North American rail traffic down 3.4% for the week ending February 25
The Association of American Railroads, AAR reported U.S. rail traffic for the week ending February 25, as well as volumes for February 2023.
U.S. railroads originated 905,744 carloads in February 2023, down 1.6% or 15,101 carloads, from February 2022.
U.S. railroads also originated 943,979 containers and trailers in February 2023, down 8.4%, or 86,351 units, from the same month last year.
Combined U.S. carload and intermodal originations in February 2023 were 1,849,723, down 5.2%, or 101,452 carloads and intermodal units from February 2022.
“Coal, chemicals, and grain together account for more than half of all non-intermodal U.S. rail volume.
When all three are down, like they were in February, it’s very hard for total carloads not to be down too,” said AAR Senior Vice President John T. Gray.
“On the positive side, several commodities including crushed stone and sand, petroleum products, steel products, grain mill and food products showed very strong performances.”
Total U.S. weekly rail traffic was 459,233 carloads and intermodal units, down 5.9% compared with the same week last year.
Total carloads for the week ending February 25 were 226,435 carloads, up 0.1% compared with the same week in 2022, while U.S. weekly intermodal volume was 232,798 containers and trailers, down 11.1% compared to 2022.
North American rail volume for the week ending February 25 on 12 reporting U.S., Canadian and Mexican railroads totaled 327,221 carloads, up 2.9% compared with the same week last year, and 308,029 intermodal units, down 9.3% compared with last year.
Total combined weekly rail traffic in North America was 635,250 carloads and intermodal units, down 3.4%.
Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Kansas City Southern (KSU), Norfolk Southern (NSC), Union Pacific (UNP), Greenbrier (GBX), Trinity Industries (TRN), FreightCar America (RAIL) and Wabtec (WAB).
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
ย iRobot to be acquired by Amazon for $61/share in deal valued at $1.7B
Amazon (AMZN) and iRobot (IRBT) announced that they have entered into a definitive merger agreement under which Amazon will acquire iRobot. Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.ย
We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, SVP of Amazon Devices.
“Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive-from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin.
Customers love iRobot products-and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
iRobot makes the popular Roomba
Amazon will acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7B, including iRobot’s net debt.
Completion of the transaction is subject to customary closing conditions, including approval by iRobot’s shareholders and regulatory approvals.
On completion, Colin Angle will remain as CEO of iRobot.
ย In light of the transaction with Amazon.com, iRobot will not hold its Q2 financial results conference call, which was originally scheduled for August 10.
In addition, iRobot has withdrawn its prior 2022 financial expectations issued in early May, as well as its long-term financial targets provided in December 2021. Given the ongoing disruptions and uncertainty that could impact the company’s outlook, iRobot is suspending its practice of providing financial guidance.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
The Fed says go, go, go, the markets’ say whoa, whoa, whoa
There is a lot of uncertainty on the Fed outlook and just how fast and how far will the FOMC go in hiking rates in orders to bring inflation down to the 2% average target.
Though Chair Powell gave no clear indication in last Wednesday’s press conference that the Fed was near done with its mission, the markets nevertheless heard what they wanted to hear, putting on a dovish spin and pricing in a pivot to rate cuts in the spring of 2023.
Fed Chair: Jerome Powell
But over the last week policymakers have been out in force, including several doves, strongly contradicting that outlook.
They have stressed the necessity of getting to restrictive territory while playing down the fear that the economy is already in recession.
Meanwhile, the U.S. ISM-NMI services index rose to 56.7 from a 2-year low of 55.3 in June that was last seen in February of 2021, translated to an ISM-adjusted ISM-NMI rise to 54.3 from a 2-year low of 53.7 in June.
Today’s rise joins big declines for the ISM, Chicago PMI, Dallas Fed and Philly Fed, but gains for the Richmond Fed and Empire State, to leave an 8-month producer sentiment pull-back from robust November peaks.
Surging interest rates and a flattening in real household spending as prices rise are aggravating the downtrend, though sentiment also faces support as businesses continue to restock.
