But bypassing jurors sets a bad precedent.

How FDIC dropped the ball and picked up the tab

4 Apr 2023

The US bank watchdog axed a project last year that would have used data to spot risks like those that felled Silicon Valley Bank, amid skepticism from Chair Marty Gruenberg. Had it survived, the plan might not have spared the FDIC a crisis. But it could help avoid the next one.

Storage merger war gets a little Extra

3 Apr 2023

Life Storage agreed to pair up with its rival store-it company Extra in a $12.4 bln deal after rejecting a hostile takeover from Public Storage. Life’s former suitor may come back claiming big synergies. But the needed premium – and a break fee – would not be worth the additional effort.

WWE-UFC headlock relies on financial theatrics

3 Apr 2023

Combining the producers of wrestling and mixed martial arts is set to create a new $21 bln company. Grappler-in-chief Vince McMahon gets a richer valuation on paper than partner Endeavor’s outfit. This storyline, including potential synergies, leaves a lot to the imagination.

Investors put Starbucks in the grinder

29 Mar 2023

The coffee chain’s shareholders voted for an investigation into the way the company treats its workers. Had Starbucks proactively agreed to the proposal like Apple did, it could have saved its worker-friendly image. Instead, new boss Laxman Narasimhan starts on the wrong foot.

Bigger and louder choirs create M&A dissonance

29 Mar 2023

After Ritchie Bros struck its $7 bln deal to buy IAA, at least 10 shareholders, including Starboard and lesser-known Discerene, sang out about the transaction. Uncommon and first-time vocalists are on the rise. Expect bosses and boards to develop their own new song and dance.

Another cultish cost-saving formula gets off-track

29 Mar 2023

Like GE’s Six Sigma and zero-based budgeting at Kraft Heinz, the railroad version of efficiency has gone too far. It is being tested at $120 bln Union Pacific, where a pushy investor wants devotee Jim Vena to be CEO. New industry concerns suggest it’s time to slam the brakes.

Capital Calls: Apple arrives late to pay-later

29 Mar 2023

Concise views on global finance: The $2.5 trln iPhone maker is rolling out its U.S. “buy now, pay later” product into a much tougher, and riskier, market than when it first unveiled plans in June.

Crypto hangs on by an unraveling thread

28 Mar 2023

U.S. agencies targeted Coinbase and Binance for how they engage with customers. A crypto deal is being blocked. A respected stablecoin lost its peg. As FTX founder Sam Bankman-Fried is charged with bribing Chinese officials, it’s clear digital currencies’ issues weren’t just his.