DASH - Wall Street Breakfast Podcast: Macy's Receives Buyout Offer

2023-12-11 06:38:49 ET

Summary

• Private equity group offers $5.8B to take Macy's private, valuing the company at $21 per share.
• Cigna and Humana abandon merger talks, with Cigna planning a major stock buyback instead.
• DoorDash will join the Nasdaq 100 Index, along with other companies like CDW and Coca-Cola Europacific Partners.

Listen below or on the go on Apple Podcasts and Spotify

Macy's (M) gets $5.8B offer to be taken private - WSJ. (00:22) Cigna (CI), Humana (HUM) scrap merger talks; Cigna planning major stock buyback (update). (01:40) DoorDash (DASH) gets the call-up to the Nasdaq 100 Index. (02:52)

This is an abridged transcript of the podcast.

A private equity group has made a $5.8B offer to take Macy's private .

The offer from Arkhouse Management and Brigade Capital Management values the long-time department store chain at $21 per share. The two firms already own some Macy's (NYSE: M ) stock.

Given Macy's ( M ) closing price of $17.39 on Friday, the offer is a ~21% premium to that close.

The Wall Street Journal first reported this story on Sunday.

The newspaper said that the offer was made on Dec. 1 and the company's board has met to discuss it, though there is no word on how the board is leaning.

Arkhouse and Brigade Capital believe Macy's ( M ) is undervalued and are prepared to raise their offer subject to due diligence. They also have the support of an investment bank who has provided a letter on their ability to raise capital to complete the deal.

Year to date, Macy's ( M ) shares are down ~14%.

In its Q3 financial results released in November, the company beat on the top and bottom lines, and also boosted its sales and EPS guidance for fiscal 2023. Even though it was a beat, revenue declined about 7% compared to the prior-year period.

Premarket Macy’s is up 19%

Cigna (NYSE: CI ) and Humana (NYSE: HUM ) have reportedly scrapped plans to merge after being unable to agree on financial terms, including price.

Cigna will instead conduct a major stock buyback, according to The Wall Street Journal .

Investors failed to embrace the idea of a merger, with Cigna shares dropping 8% following news of an impending deal and trending lower since. Humana shares have also taken a significant hit.

In a statement released Sunday , Cigna said it plans to conduct an additional $10B incremental stock buyback, which would bring the total amount of its repurchase authority up to $11.3B. The company is looking at buying back at least $5B in common stock before the end of the first half of 2024, with a portion of the buyback to be conducted through an accelerated repurchase program in Q1 2024.

"We believe Cigna's shares are significantly undervalued and repurchases represent a value-enhancing deployment of capital," Cigna CEO and Chairman David Cordani said in the statement, which didn't mention Humana.

Cigna also reaffirmed its previously issued outlook of 2023 consolidated adjusted income from operations EPS of at least $24.75, with a target of at least $28 per share for 2024.

DoorDash (NASDAQ: DASH ) will become part of the Nasdaq 100 Index.

The Announcement was made late on Friday as part of the annual reconstitution of the index . The online food delivery company will officially be part of the index prior to market opening on December 18.

Other additions to the index are CDW ( CDW ), Coca-Cola Europacific Partners ( CCEP ), MongoDB ( MDB ), Roper Technologies ( ROP ), and Splunk ( SPLK ).

Six companies will be removed from Nasdaq 100 as a result of the reconstitution: Align Technology ( ALGN ), eBay ( EBAY ), Enphase Energy ( ENPH ), JD.com ( JD ), Lucid Group ( LCID ), and Zoom Video Communications ( ZM ).

To note, shares of DoorDash ( DASH ) are up more than 85% over the last year.

Other articles to look out for on Seeking Alpha:

Earnings week ahead: Oracle, Costco, Adobe, FuelCell, Lennar and more

Generative AI could upend every sector. Oppenheimer has 10 predictions for how it plays out

Nvidia CEO eyes chip production base in Vietnam

On our catalyst watch for the day,

• The two-day Fortune Brainstorm AI Conference in San Francisco will bring together leading executives and policymakers to examine new business cases for AI. Companies with speakers at the event include Cloudflare ( NET ), Accenture ( ACN ) and Williams-Sonoma ( WSM ) among others.

• Shareholders with Arlington Asset Investment Corp. ( AAIC ) vote on the buyout offer from mortgage REIT Ellington Financial ( EFC ). Shareholders with RPT Realty ( RPT ) will vote on the $2B acquisition offer from Kimco Realty ( KIM ).

• The healthcare sector will be on high alert with the 65th ASH Annual Meeting and Exposition taking place in San Diego, California. The Hematology meeting has led to share price jolts from participants in the past. Companies due to present this year include Eli Lilly ( LLY ), Agios Pharmaceuticals ( AGIO ) and Corvus Pharmaceuticals ( CRVS ) among others.

U.S. stocks on Friday shrugged off conflicting data on inflation and the labor market to end higher.

The Nasdaq ( COMP.IND ) added 0.45%. The S&P 500 ( SP500 ) climbed 0.41%, while the Dow ( DJI ) advanced 0.36%.

Of the 11 S&P sectors, seven ended in the green, led by Energy. Consumer Staples was the top loser.

For the week, the Dow ( DJI ) was up slightly by 0.01%. The S&P ( SP500 ) was up 0.21% and the Nasdaq was up 0.69%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing lower. The Dow is down 0.1%, the S & P 500 is down 0.1% and the Nasdaq is down 0.2%. Crude oil is down 1.2% at more than $70 per barrel. Bitcoin is down 3% and above $42,000.

In the world markets, the FTSE 100 is down 0.7% and the DAX is up a small fraction.

The biggest movers for the day premarket: Pinterest (NYSE: PINS ) rose as much as 3% after RBC Capital Markets upgraded the social media platform's rating to outperform from sector perform.

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