The ISM-adjusted average of the major sentiment surveys in July fell to a 2-year low of 52 from prior lows of 53 in June and 54 in May. Analysts saw a 62 all-time high in both November and May of 2021. Analysts expect a 52 average in Q3, after averages of 55 in Q2, 57 in Q1, and 60 in Q4.
The futures are now repricing for about a 50-50 risk for a third straight 75 bp hike in September.
James Bullard Federal Reserve Bank of St. Louis
Meanwhile, the hawk Bullard continues to look for a policy rate around 3.75% to 4% by year-end, though implied Fed funds still reflect a terminal rate in the 3.5% area.
Analysts continue to project a 50 bp boost in September followed by 25 bps in November and December to bring the median funds rate to 3.375%.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
U.S. flash Markit Purchasing Managers Index’s (PMI) all slipped in December as activity eased amid well known headwinds such as capacity constraints and Omicron variant spread.
Flash Manufacturing PMI is an estimate of manufacturing for a country, based on about 85% to 90% of total Purchasing Managers’ Index (PMI) survey responses each month.
Any reading of the Flash Manufacturing PMI above 50 indicates improving conditions, while readings below 50 indicate a deteriorating economic climate.
The manufacturing index fell another -0.5 ticks to 57.8 in December after dipping -0.1 ticks to 58.3 in November. It is the weakest since the 57.1 last December.
The index has been sliding from the record high of 63.4 in July, but it remains in expansion for an 18th straight month.
New orders declined to 56.3 from 56.9, while supplier delivers increased to their best reading since May.
The preliminary services index also fell -0.5 ticks to 57.5 on the month following the -0.7 point decline to 58.0. The reading is above the 54.8 from a year ago, however, and has been above 50 since July 2020.
The business expectations component improved to its highest reading since November 2020.
Input prices climbed to 77.4 versus 75.7 last month and is at an all-time peak (data goes back to 2009).
The composite reading dipped -0.3 ticks to 56.9 from November’s 57.2 and was at 55.3 last December. Input prices increased to a new record level at 78.1 from November’s 77.6.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B
Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.
Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.
Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.
Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.
The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.
The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.
The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.
I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.
We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.
Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.
After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”
The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.
The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.
Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”
ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania.ย In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.
Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.
The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.
ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
At Home Group shareholder calls on company to release Q2 interim sales results
CAS Investment Partners, which beneficially owns approximately 17% of the outstanding common stock of At Home Group (HOME), called on the company to release its interim sales results for Q2 in order to provide material information and keep stockholders informed as they consider the $37 per share tender offer made by funds advised by Hellman & Friedman.
As previously disclosed, CAS deems the $37 per share tender offer wholly inadequate and opposes the transaction on its current terms. Clifford Sosin, founder and portfolio manager of CAS, commented:
“We urge At Home to promptly release interim sales results for the second quarter of fiscal year 2022. Rather than keep stockholders in the dark about the Company’s continued momentum, we believe At Home should be providing them with as much information as possible.
Clifford Sosin, founder and portfolio manager of CAS
Stockholders should not be asked to make a decision about whether to tender into the meager H&F offer without first receiving an easily-prepared update on the current quarter. It is not as if At Home has not pre-released sales data in the past.
Stockholders should seriously question why the Company is not releasing this important information at a time when we need it the most?
According to credit card data analyzed by CAS, the Company’s second quarter same store sales are trending approximately 30% above 2019 levels. Sales appear to be remaining very strong even as the economy reopens and the impact of federal stimulus fades.
We contend that this information demonstrates the Company’s recent success is durable and not a temporary byproduct of the pandemic.
It appears to us that At Home and H&F are desperately trying to avoid releasing these numbers, as evidenced by the fact that the tender deadline ends five days before the close of the second quarter on July 20th.
We are concerned that this is due to Chairman and Chief Executive Officer Lee Bird being set up to make more than $100 million in compensation if the proposed transaction is completed.
We are equally concerned that H&F may already be exerting an inappropriate level of influence over the corporate governance decisions at the Company. Given we are At Home’s largest stockholder, we call on the Company to immediately respond to our request to disclose this material information and remind the independent directors of their fiduciary duties to At Home stockholders.”
