Staple’D: FTC Wants to Quash Merger; Keurig Coffee Wants Privacy; Chipotle Earnings Not Coming Up Fresh

Deja vu…


Image courtesy of TeddyBear[Picnic]/

Nothing like a pesky lawsuit to put a crimp in your $6.3 billion proposed takeover plans. Which is exactly what happened to Staples Inc. when the FTC voted unanimously, in a 4-0 vote, to try and put the kibosh on the office supply retailer’s’ attempted takeover of Office Depot by filing a suit to block the deal. The deal, which was expected to generate $39 billion in revenue, has the FTC concerned that the merger would create just one mammoth national office supply retailer that would yield too much power to raise prices, whether it be private consumers or commercial entities, many of which have big vendor contracts. This is not the first time that Staples has tried to pick up Office Depot. Back in 1997, the company attempted to do the same thing but was blocked from doing so even back then. Because the office supply marketplace has changed so much, given the availability of office supplies via e-commerce, Staples was certain this time there would be no issue. Besides, in 2012 the FTC approved a merger between Office Depot and Office Max merged on the basis that there was enough competition from Amazon, Wal-Mart and other outfits that allowed for a healthy amount of competition. Instead, of a merger today, however,  shares of Staples Inc. fell 14%, the most in 18 months, while shares of Office Depot fell 18% on news of the FTC lawsuit.



Image courtesy of Iamnee/

Big news in the single-serve coffee pod marketplace – yeah that’s a real thing: Keuring Green Mountain Inc. is going private to the tune of $13.9 billion and getting $92 per share. For real. In fact, that price is a 78% premium over Friday’s closing price. For real again. So what would make a company like that want to go private? Well it was an offer the coffee maker couldn’t refuse. That’s part of it anyway. The company posted some disappointing numbers and is down 60% just this year. Besides the ever-increasing competition in the single-serve pod market, Keuring also struck out with its KOLD product. Enter German company JAB who wants to be the numero uno North American coffee purveyor. And why not? It’s a $6.1 billion industry there alone and makes $15 billion globally. Did I mention that North America drinks up a big 40% of that global market share? JAB already picked up Peet’s Coffee and Tea and Caribou Coffee as it attempts to compete with Nestle. So far, JAB has the upper hand. By a lot. Indeed, news of the deal sent Keurig stock up 74%, which is especially good for Coca Cola since it owns 25.87 million shares, a 17.4% stake that adds up to about $2.4 billion. That’s even more good news for Coke since that’s how much it can expect to get from JAB for its shares. Of course, with any major deal, it is subject to shareholder approval. But assuming the deal’s approved, it will likely close by April.

No más


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Even millenials can’t help Chipotle with this one. The fresh-food restaurant chain saw its shares hit its lowest point in eighteen months, all the way down to $515 per share. Never mind that the stock is currently trading at around $543 a share. But I digress. Much of that slide can be blamed on the e. coli outbreak that had the chain closing a number of its locations since most of the 52 people who picked up the virus said they had eaten at Chipotle. The company is expecting a drop in same store sales between 8% – 11% for its fourth quarter. Chipotle also now expects earnings per share from $2.45 – $2.88. That’s especially brutal when you consider that analysts were expecting about $4.06 to be added, not to mention the fact that at this time last year the company pulled in $3.85 per share. The stock has been on a downward slide since news of the e. coli outbreak was first reported back in October. The stock has fallen 22% since then and is down 18% for the year.

So Not A-Twitter, Bayer’s Getting Pain-free, Office Supplies In Short Supply?

Twitter shares unleashed…

Image courtesy of Master isolated images/

Image courtesy of Master isolated images/

Twitter, once considered one of Wall Street’s most sought after and promising stocks has proved to be otherwise. Last week’s quarterly results showed Twitter isn’t exactly growing like analysts had hoped and the expectation that it would achieve the same amount of users as Facebook…well, moving on…Shares of the social media company dropped 10% since its auspicious debut back in November no thanks in part to the”lock-up” period, which has officially expired. Now 480 million shares of Twitter, owned by insiders, are allowed to be sold and released into the wilds of the stock exchange until new buyers decide to scoop ’em up.

No pain and much gain…

Image courtesy of Grant Cochrane/

Image courtesy of Grant Cochrane/

Buying a rival company can be such a pain. But in the case of Bayer (BAYRY) picking up Merck (MRK), there should be plenty of aspirin to go around. Germany-based Bayer plunked down $14.2 billion dollars to buy Merck’s consumer care business. Some of the New Jersey based company’s more notable brands include the always appreciated Coppertone, the ever consoling Dr. Scholl’s foot care products and my personal seasonal favorite, Claritin. But unlike some of the other pharmaceutical mergers that have been occurring, albeit hostilely, Merck actually was looking for a buyer for its consumer care products so they can focus their efforts (i.e. money) on developing vaccines and other useful drugs. The merger now makes Bayer second to Johnson & Johnson in over the counter drugs. But if Bayer can help it, it won’t be that way for long.


Image courtesy of anankkml/

Image courtesy of anankkml/

In case you were thinking of stopping by your local Office Depot (ODP) to pick up a few office supplies, you better first check to see if it’s still there. The Boca based company just announced plans to shutter 400 stores by the end of 2016. Their merger with Office Max (OMX) caused an oversupply of stores and supplies. It’s hoping to save about $75 million with that move. Office supply stores, including the iconic and ubiquitous Staples (SPLS), are struggling to compete with online retailers and other types of brick and mortar stores. But rest assured, if you’ve just got to have your Office Depot fix, somewhere on this planet you’ll be able to find one as they have 2000 stores worldwide.