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| | December 8, 2015 | |
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| | U.S. antitrust enforcers are ending the year with a bang. The FTC yesterday filed a lawsuit to block the Staples and Office Depot merger, while General Electric threw in the towel on its fight with the Justice Department over a $3.3 billion deal to sell its appliance business to Electrolux. Last week, two big Tuna producers - Bumble Bee and Chicken of the Sea - called off their $1.5 billion merger in light of U.S. concerns. And all this in a year when Justice blocked Comcast's $45 billion bid for Time Warner Cable and the FTC blocked a $3.5 billion combination of Sysco and U.S. Foods.
All told, 77 deals worth $263 billion have been abandoned this year, not quite as high as the total for 2014, but far above the prior five years., according to the Wall Street Journal.
To a large extent, this robust antitrust activity reflects deal flow, as cheap debt and slowing growth have sent companies on an acquisition binge. But the resurgence of antitrust is nevertheless odd at a time when the lines dividing markets are breaking down, and competition is coming from unexpected directions - a time when Marriott worries about Airbnb more than Hyatt, and Ford eyes Apple more warily than GM.
At last month's Fortune Global Forum, I asked both IBM CEO Ginni Rometty and Wells Fargo CEO John Stumpf who their most dangerous competitors were. Rometty replied: "your biggest competition is a new business model." Stumpf said: "the people who influence us the most are outsider industries - the IBMs, the Apples, the Amazons." That has to complicate the calculations of antitrust cops.
Separately, as the U.S. economy matures, big banks are starting to put odds on the next recession. After looking at global data on the timing of recessions, a Citigroup report puts the odds of entering a recession next year as high as 65%. A separate JP Morgan says there is just a 25% chance of recession in the next twelve months, but a 76% chance in the next three years.
More news below. Enjoy the day.
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| | Top News | |
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| | • Trump vows to ban Muslims Republican presidential frontrunner Donald Trump generated waves (again) by announcing he wants to block all Muslims from entering the country. Here's an interesting tidbit that Fortune points to: this ban would mean that Jordan's King Abdullah, a partner in the fight against ISIS, would be barred from visiting the U.S. to discuss the conflict. And would Muslim Americans vacationing abroad be allowed to return? The finer points haven't been fleshed out, and polling will determine if this plan will help or harm Trump's campaign. But as Fortune notes, such statements are complicating prospects for whoever emerges as the GOP banner carrier. Fortune • Newell Rubbermaid mulls merger Consumer-products makers Newell Rubbermaid and Jarden are in talks to combine, the Wall Street Journal reports, a deal that would combine two firms with around $14 billion in annual sales. Shares of both Newell Rubbermaid and Jarden jumped on Monday on the merger speculation. Shares of both companies have performed well in recent years due to the strengthening economy and wise acquisitions. WSJ (subscription required) • Verizon dials up possible Yahoo deal Verizon Communications' finance chief, Fran Shammo, said the wireless carrier could look to buy Yahoo's core business - a deal that would include Mail, its news and sports sites, and advertising technology if it were to occur. Shammo adds that it is "way too premature" to talk about if the deal would make strategic sense and return value to shareholders. Notably, if the deal were to occur, it would come after Verizon paid $4.4 billion for another older Internet property - AOL Inc. Reuters • Icahn makes Pep Boys play Activist investor Carl Icahn has offered to buy Pep Boys for $15.50 a share, a move that comes just days after he announced he's got a 12% stake in the company. That exceeds the offer of $15 a share from tire maker Bridgestone that Pep Boys already agreed to in October, which valued the company at $835 million. Icahn's plan would be to combine the retailer with Auto Plus, which is owned by his holding company, Icahn Enterprises. Pep Boys, meanwhile, said the investor was just angling to drive up the Bridgestone offer price to score a bigger profit. Fortune • InBev CEO to defend beer deal Anheuser-Busch InBev NV Chief Executive Offer Carlos Brito will testify before Congress on Tuesday in an attempt to ease worries about the proposed more than $100-billion acquisition of SABMiller, which would create a "Mega Beer" company that currently accounts for almost a third of all beer sold globally. Though InBev has agreed to a side deal to unload U.S. beer assets to another rival, Molson Coors, there have been complaints that the merger is still too troublesome. It has come under some criticism from members of Congress. Bloomberg | |
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| | Around the Water Cooler | |
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| | • Netflix to boost original content Netflix is planning to nearly double the number of original shows that will be featured on the video-streaming service next year, with a plan to show 31 shows (up from 16). Netflix is in the middle of a pivot: it is less willing to sign pricy deals with U.S. movie studios and instead churning out new content like Orange is the New Black and House of Cards. Netflix's shares fell on the news, as investors were worried about the potential increased costs that come with in-house productions. Reuters • E. coli fears rattle Chipotle again Shares of Mexican-restaurant chain Chipotle slipped on Monday after news surfaced that 30 Boston College students got sick after eating at a restaurant over the weekend, resulting in fears of more food poisoning problems at the burrito chain. While Chipotle says there are no confirmed cases of E. coli connected to Chipotle in Massachusetts, it had to temporarily close a restaurant in Boston's Cleveland Circle where the students reportedly ate. Last week, Chipotle warned overall same-store sales would drop a steep 8% to 11% if recent sales trends continued, as the brand's perception has been hurt by an E. coli outbreak across several states. Reuters • LeBron James inks new Nike deal Nike has signed a "lifetime" agreement with LeBron James, a bet that the NBA star's shoes and apparel will sell strongly even after he's no longer playing on the courts. Nike and James have worked together since 2003, when the high school superstar initially signed a 7-year shoe contract. The deal suggests Nike thinks James will have staying power in the many years of his life when he is no longer an active player. Another Nike brand built on retired NBA star Michael Jordan has been a hit for years after his basketball career ended, so there is already a model that the athletic gear maker can lean on. Fortune | |
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