On May 7, 2021, At Home Group Inc. agreed to be acquired by private equity firm Hellman and Friedman (H&F) for a total cash consideration of $2.8 billion, inclusive of debt assumption. Under the agreement, At Home shareholders will receive $36 in cash for each share held. HOME closed at $36.80.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Macquarie to acquire Waddell & Reed for $25 per share
Waddell & Reed (WDR) announced it has entered into a merger agreement with Macquarie Asset Management, the asset management division of Macquarie Group (MQBKY), under which Macquarie would acquire all of the outstanding shares of Waddell & Reed for $25.00 per share in cash representing total consideration of $1.7B.
The transaction represents a premium of approximately 48% to the closing price of Waddell & Reed common stock on December 1, 2020, the last trading day prior to the transaction announcement, and a premium of approximately 57% to Waddell & Reed’s volume-weighted average price for the last 90 trading days.
On completion of the transaction, Macquarie has agreed to sell Waddell & Reed Financial, Inc.’s wealth management platform to LPL Financial Holdings Inc. (LPLA), a U.S. retail investment advisory firm, independent broker-dealer, and registered investment advisor custodian, and also enter into a long-term partnership with Macquarie becoming one of LPL’s top tier strategic asset management partners.
As a result of the transaction, Macquarie Asset Management’s assets under management are expected to increase to over $465B, with the combined business becoming a top 25 actively managed, long-term, open-ended U.S. mutual fund manager by assets under management, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners.
The transaction has been approved by the Boards of Directors of Waddell & Reed Financial, Inc., Macquarie Group and LPL and is expected to close in the middle of 2021, subject to regulatory approvals, Waddell & Reed Financial, Inc. stockholder approval and other customary closing conditions.
Waddell & Reed Financial, Inc. provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States.ย
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Salesforce acquires Slack in cash and stock deal worth $27.7B
Salesforce (CRM) and Slack Technologies (WORK) have entered into a definitive agreement under which Salesforce will acquire Slack.
Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30.
The boards of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement.
The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022.
Salesforce goes shopping
Salesforce has also entered into a voting agreement with certain stockholders of Slack common stock, under which each such stockholder has agreed to vote all of their Slack shares in favor of the transaction at the special meeting of Slack stockholders to be held in connection with the transaction, subject to certain terms and conditions.
The Slack shares subject to the agreement represent approximately 55% of the current outstanding voting power of the Slack common stock.
Salesforce expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on Salesforce’s balance sheet.
One year chart of Slack Tech. stock price
Salesforce has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10B senior unsecured 364-day bridge loan facility.
Salesforce said, “Slack will be deeply integrated into every Salesforce Cloud.
Five year chart of Salesforce stock price
As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Powell says outlook for economy is ‘extraordinarily uncertain’
In prepared remarks for the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve Chair Jay Powell said:
Jerome Powell say economy is on shaky ground
“Economic activity has continued to recover from its depressed second-quarter level. The reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or GDP, rose at an annual rate of 33 percent in the third quarter.
In recent months, however, the pace of improvement has moderated.
Household spending on goods, especially durable goods, has been strong and has moved above its pre-pandemic level.
In contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality.
The overall rebound in household spending is due, in part, to federal stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals…
As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check…
Covid-19 has caused a global slowdown
The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months.
A full economic recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.
Recent news on the vaccine front is very positive for the medium term. For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups.”
Meanwhile lawmakers in Washington have come up with a new stimulus plan. ย
A bipartisan group of U.S. lawmakers announced a $908B COVID-19 aid package aimed to breaking a monthslong deadlock between Democrats and Republicans over new emergency relief for small businesses, unemployed people, airlines, and other industries during the coronavirus crisis, Reuters’ Richard Cowan and Doina Chiacu report.
The bill has not yet been written into legislation, nor has it been embraced by the Republican White House, Democratic President-elect Joe Biden, or leaders in the Senate or House of Representatives, the authors note.
The package, however, does come with the support of a group of conservatives and moderates who believe it will appeal to a broad swath of Congress, the authors note.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Adtalem to acquire Walden University from Laureate Education for $1.48B in cash
Adtalem (ATGE) announced it has entered into a definitive agreement to acquire Walden University, an online healthcare education provider, from Laureate Education (LAUR), Inc. for $1.48B in cash.
