The Mouse is Going After the Fox; Dollar Wise for Fast Food; A Wrinkle in Allergan’s Plan

Fox-y mouse…

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Today’s juicy merger gossip is brought to you by Fox and Disney. Apparently, a deal is thisclose that will have Disney scooping up Fox’s studio and television production assets. The deal, which is rumored to be worth about $60 billion, will also include the acquisition of Fox’s stakes in Hulu and Sky. As for its news and sports division, Disney is taking a pass on those entities. But Disney isn’t the only one with its sights set on Fox. Comcast and Verizon are also trying to get in in some Fox action. It’s just that right now Disney seems to be getting the best crack at the media conglomerate. Wall Street seems to like the news considering it sent shares of Fox up over 3%. But the question you might be wondering about is why Disney even needs  $60 billion worth of Fox’s assets? Doesn’t it have more than enough of its own? Well,  yes, it does. However, in case you missed it, the entertainment industry is changing, with a big push towards streaming and direct to consumer models and believe it or not, picking up those particular assets over at Fox will give Disney a much much bigger global reach. And who couldn’t use some more global reach, right?

Bucking the trend…

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Fast food restaurants are engaged in a bloody dollar war. But that just means good news for consumers. McDonald’s is bringing back its dollar menu, which it ditched just four years ago because it didn’t pull down the kind of cash McDonald’s wanted to see. As for the term “dollar,” well that might be a bit generous in its definition. To be clear, the fast-food chain is offering the $1-$2-$3 Dollar Menu. If you’re in the mood for a sausage burrito, cheeseburger or any-size soft drink, well then, feel free to fish out that dollar bill that’s burning a hole in your wallet. Otherwise, prepare to shell out more. Not to be left out of the fast food fiscal fun, Burger King and Wendy’s are also trying to woo you with their version of “value” menus. But it’s Taco Bell that’s really taking aim at the Golden Arches with 20 items listed for just a dollar.  For McDonald’s, the cheapy menu is its answer to win back customers. The company apparently lost out on some “500 million transactions” because it didn’t have a value menu. Ironically, or not, Taco Bell’s dollar menu actually generated $500 million in sales. To make up for the lack of profitability that comes with McDonald’s having a value menu, the chain is expanding its “Signature Crafted Recipes” – which is really just code for more expensive menu items that will offset the value items.

A wrinkle in time…

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There’s a new Botox sheriff in town and Allergan doesn’t like it. Not one bit. Enter Revance Therapeutics Inc., a small biotech company that holds the formula for RT002, aka “the better, longer-lasting botox.” If it’s approved people can start sticking their faces with the stuff as early as 2020. Which is great news for everyone. Well, everyone except for Allergan, the pharmaceutical giant behind Botox, the original, whose stock fell over 4% on the news today. In fact, today Allergan hit its lowest price since 2013, after losing a third of its value in the last five months. And, while RT002 uses the same main ingredient for wrinkle reduction as Botox does, that being botulinum toxin Type A, it also uses the company’s proprietary peptide technology, which is apparently the reason why this particular formula lasts about a month longer than Botox.  In any event, Allergan wasn’t especially impressed by Revance’s new data released today and called it “underwhelming.” As for Allergan’s response, you could probably just call it sour grapes.

Sears Dives Into “Dump Trump” Fray; Allergan Goes From Face to Body-Contouring; Teva Beats Despite Turmoil

To dump Trump or not to dump Trump?

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Sears is the latest company caught up in the great retail debate over its decision to discontinue carrying Trump branded merchandise. It would seem that the merchandise of both President Donald Trump and his daughter, Ivanka, have been dropped from Sears and Kmart stores – which Sears owns. However, while Sears and Kmart have put the kibosh on 31 Trump Home items, there’s still plenty more Trump merchandise available online for sale via third-party vendors. Believe it or not, Sears goes by the numbers, at least the ones attached with a dollar sign, and has been putting great efforts into kicking up its online presence. So if items are profitable, they get to stay. If they are not? Well, you get it. This is in the wake of Nordstrom’s decision last week to ditch Ivanka’s line completely. Rumor has it that sales of her merchandise tanked more than 70% for most of October, compared with the same time period last year, when the would-be president still hadn’t yet managed to offend an almost an entire gender of the electorate. Since the Trump brand has been unpopular these days, plenty of customers have little desire to purchase many of its products.  But make no mistake, if the items in question had been selling, either at Sears or Nordstrom, don’t think for a second that the stores wouldn’t have kept the merchandise on its shelves, no matter what the President said – or tweeted.

