A Beer-y Big Merger is Brewing; Twitter’s Big Plans; Johnson & Johnson Needs a Band-Aid for its 3Q

99 million bottles of beer on the wall..

Image courtesy of Gualberto107/FreeDigitalPhotos.net

Image courtesy of Gualberto107/FreeDigitalPhotos.net

It looks like we have a winner. Well, a winning bid, anyways, that has SABMiller finally finally saying yes to ABInBev’s offer to scoop ’em up. After five tries, ABInBev offered up $106 billion for its fellow mega brewer. Now regulatory approval in the United States, and even China, is all that stands between final completion of the merger. That, and also shareholder approval which still might get in the way of meaningful fiscal relationship. Assuming the merger is approved, it will go down as one of the top five mergers. Ever. The newly formed  company will control approximately a third of all the world’s beer (Heineken, the next biggest competitor, only controls 9% of the market) and puts Corona and Budweiser in the same corporate family as Miller and Grolsch.  The new combo will handle 18 of the top 40 beers in the world. It’s a match, some would say, made in beer heaven. The two companies put out 77 billion liters of drinks and 150 billion pints last year. Once they merge, sales are expected to come in at about $55 billion. If, however, the deal does not go through, AbInBev  has to hand over a $3 billion break-up fee. to SABMiller. Is that necessarily a bad thing?

Chirp chirp…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Twitter is about to get a lot less chipper. Well, 8% less chipper, to be more precise. Just one week after re-assuming his CEO role, co-founder Jack Dorsey announced that Twitter will be trimming its workforce, eliminating 336 positions out of the 4,100 at the social media company. Those positions will be mostly from the product and engineering areas whose departments were already bloated. No lay-offs are expected of any executives. Apparently, the company is not bloated with them. Dorsey is on a mission to turn Twitter into a kindler gentler platform. Just kidding. He just wants to make the system more accessible because, believe it or not, not everybody finds Twitter that user-friendly. Who would’ve thunk it? It seems many users have signed up only to unceremoniously part ways with the micro-blogging tool shortly thereafter.  In the process, Dorsey’s also hoping to make a lot of cash and do away with those bleak stagnant quarters that the company keeps churning out. Wall Street likes Jack Dorsey’s ideas so far and sent shares up almost 6%. Too bad the stock is down 30% for the year.  Dorsey added, “The world needs a strong Twitter, and this is another step to get there.” I couldn’t have made that up if I tried.

Band-Aids and Tylenol and hep C, oh my!

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Health care giant Johnson & Johnson has had better quarters. Especially much better than this past third quarter where the company saw a 29% drop in earnings and is now down 8% for the year. There is no band-aid big enough for that boo boo. As is the trend, the strong dollar gets part of the blame, or rather 8% of it. But at least the company is showing signs of recovery following a spate of recalls that go back to 2009, as its consumer health business posted some respectable digits. The company even plans to buy back $10 billion in common stock and increased its profit outlook by a nickel hoping to score between $6.15 – $6.20 per share for the year. Johnson & Johnson pulled in net income of $3.36 billion scoring $1.20 per share with over $17 billion in revenue. Unfortunately, analysts were looking for $17.41 billion in revenue and doesn’t even compare to last year’s net income of $4.75 billion figure that added $1.60 per share. Wall Street made sure to share its disappointment by sending shares down 71 cents a pop.  The company also took a 90% beating on its hepatitis C, Olysio, drug since newer drugs to treat that hit the market. And even though sales of Tylenol and Motrin fell worldwide by 7.7%, here in the states, sales on those products increased almost 9%. And for that you are welcome, Johnson & Johnson.

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Mega Media Merger; Fitbit is Overweight…And That’s a Good Thing; Some Foam for Thought

Urge to merge…

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

While you were busy navigating mall parking lots trying to find a parking space so you could do some meaningful Labor Day shopping, Media General was also busy doing some shopping of its own. The media company picked up, or merged – as it’s being called – with Meredith Media to the tune of $2.4 billion. The new company to be borne out of this merger will be called Meredith Media General – how convenient – and will take its place as the third largest television station operator in the U.S. Media General is gaining an additional 17 television stations, bringing its grand total to 88. Meredith also brings with it some great poolside reading, including Better Homes and Gardens, Shape and Parents magazine – the ultimate publication that lets parents know they are doing everything wrong. The deal was done for $51.53 per share, a generous 12% premium from Meredith’s Friday closing price of $45.94. While the boards of both companies approved the deal, the FCC must also gives its blessing for this union, which is estimated to rake in $3 billion in annual revenue. And here’s a little fun fact: Meredith Media began in 1902 as an agricultural publisher. Who knew?

Fit to be upgraded…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Nothing says fit like having your stock upgraded by Morgan Stanley to overweight. Oh the irony.  Morgan Stanley had initially classified the stock as equal weight as in, it’s right where it belongs. But alas! Morgan Stanley has been noticing how Fitbit has been performing really nicely lately, fiscally speaking of course, and expects the maker of the wearable device to outperform aka overweight. That is a finance term, I kid you not, which also can mean (and does in this instance) outperform. And who does’t love a stock that is overweight and outperforms? Hence, the stock rallied today. In fact, Fitbit had its biggest jump today since June, when it debuted at a relatively modest $20 per share. Second quarter revenue tripled from a year earlier to over $400 million, compelling Morgan Stanley to revise Fitbit’s target price from a paltry $43 per share to a handsome $58 per share. And it’s no wonder since Fitbit has a staggering 21% piece of a a $10 billion industry. As for that little company we call Apple, it appears that wondrous watch they peddle isn’t swaying those Fitbit wearers, many of whom have decided against purchasing that ever wondrous piece of technology. Fitbit’s stock price, btw, hit $34.77 and closed today at $35.49.

An ice cold one…

Image courtesy of Getideaka/FreeDigitalPhotos.net

Image courtesy of Getideaka/FreeDigitalPhotos.net

Because it’s the thing to do, Heineken is adding to its stash of beer selections by welcoming craft brewery Lagunitas Brewery to its foamy fold. Apparently craft beer is the new black and has been growing at a steady clip compared to its less craftier counterparts, whose growth rate has slowed considerably. In fact, one out of every ten beers is a craft beer. Clearly it’s all the rage. Lagunitas’ beverages, most notable for its India Pale Ale, are reputed to be so tasty, that the company shipped out 600,000 barrels just in 2014. Unfortunately, now with Heineken taking a 50% stake in Lagunitas, the California-based beer company no longer gets to sport the craft brewer status. In order to be classified in that illustrious category, a company must be less than 25% owned or controlled by a larger brewer. Oh well. But at least with Heineken buying it, Lagunitas gets to spread its foamy wings and bring its tasty ales to other parts of the world that have yet to experience the joy that is…Lagunitas.