With the addition of Walden, Adtalem will become a national healthcare educator, providing workforce solutions to employers through learning modalities with academic outcomes.
By adding Walden to its existing healthcare portfolio, Adtalem said it is better positioned to increase the talent supply to address the rapidly growing and unmet demand for healthcare professionals in the U.S. and globally.
The combined companies will have 90,000 students
The combined organization will have 26 campuses across 15 states and four countries, 6,100 faculty members, and more than 90,000 students with 34% African American enrollees.
The company said, “The acquisition is expected to provide significant potential for growth and margin expansion through new and expanded offerings as well as revenue and cost synergies.
These financial benefits are expected to lead to substantial gross margin and EBITDA margin expansion, and robust cash flow generation to invest in its offerings while paying down debt.”
Adtalem expects to generate upside to revenue by providing new and complementary educational offerings, increased student acquisition and retention capabilities as well as enhanced scale and coverage that will allow for new partnerships with large-sized employer partners in the healthcare sector.
The company noted, “The purchase price represents a compelling, pre-synergy adjusted EBITDA multiple of 8.4x, and the transaction is expected to contribute significantly to Adtalem’s free cash flow and earnings per share, generating $60 million in incremental free cash flow excluding special items in year one and adding $0.75 in earnings per share from continuing operations excluding special items in year two as synergies begin to offset the dilutive effect of purchase price accounting.”
Walden Univ. Campus
Adtalem expects to generate annual cost savings of approximately $60M driven by increased efficiencies in marketing spend and back office operations. Approximately $30M of these cost savings are anticipated within 12 months of closing and the remainder within 24 months of closing.
Additionally, Adtalem expects that this acquisition will generate between 10% and 12% ROIC beginning in year one, significantly exceeding the company’s current WACC of approximately 8%.
Adtalem expects to fund the cash consideration through a combination of cash from its balance sheet and committed debt financing.
Adtalem expects to realize the full potential of the transaction while maintaining a strong balance sheet.
The transaction is expected to close in Q1 of FY22, subject to regulatory approvals and other customary closing conditions.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Virtusa to be acquired by BPEA for $51.35 per share in cash deal valued at $2B
Baring Private Equity Asia, or BPEA, and Virtusa (VRTU) announced the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for $51.35 per share in an all-cash transaction valued at approximately $2B.
Virtusa Corporation provides digital engineering and information technology (IT) outsourcing services primarily in North America, Europe, and Asia.
Virtusa sold for $2B
The companies said in a release, “The price per share to be paid in the transaction, which was unanimously approved by the Virtusa Board of Directors, represents a premium of approximately 27 percent to the closing price of Virtusa common stock on September 9, 2020, the last trading day prior to the transaction announcement, and premiums of approximately 29 percent and 46 percent to Virtusa’s volume-weighted average prices, or VWAP, for the last 30 and 60 trading days, respectively.
In addition, the price paid implies a valuation of 16.2x Firm Value / Last Twelve Months EBITDA as of June 30, 2020. On July 20, 2020, the Virtusa Board of Directors received an unsolicited proposal from an interested party to acquire Virtusa.
BPEA buys Virtusa for $2 billion
Following receipt of the offer, consistent with the Board’s fiduciary duties to maximize shareholder value, the Board authorized the Company and its financial advisors to engage with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.
As part of this process, the Company signed non-disclosure agreements with five parties and engaged with two others.
After an independent review of the alternatives available, including the value creation opportunity through continued execution of the Company’s strategic plan, the Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $51.35 per share in cash maximizes value for Virtusa’s shareholders.
The transaction, which is expected to close in the first half of 2021, is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States, or CFIUS, and customary closing conditions.
The transaction is not subject to a financing condition.
The Orogen Group, which holds 108,000 shares of Virtusa Convertible Preferred Stock and whose CEO is Vikram Pandit, an independent member of the Board, has entered into a voting agreement under which it has agreed to vote all of Orogen’s Convertible Preferred Stock in favor of the transaction.
Orogen Group is a major shareholder of Virtusa
Orogen’s shares of preferred stock are convertible into 3,000,000 shares of Virtusa common stock and represent approximately 10 percent of the voting power in the Company.