Yoga, it ain’t…

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Allergan, the maker of everyone’s favorite wrinkle-fighter, Botox, is going to scoop up Zeltiq Aesthetics Inc. for about $2.5 billion, or about $56.40 per share. That’s more than a 14% premium from Friday’s closing price. Naturally shares of Zeltiq went up, because, hey, who would’t want to join the Botox family, right? But here’s the fun part, in case you have never heard of Zeltiq. The company makes a body-contouring product, called the CoolSculpting system, that will fit in nicely at Allergan. Your face and your butt get contoured and primed all from one company. If there’s a regulatory issue with that, then I don’t care. Zeltiq has already been approved by the U.S. Food and Drug Administration and yes indeed, that kind of makes it more legit. CoolSculpting apparently reduces the appearance of fat by freezing it, however, I’m not sure that it actually gets rid of the junk in the trunk. Instead, it just shapes it into your body, like play-doh. Or something like that. Laugh all you want but there’s nothing funny about the 37% worth of revenue brought in by CoolSculpting systems products, which helped Zeltiq take in a net revenue of $374 million for 2016. Allergan CEO Brent Sanders must be onto something, since the body-contouring market is a whopping $4 billion industry and, according to him, is the fastest growing field in medical aesthetics.

Not the usual generic stuff…

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Not all pharmaceutical companies are having as much fun as Allergan. Last week, shares of Teva pharmaceuticals seemed to be in an ugly state of free fall, and matters didn’t help when its CEO Erez Vigodman suddenly left the company. The official word is that Erez Vigodman’s decision to leave Teva was part of a mutual agreement. At least that’s the story they’re sticking to. But even before that, the company was having fiscal issues in the way of delayed drug launches and major acquisitions that wreaked all sorts of ugly fiscal havoc on the company’s stock price. Then, lo and behold, the company reported an earnings beat this morning and all seems right in the world once again for the company.  Teva took in revenues of $6.5 billion, adding $1.38 per share when estimates were for $6.24 billion and $1.35 per share.  Also from the good news front, the company didn’t even see the need to adjust its forecast for the year, and still expects to score between $23.8 billion to $24.5 billion in revenues and adding between $4.90 to $5.30 to shares.  Interim CEO and President Yitzchak Peterburg took the call and said it was “a critical time for Teva, and we are here to fix what is not working.” Which basically means they are desperately trying to figure out how they can get the company to start pulling down some major cash, ditch  a lot of debt and improve its prospects.  Rumors are swirling that the company will split into two: one to focus on its generic offerings and the other for its branded products. According to some experts, a move like this could solve a ton of problems. Just maybe not all of them. Another possibility is to sell off its branded generic drugs biz in an effort to unload some its major debt. Time will tell.  Because I certainly can’t.

Uber of a Mess in California; Starbucks Bids Adieu to La Boulange; Botox Plumps Up With Kythera

This could pose a problem…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Things could get very ugly for ride-hailing app Uber, now that the California Labor Commission decided that Uber drivers are actual employees, like taxi drivers and pizza deliverers, and not independent contractors, as Uber sees them. The trouble for Uber began when a woman named Barbara Ann Berwick filed suit for additional compensation and the company denied her request. She took her case to the California courts where she was awarded $4,152. However, that $4,152 could actually end up feeling like billions. The company, which is privately held and has a $40 billion valuation, is appealing the ruling, as it has the potential to set a big bad precedent not just for Uber, but for other ride-sharing apps as well. Because, if Uber is forced to call its one million drivers employees, it will have to start accounting for all the expenses that go with it, like social security, workers comp, etc. and that will likely mean that  not only will Uber’s operating costs go up, but the costs for the riders go up too. By a lot.

