• Harsh Patel, CFA

Merger Monday 🤑 🛍



Merger Monday gave us a juicy corporate shopping spree this year, with over $60bn of corporate mergers and acquisitions announced in a single day.


What’s Merger Monday?


A festive movie analogy for y’all: if Black Friday was Home Alone 1 and Cyber Monday was Home Alone 2, Merger Monday would be the Home Alone 3 which you probably don’t care as much for. It’s one of three informally recognised days surrounding the US Thanksgiving holidays.


Why is Merger Monday even a “thing”?


Corporate boards and executives tend to announce deals they have been working on behind the scenes on the Monday before Thanksgiving over in the US, with the hope of wrapping up media events and press conferences related to said deals ahead of some (hopefully peaceful) quality time with family & friends over the Thanksgiving weekend.


A quick list of the deals announced - details in links:

  • Charles Schwab announced plans to buy TD Ameritrade for $26bn, creating a ginormous brokerage with over $5 trillion in assets. 

  • LVMH announced plans to buy Tiffany for $16.2bn, with a previous $14.5bn offer having been rejected last month.

  • Novartis announced plans to buy The Medicines Co. - which is currently developing an innovative cholestrol drug - for $9.7bn.

  • Viagogo announced plans to buy Stubhub from eBay for $4.1bn, combining the leading second-hand ticketing sites in Europe and the US.

  • Mitsubishi and partners announced plans to buy Dutch utility Eneco Dutch utility Eneco for €4.1bn, fighting off Royal Dutch Shell and KKR shaped competition.

Why should you care?


A fair question given the holiday shopping frenzy currently underway, so we’ll keep it short.


While some of the industry redefining deals above are far from done (Charles Schwab x TD Ameritrade and Viagogo x Stubhub may be subject to regulatory scrutiny for potentially lowering the competitive forces in their respective industries), the mere fact that corporate executives feel confident enough to announce these deals is a positive sign.


This becomes clearer with some context - prior to Merger Monday, there had been a notable slowdown in merger activity this year, with several companies deciding against merging or acquiring other companies given uncertainty around global economic growth and the US / China trade war. While these risks still remain, the fact that a number of company executives now seem more willing to engage in mergers and acquisitions has been be taken as a sign of increased confidence in the global economy, helping US stock markets reach fresh record highs early in the week. Again.  


Economic conditions still remain relatively fragile, but adding a blockbuster Merger Monday to the recent stock market rally and sprinkling a little support from central banks on top gave investors a rather delicious bull-market shaped Thanksgiving pudding to indulge in 🥧

What Else is Going On?


Black Friday vs. Climate Strikes

Consumerism vs. Environmentalism 🥊


Yesterday’s Black Friday sales were accompanied by Climate Strikes across the globe, with young people everywhere taking to the streets demanding action on Climate Change. There’s currently a divide between companies who are taking a stand against Black Friday and the excessive consumerism it encourages, and those who are running harder to meet demand. It seems finding a balance between our desires as consumers and our desire to protect the planet isn’t so easy after all.



UK Election

They Think It’s All Over...


An influential and historically accurate poll suggested Boris Johnson is on course to win an overwhelming majority in Parliament, but the Conservatives are keen to avoid any complacency, having come under fire on the NHS this week. It’s a long way back for the Labour Party from here, with under 2 weeks left until Election Day - but it’s not over yet.



Ocado

Asian Expansion


Ocado shares had a great day yesterday, gaining 10% following news that the company has been hired by Japan’s largest supermarket group AEON to help develop the technology for its grocery eCommerce business. The one-time British online grocery service is looking increasingly like a tech company - it generates an increasing amount of its value from working with grocery chains worldwide to provide software & hardware solutions for grocery eCommerce. The partnership with AEON marks the company’s first in Asia, with investors hoping for more to come.



Xerox

Foes, not Friends đź‘«


What started as a friendly takeover attempt of HP by Xerox is turning hostile, fast. HP management turned down Xerox’s $33.5bn offer for the company, saying the valuation did not reflect HP’s true value as a company. Xerox disagrees, and in turn will take the $33.5bn offer directly to HP shareholders. Watch this space for more...



Tech Data

Come Get Me


Not one to be outdone by Merger Monday deal announcements, private equity firm Apollo “What’s Thanksgiving?” Global increased its bid for technology equipment distributor Tech Data on Black Friday in the face of a competing bid from Warren Buffett’s Berkshire Hathaway. “Black Friday Bargain Hunting” clearly means something entirely different for the executives at Apollo.


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At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions.

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Any and all information produced by Evarvest Limited (Company No. 12544579) is copyright protected, and while we try our best, we cannot ensure the accuracy of the information we provide.

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Please know, the value of investments can go up as well as down and you may receive back less than your original investment. Further, the tax on your investments depends on your individual circumstances and may be subject to change.  

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Evarvest Limited refers to the Evarvest network and / or one or more of its subsidiaries, each of which is a separate legal entity.