The directors and executive officers of Virtusa have also entered into this voting agreement, and hold an additional approximate 5.7% of the voting power of the Company.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Stein Mart voluntarily files Chapter 11 bankruptcy protection
Stein Mart (SMRT) announced that it and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida – Jacksonville Division.
Stein Mart files for bankruptcy protection
Stein Mart offers designer and name-brand fashion apparels, home decor merchandise, accessories, and shoes at everyday discount prices in the United States. As of June 3, 2020, it operated 281 stores in 30 states. The company was founded in 1908 and is headquartered in Jacksonville, Florida.
The Company has filed customary motions with the Bankruptcy Court that will authorize, upon Bankruptcy Court approval, the Company’s ability to maintain operations in the ordinary course of business, including, among other things, the payment of employee wages and benefits without interruption, payment of suppliers and vendors in the normal course of business, and the use of cash collateral.
Too much savings caused Stein Mart’s demise
These motions are typical in the Chapter 11 process and the Company anticipates that they will be approved shortly after the commencement of its Chapter 11 case.
Details on the Company’s Chapter 11 process and go-forward strategy are as follows:
The Company expects to close a significant portion, if not all, of its brick-and-mortar stores and, in connection therewith, the Company has launched a store closing and liquidation process.
The Company, however, will continue to operate its business in the ordinary course in the near term; and the Company is evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property.ย
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
ย Uber to acquire Postmates for $2.65B in all-stock transaction
Uber and Postmates announced that they have reached a definitive agreement under which Uber will acquire Postmates for approximately $2.65B in an all-stock transaction.
Uber buys Postmates
This transaction brings together Uber’s global Rides and Eats platform with Postmates’ delivery business in the U.S.
Additionally, Postmates has been an early pioneer of “delivery-as-a-service,” which complements Uber’s efforts in the delivery of groceries, essentials and other goods.
For restaurants and merchants, Postmates and Uber Eats will together offer more tools and technology to connect with a bigger consumer base.
Following the closing of the transaction, Uber intends to keep the consumer-facing Postmates app running separately.
Uber currently estimates that it will issue approximately 84M shares of common stock for 100% of the fully diluted equity of Postmates.
The boards of directors of both companies have approved the transaction, and stockholders representing a majority of Postmates’ outstanding shares have committed to support the transaction.
The transaction is subject to the approval of Postmates stockholders, regulatory approval and other customary closing conditions and is expected to close in Q1 2021.
Uber consolidates its market position by buying Postmates
Like other travel- and transportation-related businesses, Uber’s ride-hailing segment has been negatively impacted by the COVID-19 pandemic, due to shelter-in-place orders throughout the United States.
On-demand delivery, however, has grown, with people relying on services likeย Uber Eatsย to get food without leaving their homes. According to its last earnings report, Uber’s ride-hailing gross bookings dropped, but its food delivery serviceย saw gross sales growth of 54% during its first fiscal quarter.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
The Department of Justice has released a set of reform proposals to update the outdated immunity for online platforms under Section 230 of the Communications Decency Act of 1996.
Responding to bipartisan concerns about the scope of 230 immunity, the department identified a set of concrete reform proposals to provide stronger incentives for online platforms to address illicit material on their services while continuing to foster innovation and free speech.
The department’s review of Section 230 over the last ten months arose in the context of its broader review of market-leading online platforms and their practices, which were announced in July 2019.
The department held a large public workshop and expert roundtable in February 2020, as well as dozens of listening sessions with industry, thought leaders, and policy makers, to gain a better understanding of the uses and problems surrounding Section 230.
The first category of recommendations is aimed at incentivizing platforms to address the growing amount of illicit content online, while preserving the core of Section 230’s immunity for defamation claims.
These reforms include a carve-out for bad actors who purposefully facilitate or solicit content that violates federal criminal law or are willfully blind to criminal content on their own services.
Additionally, the department recommends a case-specific carve out where a platform has actual knowledge that content violated federal criminal law and does not act on it within a reasonable time, or where a platform was provided with a court judgment that the content is unlawful, and does not take appropriate action.