Gone gourmet…

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Image courtesy of Witthaya Phonsawat/FreeDigitalPhotos.net

It seemed like a good idea at the time, but alas, no dice as Starbucks gets set to shutter all 23 of its La Boulange bakery cafes. Even though Starbucks saw 16% growth in food with a 35% increase from just its breakfast sandwich offerings this past quarter, the gourmet goods apparently just don’t fit in with Starbucks’ long term growth plans. Translation: La Boulange may be bringing in cash now, but Starbucks isn’t convinced that it’s fiscally prudent to keep it around for the long haul. Starbucks bought La Boulange for $100 million back in 2012 because the coffee chain wanted to offer expensive fancy food that you could purchase with your extra fancy mocha drinks. While the cafes are closing, you can still get your La Boulange fancy food fix at regular Starbucks cafes. As for all those La Boulange employees who are about to be sans paycheck? Puhlease, you didn’t think a socially conscious company like Starbucks  would leave them high and dry, did you? (Insert jokes about Starbucks flopped campaign to talk about race here.) Starbucks will be helping those folks find new gainful employment, hopefully at establishments that Starbucks is not looking to unload.

Freeze…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Allergan, maker of everybody’s favorite wrinkle freezer, Botox, is buying itself some new plastic surgery fun, picking up biopharmaceutical firm Kythera for $2.1 billion. Allergan is paying 80% of that $2.1 billion in cold hard cash, with the rest paid out in shares of Allergan. And who doesn’t want a few shares of a biopharmaceutical company whose main focus is facial aesthetics? At that price, Kythera is getting about $75 per share, which seems like a lot… because it is – it’s about a 24% premium on Tuesday’s closing stock price. But hey, it’s totally worth it since Kythera also has its own beloved cosmetic treatments, including one for double chins called Kybella. Don’t laugh. Kythera’s double chin fix is currently the only non-surgical treatment for that pesky double chin issue. Of course, it entails a needle that needs to be inserted. But what’s a little needle if it gets rid of a double chin, right? Kythera’s also got something in the works for male pattern baldness. This company has GQ written all over it. In any case, Allergan, which also has Latisse and Juvederm in its cosmetic collection, is currently the fifth biggest pharmaceutical company. Which is great. Except, what to do about the fact that insurance companies don’t usually cover any of its treatments?

The Bitter End Might Have Just Arrived For Valeant Pharmaceuticals; Cocoa: Get it While You Still Can; It Seems Japan Is Not As Far As It Seems

Has their time finally come to an end?

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Could it be that the Valeant/Allergan saga has finally come to an anti-climactic end? Just when things seemed to be getting juicy, in walks generic drug-maker Actavis with an offer of $219 per share, making Valeant’s impending hostile takeover nothing more than a bad memory for Allergan. If you recall, everyone’s favorite (and only) Botox-maker had been fighting off Valeant’s fiscal hostilities for months. And in one fell money-minded swoop, Actavis put in an offer for Allergan that not only values it at about $66 billion, but also makes it so that it doesn’t have to deal with Bill Ackman and his Pershing Square Capital Management, which by the way, has almost a 9.7% stake in Allergan. Neither Pershing Square nor Valeant had any comment on the new offer and why would they. Besides, they win either way. This new deal adds quite a few billion dollars to Pershing Square’s already plump portfolio. As for Valeant, well it has already begun to set its fiscal sights on animal care company Zoetis.

Start hoarding the Hersheys…

Image Courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image Courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

It just might be that the world really is coming to an end. If a recent report by Bloomberg is correct (and seriously, it’s Bloomberg so I am sure it is), then the world will be in the throes of a chocolate shortage, with demand outpacing supply in the year 2020 by one million metric tons. If that’s not considered armageddon, then I don’t what is. Some of the factors to blame: Ebola. Yes that obnoxious, noxious deadly virus has given us ample reasons to hate it and here’s yet one more. West Africa supplies us with almost 75% of the world’s cocoa. The fact that the countries afflicted with Ebola are so close to the countries that supply cocoa are basically freaking people out on so many levels. Of course drought always manages to play a menacing role in crops and cocoa is no different. In fact the price of cocoa, whether you realized it or not (or simply just tried to feign ignorance) has gone up 60% since 2012. Combine that with pests and other plant diseases and that Hershey bar with almonds is becoming but a distant memory. So start stockpiling those candy bars. In a few years you might just be able to pay your mortgage with them.

So what’s the big deal?

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

Japan is staring into the wrong end of a recession after reporting its second straight quarter of growth contraction. Never a good thing especially when we’re talking about the world’s second largest economy. So why should we, on this side of the planet, care? Well for one, its toying with our financial markets. Our markets don’t particularly like it when other markets in other parts of the world have fiscal issues and Japan’s are quite large. Then we must take into account that our European friends across the pond aren’t too thrilled, as are we,  with state of their financial markets, which have seem to have come to a slowdown/standstill. When that happens, the United States ends up having to support more than its fair share of the global economy which, naturally extends on over to us, the taxpayers. See how that all works out so unpleasantly?

Brazil Companies Bananas for Chiquita: Another Valeant Effort for Allergan?; Cruisin for an iBruisin’

Top banana…

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Image courtesy of Aduldej/FreeDigitalPhotos.net

As you were sitting at the edge of your seat waiting for weeks now to find out who would be victorious in the corporate battle to acquire Chiquita (yes – the banana people), you can now relax as a winner has emerged. Actually two of them. Brazilian companies, The Safra Group and Cutrale Group, both of which happened to be owned by two of the wealthiest men in Brazil, scooped up the fresh fruit seller to the ripe number of $681 million. But, alas, what became of Irish company Fyffes, who was also bidding on Chiquita, and which many thought would get the fresh fruit company? Well, it wasn’t the luck of the Irish but rather the votes of the shareholders who preferred the Brazilians’ offer. You see Fyffes was offering up stock in exchange for Chiquita. But with Safra/Cutrale’s offer, shareholders get to see more cash up front. And who doesn’t like a little cash up front? Besides, the inversion appeal of Fyffes wasn’t going to net Chiquita all that much to make the transaction worthwhile for Chiquita. But don’t feel too bad for Fyffes. The Irish firm stands to gain a break up fee worth as much as $23 million.

Ironing out the wrinkles…

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Image courtesy of artemisphoto/FreeDigitalPhotos.net

Canadian company Valeant Pharmaceuticals still so very badly wants to takeover Irvine, California-based Allergan. And why not? Allergan makes everybody’s favorite wrinkle-smasher Botox. Allergan also happens to make Latisse, another invaluable, behind the counter, yet highly-essential beauty cosmetic, in my opinion. It also helps that Allergan reported net income of $312.5 million on $1.8 billion in revenue. The stock nearly doubled over the past year. In fact, Valeant wants Allergan so so so badly, that it is once again upping its offer from $179 per share to around $200 per share. And if it has to happen hostilely, then so be it. Which it probably will, mind you. A  “special” shareholder’s meeting is taking place on December 18 where replacing board members will be the theme of the day (in particular, the ones opposing Valeant’s offer). Besides Valeant, Bill Ackman, of Pershing Square Capital Management LP would also like to see a “few” changes made to Allergan’s board as he has a hefty stake in the Botox-making company and would be tickled pink to see Allergan gobbled up by Valeant.

Maybe it’s not you after all…

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Image courtesy of sattva/FreeDigitalPhotos.net

Technology is grand. But maybe not so much in your new car. At least according to Consumer Reports 2014 Annual Auto Reliability Survey. Turns out all those really cool super awesome electronic features that you absolutely have to have are putting a damper on the overall quality of your ride. There are 23 million of us out there who have internet “savvy” cars. By 2020, that number will hit 152 million users. But the problem now, in 2014, is that in-car electronics defects logged the most complaints in 17 categories of the survey. In fact, the problem was called, ahem, “a growing first year reliability plague.” Ouch. Drivers start to question the overall quality of their vehicles when electronic issues begin to arise. Want the most reliable car? Lexus took the number one spot. The Infiniti Q50 sedan, however, took a big hit plunking down to the number 20 spot.

 

 

IBuMmer; Icahn/Andreesen Billionaire Smackdown; Valeant/Allergan Smackdown

 Big Blue-boo…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Perhaps you recall IBM?  Perhaps you don’t. The once powerful company that sat at the forefront of technology is now at the forefront of…nothing as the company just released its very disappointing earnings. The once mighty maker of chips – and I don’t mean potato (though we might be seeing better earnings if the chips were indeed of the potato variety), has sold that portion of its business. Revenue was down 4% to $22.4 billion which might seem like a nice beefy number except that analysts were expecting $1 billion more than that. And the company’s revenue has been going down for a few years now.  Analysts expected  the company to at least pull in $4.32 per share. It didn’t. Instead, profits for IBM took a 10% dive earning $3.68 per share.  Oh well. There’s always next quarter.

Love doesn’t live here anymore…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s official. Marc Andreesen and Carl Icahn are not friends. And I don’t think they ever can be. At least not anymore after Mr. Icahn said in an interview that Andreessen is “what’s wrong with corporate America” and Andreesen telling CNBC that Carl Icahn lies and “makes stuff up.” Where is the love gentlemen? In any case, the latest episode in the Icahn/Andreessen saga is that Marc Andreesen has bid a not-so-fond farewell to the board over at EBay. It seems the extremely prescient Silicon Valley billionaire, Andreesen, and activist investor, Icahn,  got themselves tangled in yet another kerfuffle which has probably something to do with the kerfuffle they had earlier where Mr. Icahn accused Mr. Andreesen and fellow board member, Scott Cook, of having conflicts of interests where PayPal and EBay are concerned. I shall spare you the lurid details. Mr. Andreesen and Mr. Cook vehemently disagreed with Mr. Icahn’s accusation. But alas, it matters not as PayPal is no longer one with EBay. As for hopes of Mr. Andreesen and Mr. Icahn burying the corporate hatchet (or whatever it is that insanely wealthy executives do), don’t hold your breath.

A wrinkle in plans…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Perhaps you may recall pharmaceutical giant Valeant? Perhaps you recall how this pharmaceutical giant wanted to take over another pharmaceutical giant by the name of Allergan, notable for perennial fan fave Botox? And perhaps you recall that Allergan would prefer if Valeant would just go away? Well, it looks like that’s not going to happen anytime soon as Valeant just released some very impressive earnings, easily trumping analysts’ expectations. Except that Valeant also had good earnings. But no matter because Valeant really wants very badly to scoop up Allergan even though Allergan very badly does not want that to happen. Activist investor Bill Ackman, and his Pershing Square Capital Management LP, who is gunning for an Allergan takeover, just might make that even likelier and hostile-r because of Valeant’s newly announced, financially robust numbers, since numbers like those will allow him, together with Valeant, to up the ante to buy out the fabulous Botox maker.

 

Botoxed-Off, Toyed-Off and Great Whites Great For Tourism

In this week’s pharmaceutical saga…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Allergan, the company behind the super-important and super glam, Botox, is making news while erasing wrinkles. How ’bout that. The company announced its plan to cut 1500 jobs – roughly 13% of its work force  – hoping it will make things more efficient and productive. In the meantime Valeant, together with Pershing Square Capital, has been trying to buy(out) Allergan for $53 billion and has been tattle-telling on Allergan to regulators -and anybody else who’ll listen, about alleged rumors and other comments it made. More like the stuff of playgrounds than boardrooms but at least it keeps things interesting. The Irvine, California-based company is trying to fend off Valeant’s offers for a (hostile) takeover which Allergan says “substantially undervalues” the company. Unfortunately for Allergan, its biggest shareholder Capital Research Management just sold off its own 6.3% stake in the company, which seems to suggest that it doesn’t feel Allergan’s value is going much higher than what Valeant is offering.

Not feeling very playful…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Hasbro, maker of some of America’s most beloved board games, like Monopoly and Twister, is finding that America is not so much loving them anymore. The company that also makes Play-Doh and Nerf toys took a hit in its earnings even though sales in its boys division pulled off a 32% surge to the tune of $335 million in sales. Despite their super-hero status, there was only so much Marvel Superheroes and Transformers could do as no force seems to be greater than Wall Street which hoped for $842 million and a profit of $.37 per share. Sadly, Hasbro was only able to reign in $829 million and a penny less in earnings per share. My Little Pony and her and perfectly coiffed equine friends also helped with a $163.8 million in sales but those board games took a 12% beating. However, this time last year, the toy company pulled in over $766 million, so at least it wasn’t a total bust.

Great Escapes…

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Image courtesy of vectorolie/FreeDigitalPhotos.net

Instead of filling would be beach goers with fear, Great White Sharks have been causing a tourist spending frenzy. The carnivorous ocean denizens are creating quite a stir in the retail arena with sales of shark paraphanerlia surging. Sure, the sighting of a fin might evoke fear and panic, but don’t rule out the need for shark hoodies, shark-themed candies and the ever cuddly great-white shark plush toy. Since 1916, there have been over a hundred unprovoked attacks – thirteen of them deadly. From Cape Cod down to the Florida coast and beyond, you can count on one thing – Sharks are good for the economy.