What You Need To Know This Week — May 9th, 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.
LIBERTY GLOBAL AND TELEFONICA COMBINE U.K. UNITS IN $39 BILLION DEAL
Liberty Global agreed to combine its British cable operations, Virgin Media, with Telefonica’s U.K. telecommunications business, O2, in a game-changing $39 billion merger. The business combination, the largest merger since the global health-related shutdown started, creates a “quad play” telecom operator that can offer cable TV, internet, landline and mobile phone services to consumers in one package. The deal will reshape the competitive environment in the U.K., as the proforma company will have the country’s largest mobile network and the second-largest broadband internet network.
STRUGGLING RETAILER NEIMAN MARCUS FILES FOR BANKRUPTCY AS CORONAVIRUS HAMMERS DEPARTMENT STORES
113-year-old department store company Neiman Marcus was the latest victim to the coronavirus-led recession, filing for Chapter 11 bankruptcy protection this week. Other retail casualties of the downturn include J Crew and Canadian shoe retailer ALDO Group, both of which filed for bankruptcy in the last few days. Neiman Marcus’ financial condition has been perilous for years given its overleveraged balance sheet and declining sales, the result of an ill-fated $6 billion leveraged buyout by Ares Management and the Canada Pension Plan Investment Board in 2013.
MERGERS UP IN THE AIR AS COVID-19 HITS ASSET VALUES
As the pandemic pummels certain businesses while other companies are seeing their fortunes soar in the age of COVID-19, some mergers and acquisitions are going haywire. Auto parts manufacturer BorgWarner coerced acquisition target Delphi to accept a 5% price cut to stay committed to the deal. Amherst Holdings abandoned its deal for single-family home landlord Front Yard Residential, citing uncertainty caused by the pandemic. GAIN Capital’s brokerage business is experiencing record financial results as a result of the health crisis and an activist is agitating for GAIN’s acquiror to pay a higher price in the deal.
Recommended Articles, Podcasts, Books and Tweets
Listen to thoughts and insights from venture capitalist Josh Wolfe on Eric Weinstein’s The Portal Podcast.
Interested in cannabis investing? Be sure to check out the latest Absolute Return Podcast with special guest Tyler Stuart, Co-founder of Green Acre Capital, a leading cannabis private equity investment firm.
Legendary global macro hedge fund manager Paul Tudor Jones is buying bitcoin futures in his fund, citing concern about central bank money printing: “The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.”
The judge presiding over the dispute between Rifco and its would-be acquiror CanCap Group claims that more evidence is needed to determine whether a material adverse change occurred, which would allow CanCap to get out of the deal.
The U.S unemployment rate has surged to 14.7%, its highest level since the second world war. This is below the 16% expected by economists.
Canada’s unemployment rate hit 13% as 2 million people lost their jobs in April. Economists were expecting the unemployment rate to hit 18%.
Warren Buffett sold out of all of Berkshire Hathaway’s holdings in airline stocks during the market panic. Perhaps his new investment mantra is, “be fearful when others are fearful.”
Value stocks are at their most attractive level in history. However, don’t take my word for it. In a new research report, AQR’s Cliff Asness shows the value spread at the 100th percentile and dismisses common criticisms of value investing.
Google’s Sidewalk Labs abandoned its controversial Toronto smart-city project, blaming the COVID-19 pandemic and its effects on the Toronto real estate market.
Another private mortgage fund suspended redemptions, which serves as another reminder not to invest in private mortgage funds.
Vehicle rental company Hertz is preparing to file for bankruptcy. It’s another victim of the slowdown in travel due to COVID-19.
Kingsoft Cloud Holdings, a Chinese cloud computing company, went public this week raising more than US$500 million in its initial public offering. It is the first non-biotech or non-SPAC to go public since the bear market began.
L Brands allowed would-be acquiror, private equity firm Sycamore, to walk from its acquisition of Victoria’s Secret. No break fee was paid.
As sentiment for bitcoin improves, venture capital firm Andreessen Horowitz raised $515 million for a new crypto fund.
