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| Here's your daily business briefing. - 🚫 Amazon scraps $1.4B iRobot buy, iRobot CEO resigns amid EU regulatory conflicts.
- 📈 Deep Dive: The CNBC/NRF Retail Monitor rose 0.4% in December, down from November's 0.8%.
- 💼 Willscot Mobile Mini Holdings acquires McGrath RentCorp in a $3B deal.
- 💰 LVMH reports 2023 sales of $93.79B with 13% organic growth.
- 🏦 SoFi Technologies' 22% stock surge followed its first-ever quarterly profit of $48M.
- 🚗 BYD Co. expects a 75% YoY increase in 2023 net income, driven by robust electric vehicle sales.
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Amazon canceled its $1.4B iRobot acquisition due to EU regulatory conflicts, resulting in iRobot's CEO, Colin Angle, stepping down. Amazon will pay a $94M termination fee for the deal's dissolution, prompting iRobot to undergo a restructuring plan with a 31% workforce reduction. More: - Following discussions with the FTC's senior antitrust staff, Amazon abandoned the acquisition, with legal action against the deal being recommended.
- Antitrust authorities in the U.S. and the EU seek to stop big internet firms from purchasing innovative new businesses before they become formidable rivals.
- The American multinational technology company is under scrutiny to demonstrate that its retail, cloud computing, and entertainment expansion doesn't adversely impact competition.
- Amazon's action aligns with a pattern in which antitrust authorities target internet firms; Adobe likewise withdrew its proposal to acquire startup Figma Inc. for $20B.
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What the numbers say: In December, the CNBC/NRF Retail Monitor rose 0.4% (excluding autos and gas), down from November's 0.8%. Consumer spending faced obstacles from a housing industry slowdown, impacting categories like electronics and appliances, building supplies, and furniture, while traditional holiday-related retail sectors showed modest gains. Relevance: Solid retail gains in the final holiday season month are clouded by deflationary pressures on consumer spending. Economists anticipate an economic cooldown from the third-quarter growth, with a slowdown in the housing industry affecting spending. The Retail Monitor provides insights into consumer purchases, differing from the Census Bureau's survey-based retail sales report. More data: The core retail gauge increased by 0.2% (excluding restaurants), a decrease from the previous month's 0.7%, reflecting deflationary pressures on consumer spending. The data showed moderate increases during the key holiday months of November and December. | | | |
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| 3 | | Willscot Mobile Mini Holdings ($WSC) is acquiring McGrath RentCorp ($MGRC) in a $3B cash-and-stock deal. McGrath shareholders can choose between $123.00 in cash or 2.8211 shares of Willscot Mobile Mini stock per share, with 60% converting to cash and the remaining 40% to stock, offering a 10% premium over McGrath's previous closing stock price. More: - Based in Phoenix, Willscot Mobile Mini rents out mobile structures, temporary offices, and climate-controlled storage containers.
- McGrath, which has its headquarters in Livermore, California, sells and rents modular buildings for a range of uses.
- The market value of McGrath has decreased by around 7% so far this year to approximately $2.7B.
- By the conclusion of the first full year following the deal's closing, the combined business is anticipated to produce about $700M in annual free cash flow.
- 2024 sees a robust deal-making environment in the industrial sector, fueled by rising infrastructure spending and a need for a larger scale.
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| 4 | | Moet Hennessy Louis Vuitton ($LVMH) beat expectations with 2023 sales of $93.79B and 13% organic growth, slightly lower than the previous year. The company reported a net profit increase to $16.41B, up from $15.23B in 2022, and expressed confidence for 2024 growth despite global economic uncertainties, proposing a $14.08 per share dividend. More: - With a 14% growth in organic sales, LVMH's fashion and leather goods segment adds $45.62B to the company's overall revenue.
- Revenue from selective retailing, which includes Sephora, rises by 25% to $19.34B.
- Perfumes and cosmetics saw an 11% increase in sales, while watches and jewelry showed a 7% gain.
- Due to high inventory levels and a strong comparison basis in 2022, wines and spirits saw a 4% decline in sales.
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| 5 | | SoFi Technologies Inc. ($SOFI) experienced a 22% share surge after posting its first-ever quarterly profit, reporting net income of $48M, exceeding analysts' average estimate. With fourth-quarter earnings per share at $0.02, surpassing expectations and indicating a positive shift from the previous year's $0.05 loss, SoFi is charting a transition year in 2024, emphasizing technology and financial services for growth. More: - The company projects net income between $95M and $105M for the entire year, with earnings per share ranging from $0.07 to $0.08.
- Adjusted net revenue for the fourth quarter was $594.2M, exceeding analyst projections of $573.2M.
- In Q4 2023, SoFi reported total deposits of $18.6B, up from $7.34B in the same period the previous year.
- Aiming for 20% to 25% EPS growth beyond 2026, the company hopes to capitalize on the expansion of its core business and additional business lines that will be introduced between 2024 and 2026.
Zoom Out: - SoFi initially focused on student-loan refinancing and entered the crypto space in 2019 but decided to exit in November due to regulatory pressures.
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| 6 | | BYD Co. ($BYDDY) projects a 75% YoY growth in its 2023 preliminary net income, ranging from $4B to $4.4B, fueled by a surge in electric vehicle sales, notably selling 526,409 fully electric cars in China in Q4 2023. Despite the global decline in EV demand, BYD outperformed Tesla Inc. in the final quarter, establishing itself as the foremost global seller of fully electric cars. More: - BYD's sales boom in China was primarily attributed to its wide range of less expensive electric vehicle models.
- Nevertheless, BYD's earnings failed to meet analyst forecasts, with the preliminary amount falling short of the $4.43B average estimate.
- Amid a price war in China's auto market, Shenzhen-based EV maker BYD discounted popular models, including Qin, Han, and Tang, by up to 10,000 yuan in November 2023 to meet annual delivery targets.
- BYD undergoes increased scrutiny in the EU's anti-subsidy investigation amid geopolitical tensions and concerns about Chinese government support.
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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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