SEDG - Wall Street Breakfast Podcast: Macy's Rejects $5.8B Offer

2024-01-22 06:50:14 ET

Summary

• Macy's rejects $21 per share takeover offer from Arkhouse Management and Brigade Capital Management.
• Terraform Labs files for Chapter 11 bankruptcy after collapse of TerraUSD and Luna.
• SolarEdge Technologies to lay off 900 employees.

Listen below or on the go on Apple Podcasts and Spotify

Macy's ( M ) rejects $5.8B offer ; bidder threatens to go directly to holders. (00:27) Terra-Luna crash : Terraform Labs files for Chapter 11 bankruptcy. (01:36) SolarEdge ( SEDG ) to cut 16% of workforce as revenues slide. (02:41)

This is an abridged transcript of the podcast.

Macy's (NYSE: M ) has rejected a $21 a share takeover offer from Arkhouse Management and Brigade Capital Management.

Before the official rejection from Macy's ( M ), the private equity firms threatened to go directly to shareholders with their $5.8 billion offer for the department store chain.

"We are highly motivated to consummate an acquisition of Macy’s and are prepared to pursue all necessary steps, including direct engagement with stockholders, to achieve this goal," Arkhouse Managing Partners Gavriel Kahane and Jonathon Blackwell said in a statement on Sunday.

"We see the potential for a meaningful increase to our original proposal if we are granted access to the necessary due diligence and, to that end, have offered to sign a mutual non-disclosure agreement to conduct this due diligence," the Arkhouse managers added in the statement.

Macy's ( M ) responded in a statement on Sunday and said that it has determined that the non-binding proposal does not constitute a basis to enter into a non-disclosure agreement or provide any due diligence information to Arkhouse and Brigade.

Macy's ( M ) board said in a letter to Arkhouse and Brigade that it continues to have "serious reservations" about the investment firms' ability to finance its non-binding proposal.

News of the Arkhouse potential direct push to shareholders was earlier reported by the WSJ on Sunday. Last week the WSJ reported that Macy's ( M ) is planning t o cut ~13% of its corporate staff , or about 2,350 positions, and close five stores.

Terraform Labs, the company behind the failed cryptocurrencies TerraUSD ( UST-USD ) and Luna ( LUNA-USD ), has filed a voluntary petition for Chapter 11 bankruptcy in the U.S.

TerraUSD ( UST-USD ), along with its sister token Luna ( LUNA-USD ), collapsed in 2022 after the stablecoin lost its peg to the U.S. dollar, with both cryptos losing around $40B.

According to a court filing , Terraform listed assets and liabilities worth around $100M-$500M each. Reuters reported that it intends to meet all financial obligations to staff and vendors during the Chapter 11 proceedings without additional financing.

"The filing will allow Terraform to execute on its business plan while navigating ongoing legal proceedings, including representative litigation pending in Singapore and U.S. litigation involving the Securities and Exchange Commission," the company said, adding that it plans to continue expanding its Web3 offerings.

Terraform is expected to face a class-action lawsuit in Singapore from investors claiming they lost a combined $57M during TerraUSD's ( UST-USD ) collapse.

Terraform also faces fraud charges brought on by the U.S. SEC, which the company sought to dismiss by arguing that TerraUSD ( UST-USD ) did not fall under the regulator's purview as it is not a security .

SolarEdge Technologies (NASDAQ: SEDG ) plans to lay off 900 employees, or ~16% of its total workforce of 5,500. Calcalist reported Sunday that 550 of those workers are in Israel.

The company , whose market valuation has plunged 80% in the past year, is expecting Q4 2023 revenues to decline 55% to ~$325M from Q3, which were 27% less than in Q2.

SolarEdge ( SEDG ) has dropped 25% in the first three weeks of the new year; seeing a tough road to recovery for sales, margins and market share.

In addition, Barclays downgraded shares last week to Underweight from Equal Weight with a $50 price target.

On our catalyst watch for the day:

• The blackout period begins for Federal Reserve members in advance of the January 30-31 meeting.

• BJ’s Restaurants ( BJRI ), Xponential Fitness ( XPOF ), and First Watch Restaurant Group ( FWRG ) will be participating in the Jefferies Consumer Summit.

• WTI crude February futures will expire. Crude oil futures ( CL1:COM ) have seen extra volatility over the last year on contract expiration dates.

On our earnings watch for the day, United Airlines Holdings ( UAL ) is scheduled to announce Q4 earnings results today after market close.

The consensus EPS Estimate is $1.71 (-30.5% Y/Y) and the consensus Revenue Estimate is $13.55B (+9.3% Y/Y). Over the last 2 years, UAL has beaten EPS estimates 75% of the time and has beaten revenue estimates 63% of the time.

Other articles to look out for on Seeking Alpha:

European gambling company Kindred Group in talks to be sold for $2.5B - WSJ

Red Sea crisis seen as bigger impact event for shipping than early pandemic

Beverage buzz: McDonald's new CosMc's concept starts off strong

U.S. stocks on Friday jumped to end with healthy gains.

The Nasdaq ( COMP.IND ) added 1.70%. The Dow ( DJI ) climbed 1.05% and the S&P ( SP500 ) advanced 1.23%.

Of the 11 S&P sectors, nine ended in the green.

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 in the green. The Dow is up 0.1%, the S & P 500 is up 0.3% and the Nasdaq is up 0.5%. Crude oil is up 0.07% at more than $73 per barrel. Bitcoin is down 2.3% at more than $40,000.

In the world markets, the FTSE 100 is up 0.3% and the DAX is up 0.5%. And the stock market in India is closed today due to a holiday.

The biggest movers for the day premarket: Amidst a challenging market environment, the China stock selloff continues to intensify, with the Hong Kong Index nearing a 19-year low. The pre-market trading session has added to the woes, as prominent stocks including JD.com ( JD ), Li Auto ( LI ), Xpeng ( XPEV ), Nio ( NIO ), Bilibili ( BILI ), and Netease ( NTES ) all registered significant losses at more than 5%.

On today’s economic calendar:

• 10am leading indicators

For further details see: