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Investment Bankers Are Grateful for M&A This Thanksgiving

Image via Vidar Nordli-Mathisen on Unsplash

There's going to be a lot of happy investment bankers after yesterday. Merger Monday was back with a flurry of deals totaling nearly $60 billion across a variety of sectors. 

The largest of the deals was a $26 billion all-stock deal in which Charles Schwab will acquire discount brokerage rival TD Ameritrade. The merger brings together the two largest publicly traded discount brokers, who will now have a combined $5 trillion in client assets. The combined company will now be the third-largest in the retail financial services market, behind Fidelity and Vanguard, accounting for about 11% of total client assets.

"We believe the combination of our two great companies positions us to be competing and winning in the investment services business for the long run — the very long run," said Charles Schwab president and CEO Walter Bettinger.

LVMH reached a deal to acquire Tiffany & Co. for $135 per share in cash, or $16.2 billion. The deal price is below Tiffany's all-time high of just above $141 per share, which it reached in 2018. LVMH, which owns popular luxury brands such as Moët & Chandon, Dom Perignon, Givenchy and Louis Vuitton, said the acquisition will "strengthen LVMH’s position in jewelry and further increase its presence in the United States."

LVMH CEO Bernaud Arnault said that the company intends "to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons. We will be proud to have Tiffany sit alongside our iconic brands."

Swiss drugmaker Novartis agreed to purchase The Medicines Co., which has only one drug, for $85 per share in cash, or $9.7 billion. The deal gives Novartis a drug prospect that can compete with cardiovascular medicines from Amgen, Sanofi, and Regeneron Pharmaceuticals. 

Inclisiran, which still has to be approved by regulators, requires significantly less injections than other drugs currently on the market. "We’re hoping to reimagine treatment of the leading global cause of death. This could be a strong step forward in Novartis’ transformation into a focused medicines company," tweeted Novartis' CEO Vas Narasimhan. 

Finally, eBay announced it is selling ticket marketplace StubHub to Swiss ticket reseller viagogo for $4.05 billion in cash. The move to sell StubHub was pushed by activist investors Elliott Management Corp. and Starboard Value LP who wanted eBay to divest non-core businesses. eBay purchased StubHub in 2007 for $310 million.

The timing of the deal is convenient as just a few days ago the U.S. House Energy and Commerce Committee opened an investigation into "potentially unfair and deceptive practices in the live event ticketing industry." StubHub was among the companies that were asked to provide documents explaining ticket allocations, fees and how customers can have a fair shot at buying tickets at face value.

With low interest rates and elevated share prices, more M&A could be highly likely as companies look to merge and find synergies, aka lay off employees, to boost their bottom lines.

Leftover Crumbs

  • This is so far beyond a complete farce at this point. Despite "agreeing in principle" to a "phase one" trade deal on October 11, after more than a year of hopes of a comprehensive trade deal, U.S. and Chinese negotiators are now still holding phone calls to make a deal. The two sides discussed "core issues of concern" and reached "a common understanding on resolving relevant problems," according to China’s Commerce Ministry. While any rational person knows talks haven't progressed in over a year, the latest "news" is nothing more than another attempt to jawbone equity markets higher on "hopes of a deal."

  • That's bollocks. Uber has lost its license to operate in London as Transport for London (TfL) cites a "pattern of failures" that "placed passenger safety and security at risk." Uber will still be able to operate in London, which is one of its top five markets globally, while the decision is appealed. London Mayor Sadiq Khan said "I know this decision may be unpopular with Uber users, but their safety is the paramount concern. Regulations are there to keep Londoners safe." Uber CEO Dara Khosrowshahi tweeted "This TfL decision is just wrong."

  • Maybe Brazilian farmers will need bigger tractors. China's imports of U.S. soybeans fell to a three-month low in October amid the never-ending trade war. China's inbound shipments from the U.S. fell to 1.15 million tons last month compared to 1.73 million tons in September. While purchases from its largest supplier, Brazil, also fell compared to September, China still purchased 3.8 million tons of soybeans from the South American country last month. Despite continuously saying China will buy more U.S. agricultural products as part of a trade deal, the data paints a different picture. 

  • It's not just Florida. Last week Market Crumbs wrote about "one of the most destructive foreign plant diseases imaginable" wreaking havoc on Florida's citrus industry. The disease, huang long bing, has now reached San Bernardino County in California for the first time ever. Along with previous detections in Los Angeles and Orange counties, there's now a 1,015-square-mile area quarantined. While California's $4 billion citrus industry is much smaller than Florida's $9 billion citrus industry, California officials are increasingly worried the disease could spread further throughout the state. 

  • Netflix who? According to data from research firm Apptopia, Disney+ is averaging nearly a million new subscribers per day. The Disney+ mobile app has been downloaded 15.5 million times with $5 million in in-app purchases through its first 13 days. The Walt Disney Company is certainly making enough money where it can now focus on fixing those glitches and taking care of users' accounts being hacked and sold online.