What You Need To Know This Week — May 23rd, 2020
What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
WORK FROM HOME BECOMES PERMANENT FOR MORE AND MORE COMPANIES
The coronavirus pandemic and consequent work from home measures have turned many companies on to the benefits of a work from home policy, including increased productivity and reduced costs. Recently, technology companies Twitter and Spotify both announced the transition to a permanent shift to remote work. Social networking giant Facebook also announced that it expects half of its 50,000 person workforce to be working from home by 2030. The transition from a centralized office to a distributed workforce has significant implications for commercial real estate and company culture that will play out for years to come.
SILVERCORP INCREASES FRIENDLY OFFER FOR GUYANA GOLDFIELDS BY 88% AS THIRD PARTY BID EMERGES
We have our first corporate bidding war of the post-coronavirus era, folks. This week, Guyana Goldfields received an unsolicited, all-cash bid from an unnamed interloper. This bid is in addition to the unsolicited all-share proposal from rival Gran Colombia Gold. In response to the bids, friendly acquiror Silvercorp raised its consideration for Guyana Goldfields by a stunning 88%, which represents an enormous 187% premium to Guyana’s unaffected share price. This is the sort of bidding war that can make an arbitrageur’s year, and I suspect it isn’t over yet. We have yet to hear from the unnamed third-party bidder or Gran Colombia with respect to the new Silvercorp offer for Guyana.
PRIVATE EQUITY FIRM ADVENT RENEGES ON COMMITMENT TO ACQUIRE FORESCOUT AND GETS SUED
On the day that Forescout Technologies’ acquisition by private equity firm Advent was supposed to close, Advent got cold feet and tried to terminate the $1.9 billion transaction by claiming a material adverse effect. All conditions of the deal have been satisfied. Advent’s last-minute change of heart and resulting breach of the merger agreement by not closing was likely caused by the COVID-related market downturn. As investors hoped, Forescout sued Advent for specific performance in an attempt to get a judge to order Advent to close the acquisition at the agreed-upon deal price of $33.00 per share. Forescout’s stock declined on the week to $23.40.
SPOTIFY SIGNS JOE ROGAN AS EXCLUSIVE PODCASTER FOR A RUMOURED $100 MILLION
Streaming company Spotify signed comedian Joe Rogan to make his podcast exclusive to the company in a deal worth a rumoured $100 million. Episodes of the extremely popular podcast The Joe Rogan Experience, with its estimated 200 million downloads per month, will begin airing audio and video exclusively to the Spotify platform in September. The company has been on a podcast acquisition spree, buying Gimlet Media, Anchor, and Parcast last year. Spotify’s market capitalization increased by $5 billion on the news of the Rogan deal.
Notable Insights, Articles, Podcasts, and Tweets
On the Tony Robbins Podcast, a panel of experts consisting of researchers, an experienced epidemiologist, a Nobel Laureate, and M.D.s discuss facts and insights about COVID-19 that politicians and media seem to ignore.
Watch the Accelerate team open the Toronto Stock Exchange this week (virtually of course) to celebrate the launch of the Accelerate Arbitrage Fund (TSX: ARB).
Electric semi-truck manufacturer Nikola Motors is a stock market darling, ever since it announced the reverse takeover of special purpose acquisition company VectoIQ. Newly-minted billionaire Trevor Milton, CEO of Nikola, has lost everything in his last two ventures. For Milton, it appears that the third time’s a charm.
The “King of Instagram”, Dan Bilzerian, is Chairman and Chief Executive Officer of Canadian Securities Exchange-listed CBD company Ignite International Brands Ltd. The small cap company pays the $200,000 a month lease for Bilzerian’s rented mansion, amongst other perks.
The U.S. Department of Justice is planning on filing antitrust charges against Google this summer. The regulators are focused on Google’s dominance in the online advertising industry in addition to allegations that the internet giant abused its dominant position in search to hurt competitors.
As casinos open back up throughout America after closing for two months, gamblers drove hours and waited in massive line-ups to get in.
John Krasinski’s uplifting web series “Some Good News” is getting acquired by ViacomCBS after a massive bidding war for the newly launched show.
U.S. insurance comparison website SelectQuote raised $360 million in an initial public offering valuing the company at $3.25 billion. The equity market window continues to open for select issuers.
Canadian real estate activist investor Sandpiper Group revealed a 10% position in hard-hit retirement home operator Extendicare. The stock is down -30% year-to-date.
China unveiled a $500 billion economic stimulus package in a bid to create 9 million jobs and combat the coronavirus-led recession. In addition, the country officially dropped its GDP growth target.
Hong Kong stocks fell over -5% on Friday over geopolitical concerns as China announced that it would impose a national security law on the city.
“Black Swan” author Nassim Nicholas Taleb and quant hedge fund manager Cliff Asness got into a nasty Twitter fight over tail-risk hedging strategies. The conflict began with Taleb claiming AQR’s criticism of tail-risk hedges was flawed.
Yields on U.K. 5-year Government bonds went negative for the first time as traders price in the potential for negative interest rate policy at the Bank of England.
One of the craziest business stories ever is playing out in Toronto right now: A mafia-style turf war is occurring in the towing business, of all places. Four truck drivers have been murdered in the past 18 months and at least seven trucks have been set on fire in the past week.
CI Financial acquired the remaining 25% of robo-advisor WealthBar that it didn’t already own. The terms of the deal were undisclosed.
Evan Siddall, CEO of Canada Mortgage and Housing Corp., forecasts that average Canadian housing prices will decline -9% to -18% in the coming year while not rebounding until 2022.
Private equity has been ruining healthcare by raising prices and cutting costs while reducing the quality of care for patients. The coronavirus has made this dynamic even worse.
European regulators ended their ill-advised ban on short-selling.
The investment firm that owns Peet’s Coffee is planning a $2.2 billion IPO for the company in what would be the largest European initial public offering of 2020.
Biotech firm Moderna reported positive data on its coronavirus vaccine trial. The early-stage trial produced COVID-19 antibodies in all 45 participants. Market participants are hopeful that there will be a vaccine from one of the hundreds of firms working on the challenge by the fall of this year.
Irrationality in the food-delivery sector allowed a pizza proprietor to engage in an entertaining pizza arbitrage campaign. The arbitrage profits were funded by the venture capitalists who capitalized Doordash.
Instead of loading the boat during the coronavirus-led market panic, Warren Buffett was selling. Berkshire Hathaway disclosed that it sold most of its Goldman Sachs stake.
Venture capital firm Andreessen Horowitz funded early stage and heavily-hyped voice-based social media app Clubhouse at a reported $100 million valuation.