A second category of proposed reforms is intended to clarify the text and revive the original purpose of the statute in order to promote free and open discourse online and encourage greater transparency between platforms and users.
One of these recommended reforms is to provide a statutory definition of “good faith” to clarify its original purpose.
The new statutory definition would limit immunity for content moderation decisions to those done in accordance with plain and particular terms of service and consistent with public representations. These measures would encourage platforms to be more transparent and accountable to their users.
The third category of recommendations would increase the ability of the government to protect citizens from unlawful conduct, by making it clear that Section 230 does not apply to civil enforcement actions brought by the federal government.
A fourth category of reform is to make clear that federal antitrust claims are not, and were never intended to be, covered by Section 230 immunity.
Over time, the avenues for engaging in both online commerce and speech have concentrated in the hands of a few key players.
It makes little sense to enable large online platforms (particularly dominant ones) to invoke Section 230 immunity in antitrust cases, where liability is based on harm to competition, not on third-party speech.
The action follows President Trump’s executive order seeking to weaken broad immunity enjoyed by Facebook (FB), Twitter (TWTR) and Google (GOOGL).
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
As JC Penney’s files for bankruptcy, others line up to do the same
Retailers have long been suffering from a tough retail environment due to competition from online retailers such as Amazon, Etsy and eBay; it seems like COVID-19 fired the kill shot.
J.C. Penney
J.C. Penney announced that it has received approvals from the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX for the “First Day” motions related to the company’s voluntary Chapter 11 petitions filed on May 15, 2020, including approval for the company to access and use its approximately $500M in cash collateral.
The 118 year old retailer files for Chapter 11 bankruptcy, Stockwinners
J.C. Penney entered into a restructuring support agreement with lenders holding approximately 70% of J.C. Penney’s first lien debt to reduce the company’s outstanding indebtedness and strengthen its financial position. J.C. Penney has approximately $500M in cash on hand as of the Chapter 11 filing date.
James Cash Penney started the company in 1902
JCP Gets Delisted
The New York Stock Exchange announced that the staff of NYSE Regulation has determined to commence proceedings to delist the common stock of J.C. Penney Company – ticker symbol JCP – from the NYSE. NYSE Regulation reached its decision that the company is no longer suitable for listing after the company’s May 15, 2020 disclosure that the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Recent Retail Bankruptcies
On May 4th, J.Crew Group announced it has reached an agreement with its lenders holding approximately 71% of its Term Loan and approximately 78% of its IPCo Notes, as well as with its financial sponsors, under which the company will restructure its debt and deleverage its balance sheet, positioning J.Crew and Madewell for long-term success.
Houston-based Stage Stores Inc. filed for chapter 11 bankruptcy in Texas last week.
GNC Holdings (GNC), the nutritional supplement retailer, avoided bankruptcy by reaching a last-minute deal with creditors that allows it to avoid bankruptcy for at least 30 days but no more than 90 days under a deal announced Friday.
GNC avoids bankruptcy for 90 days
True Religion
Even before COVID-19 forced True Religion to close its 87 stores, the denim specialist’s sales were in decline and its profits were negative. After shuttering its footprint in response to the pandemic, 80% of its sales disappeared, according to the company.
Others on the list
According to Law.com, both Macy’s (M) and Neiman Marcus have hired bankruptcy law firm Kirkland, and Wachtell. Neiman filed for Chapter 11 last week. Macy’s should be forthcoming.
Pier 1 Imports (PIR) filed for bankruptcy protection this month. It would only make sense if it’s competitors follow the same path.
Nashville-based retailer, Kirkland’s, Inc. operates as a specialty retailer of home dรฉcor in the United States. The company’s stores provide various merchandise, including holiday dรฉcor, furniture, ornamental wall dรฉcor, decorative accessories, art, textiles, mirrors, fragrance and accessories, lamps, artificial floral products, housewares, outdoor living items,
Kirkland’s has avoided Chapter 11, Stockwinners
In 2019, seventeen major retailers filed for bankruptcy. For some of them it was their second trip to the alter including Payless, Gymboree, and Charming Charlie.
Some of the retailers that filed for bankruptcy in the past 18 months. Stockwinners
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
