SHAK - Wall Street Breakfast Podcast: Vice Files Chapter 11

2023-05-15 07:20:14 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify Media struggles see Vice ( VICEM ) file for bankruptcy protection . Oneok ( OKE ) to buy Magellan Midstream Partners ( MMP ) in a deal valued at $18.8B. Athenex ( ATNX ) falls 52% after bankruptcy filing. Learn more about these stocks with Seeking Alpha Premium .

This is an abridged transcript of the podcast.

• The digital publishing industry claims its latest victim. Vice Media files for bankruptcy.

• Today is catalyst watch Monday. One highlight of the week is retail sales. *audio from Kim Khan* Look out for that report tomorrow at 830 am.

• Oneok agrees to acquire Magellan Midstream Partners. The deal is valued at nearly $19B.

You can find links to all the stories we talk about on the show in show notes and our daily Seeking Alpha Wall Street Breakfast articles.

OUR TOP STORY

The digital publishing industry has claimed its latest victim.

Vice Media ( VICEM ) has filed for Chapter 11 bankruptcy protection and listed both assets and liabilities in the range of $500M-$1B.

Vice Media ( VICEM ) assets include Vice News, Vice TV, Refinery29 and Motherboard.

Investors including Fortress Investment Group and Soros Fund Management have approved $20M in debtor-in-possession financing to keep Vice Media ( VICEM ) going during the bankruptcy process.

The two will end up acquiring the digital publisher for $225M - via existing loans made to the company - unless other firms submit "higher or better" bids.

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Today is catalyst watch Monday.

Seeking Alpha senior managing news editor Kim Khan is giving us a glimpse of what to expect this week.

*audio from Kim Khan*

Now let’s check in on earnings with Seeking Alpha associate news editor Kevin Curran.

*audio from Kevin*

Seeking Alpha’s catalyst watch article that looks at the catalysts for the upcoming week is published every Friday around 3 pm.

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NOW MORE ON THE MARKET

Wall Street's major averages ended lower on Friday, though they settled significantly higher than their session lows.

The Nasdaq ( COMP.IND ) ended down 0.4%. The S&P 500 ( SP500 ) closed down 0.2%. The Dow ( DJI ) slipped marginally.

For the week, the averages turned in a mixed performance. The Nasdaq added 0.4% while the other two indices slipped. The S&P was down 0.3% and the Dow was lower by 1.1%.

Of the 11 S&P sectors, seven ended in the green, led by Utilities. Consumer Discretionary topped the losers.

Meanwhile, economic data showed a more-than-expected drop in the University of Michigan's gauge of consumer sentiment for May. Five-year implied inflation expectations rose to 3.20%, its highest reading in over a decade.

In terms of the markets, JPMorgan CEO Jamie Dimon weighed on what the debt ceiling impasse would mean for stocks and Treasuries, adding that a default would be "potentially catastrophic" and the closer you get to it investors will "panic.".

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MORE OF OUR TOP STORIES

Austin Russell, founder and CEO of Luminar (NASDAQ: LAZR ) and Integrated Whale Media Investments ( IWM ) will acquire a majority ownership in Forbes Global Media.

The transaction values Forbes at ~$800M. Russell will hold an 82% interest in the entity that controls Forbes. IWM will also keep one board seat in conjunction with its retained minority stake.

All capital for the acquisition has been fully committed and independent of Russell's stake in Luminar ( LAZR ).

As part of the transaction, the remaining stake of Forbes owned by the Forbes family will be acquired by the new owner. However, Steve Forbes will remain involved in the company.

Russell will act as a visionary for the brand, and will not be involved in its day-to-day operations.

The transaction is expected to be complete later this year.

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Engaged Capital plans to start a proxy battle with Shake Shack (NYSE: SHAK ) in an effort to gain three board seats at the hamburger chain.

According to a WSJ report , the Activist has been talking with management of the chain for the past six months.

Engaged Capital has a 6.6% stake in Shake Shack ( SHAK ) including swaps.

Engaged believes it has ways to double Shake Shack’s profitability within two years and wants the company to get rid of its staggered board.

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Oneok (NYSE: OKE ) said Sunday it agreed to acquire Magellan Midstream Partners (NYSE: MMP ) in a cash and stock deal valued at ~$18.8B including assumed debt, resulting in a combined company with a $60B total enterprise value.

The consideration will consist of $25/share in cash and 0.667 common shares of Oneok ( OKE ) for each outstanding Magellan ( MMP ) common unit.

This represents a current implied value to each Magellan unitholder of $67.50/unit for a 22% premium based on the May 12 closing price.

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Netflix (NASDAQ: NFLX ) is reportedly looking to cut some $300M in costs this year.

That's a small dent in the company’s overall expense base, which last year came to about $26B.

According to the Wall Street Journal, Netflix will trim those costs and urged staffers to be "judicious' with spending, including hiring, but the company won't freeze hiring or pursue more layoffs.

The cost focus continues in part because of the delay in Netflix's password-sharing crackdown into the second quarter.

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CVS (NYSE: CVS ) is shutting down its clinical trials unit to focus on its core business.

In a statement, CVS said “We’re winding down our Clinical Trial Services business in a phased way with a full exit expected by December 31, 2024.”

CVS unveiled its clinical trial services unit in May 2021.

A year later Walgreens ( WBA ) followed suit.

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Athenex (NASDAQ: ATNX ) is down nearly 52% pre-market after announcing that the biotech and some of its subsidiaries filed for Chapter 11 bankruptcy in the Southern District of Texas.

The move was aimed at accelerating a sales process for the company’s assets in its main businesses.

The expedited sales process is expected to conclude by July 01, while Chapter 11 cases will continue at the U.S. Bankruptcy Court for the Southern District of Texas after that to resolve claims.

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If you want more information about a topic we covered on today’s show. You can find links in show notes and our daily Seeking Alpha Wall Street Breakfast articles.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.3%. The S&P 500 is up 0.4% and the Nasdaq is up 0.3%. Crude oil is up 0.2% at more than $70 a barrel. Bitcoin is up 2%.

In the world markets, the FTSE 100 is up 0.5% The DAX is up 0.2%.

On today’s economic calendar, at 8:45 a.m. Atlanta Federal Reserve Bank President Raphael Bostic will give welcoming remarks before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference. And at 12:30 p.m. Richmond Federal Reserve Bank President Thomas Barkin will moderate a luncheon keynote at the same event.

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