| Here's your daily business briefing. - 💻 Intel's $25B Israel plant
- 🎁 Deep Dive: U.S. trims gift budget, ups other expenses
- 🧬 Bristol Myers acquires RayzeBio for $4.1B
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks for reading!! Shriram
p/Shriram | |
| 1 | | Intel and the Israeli government confirmed plans for a $25B chip factory in Kiryat Gat, Israel, described by Prime Minister Benjamin Netanyahu as the country's largest-ever investment. With 11,700 employees in Israel and over $50B invested in the past 50 years, Intel aims to enhance global material and chip sourcing by expanding the Kiryat Gat site. More: - For the Kiryat Gat plant development over several years, the Israeli government will provide $3.2B.
- Over the following 10 years, Intel promised to spend $16.6B on products and services from Israeli vendors.
- This investment is a component of Intel's larger plan to fortify supply chains and enhance its market position in the semiconductor sector.
- Intel's $5.4B acquisition of Israeli chipmaker Tower Semiconductor in February 2022 was canceled this year due to regulatory hurdles.
Zoom Out: - In 2021, Intel announced plans to invest $20B in constructing two new chipmaking facilities in the U.S. and up to $90B in new European factories in 2022.
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What the numbers say: Americans are expected to spend nearly $1T during the 15th consecutive year of holiday season growth, per the National Retail Federation. Bank of America's data reveals increased holiday spending, particularly on experiences, with service spending up by 2.5% last month, while retail spending, excluding restaurants, fell by 1%; prices for services like travel and entertainment rose by 5.5% over the past year, outpacing the overall inflation rate of 3.1%. Relevance: Increased spending on experiences impacts consumers aiming to reduce overall holiday expenses, with higher wages and easy credit access leading many to exceed their spending intentions. Over 40% of Gen Z and millennials are expected to go into debt for holiday expenses, utilizing financing options like Buy Now, Pay Later. More data: In November, average household spending on holiday items rose by 1%, driven by the popularity of Buy Now, Pay Later, which accounted for 7.2% of online sales during Black Friday and Cyber Week. Credit card APR increased to around 21% this year from 16% last year, with balances rising 4.7% to $1.08T in the latest quarter, leading some to use credit card reward points creatively for higher holiday expenses without debt. | | | |
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| 3 | | Bristol Myers Squibb (BMS) is set to acquire RayzeBio for approximately $4.1B, enhancing its cancer drug portfolio. The deal includes RayzeBio's late-stage targeted radiopharmaceutical therapy, RYZ101, and grants access to RayzeBio's Indianapolis manufacturing facility, with Bristol Myers paying a 104% premium at $62.50 per share in cash. More: - This strategic deal comes after Karuna Therapeutics was bought by BMS for $14B, which was revealed a few days ago.
- The action aligns with BMS's strategic goal of diversifying its product line in light of the approaching patent expirations of several more established treatments.
- With the acquisition announcement, RayzeBio's shares more than doubled to $61.40, having increased 27% since the company's September market debut.
- Major pharmaceutical companies increasingly make strategic acquisitions to strengthen their drug pipelines and solve industry difficulties.
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| 4 | | In 2024, media companies are exploring the return of bundles as the streaming era evolves, creating opportunities for both streaming services and cable providers. Analysts predict similar arrangements, driven by subscriber bases, with potential revenue impacts for pay TV and broadband firms, while mergers like Paramount and Warner Bros. Discovery discussions may spur additional bundling initiatives, notes Liberty Media. More: - Despite concerns, significant players are diving into streaming bundles, as seen in Disney acquiring Comcast's Hulu stake, launching a unified Disney+ and Hulu platform, and offering a three-way bundle with Disney+, ESPN+, and Hulu.
- Reports suggest Paramount Global and Apple may bundle Apple TV+ and Paramount+, while Verizon could offer customers a $10-a-month bundle of Max and Netflix's ad-supported tiers.
- The industry might benefit from adding streaming to pay TV bundles, particularly in light of this year's anticipated 18% drop in pay TV ad revenue.
- The Disney-Charter deal is a model for cable companies transitioning into the streaming era, offering potential benefits for Disney and Warner Bros. Discovery.
- Amid a fee dispute and Disney-owned channel blackout on Charter's Spectrum service, the Charter-Disney deal enabled Spectrum TV Select Plus subscribers to access the ad-supported tier of Disney+ and ESPN+.
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| 6 | | Cocoa futures hit a 46-year high, affecting chocolate manufacturers such as Hershey and Nestle, as global supplies are anticipated to fall short of demand for the third consecutive year. Challenging West African cocoa production, covering almost 70% of supplies, has exceeded expectations, causing a significant surge in cocoa product costs, including butter, making up 20% of an average chocolate bar's weight. More: - At over 2.5 times the price of cocoa futures in Europe, butter prices have reached a record high.
- Labor, processing, transportation, and marketing expenses are rising for chocolate manufacturers like Lindt and Hershey.
- Until the fresh harvest in October 2024, cocoa prices are predicted to stay high, possibly dampening the market.
- Unit sales in the food category, which includes chocolate, fell by 4.7% in the 12-month period ended on Dec. 9, suggesting that consumers may be making reductions in spending.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
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 | 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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