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| Here’s your daily business briefing. - 🛒 Self-checkout decline gains momentum
- 📉 Deep Dive: M&A activity plummets in November
- 🛢️ Occidental buys CrownRock in $10.8B deal
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks! Shriram
p/Shriram | |
| 1 | | Dollar General is changing its self-checkout approach, moving it from a primary to a secondary option in response to challenges. The company initially expanded self-checkout to over half of its 19,000 stores but is now revising the strategy to improve sales and address merchandise losses, known as "shrink," by reintroducing staff at checkout. More: - Todd Vasos, CEO of Dollar General, recognized that self-checkout is overused and emphasized the importance of having a human cashier there.
- According to research conducted in the U.S., Great Britain, and other European nations, self-checkout businesses had a loss rate of roughly 4%, double the industry average.
- Citing various reasons, other businesses like Booths and Walmart have likewise reduced or eliminated self-checkout options.
- Costco is adding employees to self-checkout locations to curb misuse, while Target limits self-checkout to consumers purchasing 10 or fewer items.
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What the numbers say: November's global M&A deals totaled $160B, the lowest for the month since 2011, marking a 36% drop compared to the 28% fall for the entire year, jeopardizing the annual target of reaching $3T. Relevance: Geopolitical instability stemming from the Israel-Hamas conflict has led to market disruptions and a decrease in deal values. Amidst the current state of uncertainty, companies being evaluated for possible acquisition by private equity firms face difficulties making decisions. More data: Traditional banks, expected to fund major private equity deals, encounter obstacles in dealmaking amid market dynamics and geopolitical uncertainties. Despite a steeper decline in November 2022 deal values, there's optimism for a better start in 2024, with robust pipelines and potential improvements in financing conditions. | | | |
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| 3 | | Occidental Petroleum has revealed a $10.8B cash and stock deal to acquire CrownRock, a West Texas producer. The acquisition involves Occidental taking on new debt of $9.1B, issuing approximately $1.7B in common equity, and assuming CrownRock's existing $1.2B debt, positioning the company to stay competitive amid industry consolidation. More: - With the support of Lime Rock Partners and headed by Texas entrepreneur Timothy Dunn, CrownRock has more than 94,000 net acres in the Midland Basin, which is the Permian Basin's eastern region.
- Occidental Petroleum's acquisition of CrownRock follows its challenging $38B purchase of Permian rival Anadarko four years ago, signaling the company's resilience and financial recovery.
- With roughly 1,700 undeveloped areas, Occidental projects that the acquisition will increase its output by nearly 170,000 barrels of oil equivalent per day by 2024.
- The acquisition supports the goals of Vicki Hollub, CEO of Occidental, to develop a unique portfolio and pursue carbon capture projects.
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| 4 | | X, formerly Twitter, is pursuing collaborations with smaller advertisers as significant brands and advertiser boycotts pose challenges. Elon Musk's controversial statements strained relationships with major brands, leading to a decline in X's advertising revenue, particularly after Media Matters reported that ads were placed near pro-Nazi content. More: - With an eye on broadening its advertisement base, X is looking into joint ventures to draw in small and midsize companies.
- There have been preliminary discussions with Amazon about a possible collaboration that would enable X to run ads through Amazon's ad-buying platform.
- Talks also revolve around granting ad-tech startup PubMatic access to X's ad inventory so they can participate in automated ad auctions.
- Linda Yaccarino, CEO of X, spearheads initiatives to increase the company's advertiser base, concentrating on small and midsize enterprises.
- As of August 2023, more than 80% of active advertisers on X were small and medium-sized enterprises, reflecting a shift in the company's clientele.
Zoom Out: - Prior to Musk's acquisition of Twitter, 85% of its ad revenue came from large brands like Apple and Disney, emphasizing brand-building and name recognition.
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| 6 | | Apple and Paramount Global are in early discussions to bundle their streaming services, Paramount+ and Apple TV+, at a discounted rate as entertainment companies seek partnerships to counter competitive pressures. The move aims to offer cost-effective and appealing bundled services amid the rising trend of subscription price increases and potential customer defections. More: - Service bundling reduces subscriber churn by providing multiple services in a package, making viewers less likely to cancel every month.
- Prominent examples of bundling agreements are Verizon's partnership that provides HBO Max and Netflix, while David Zaslav, CEO of Warner Bros. Discovery, has stated that he is amenable to bundling Max with more services.
- In October, the customer-defection rate (churn) for Apple TV+ and Paramount+ exceeded 7%, higher than the industry average for streaming (5.7%).
- In comparison to stand-alone services, Disney's combined offering of Disney+, Hulu, and ESPN+ has demonstrated reduced subscriber attrition rates.
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| 7 | | Quick Hits: - Want to master Kubernetes? The Kubernetes Cookbook is a must-have guide to discover guidance on cloud architecture analytics, optimization, governance, and more.*
- Tucker Carlson Network, live since today at a monthly cost of $9, features various shows, including interviews, short-form videos, and monologues.
- Meta announced that users of its Facebook and Messenger apps will now automatically benefit from end-to-end encryption, a significant improvement in security and privacy.
- BlackBerry Ltd. has decided to keep its internet-of-things business in-house alongside its cybersecurity unit, reversing its earlier plan to spin off the IoT division.
- Amazon's removal of Venmo from its marketplace poses another setback for PayPal's recent growth initiatives.
- Bestselling book on alternative investing offers the first chapter free for a limited time. "Money Shackles" innovates the way you think about money.*
*This is a sponsored listing. | | | |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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