What You Need To Know For August 15th

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The Main Story 🔍

The Starbucks Latte Coup:

Brian Niccol, the current CEO of Chipotle will be stepping down and will become the new CEO of Starbucks effective September 9th. This comes after activist pressure from activist hedge fund giants like Elliott and Starboard, as well as two quarters in a row of very weak Same Store Sales numbers. Niccol leaves Chipotle at the top of his game, after spending 6.5 years leading the Mexican food chain to a whopping 773% increase in share value.

Laxman Narasimhan stepped down immeditately, capping off an abrupt 18 months in charge of the company. Over the past few months he had been juggling fending off activist investors and Starbucks founder Howard Schultz. The 20-year McKinsey Vet did not last long, and instead Starbucks is turning towards Niccol, the experienced fast casual guy. Wall Street is highly bullish on Niccol coming in, and the 24% jump in shares on Tuesday showed just that.

Last time Brian Niccol made a move, he demanded that the Company moved to him. It sounds crazy but Chipotle had to move their HQ from Denver, Colorado to Newport Beach, California in order to get Niccol to quit his job as the CEO of Taco Bell. It’s been shockingly reported that Niccol doesn’t have to move to Seattle to take over the job. He gets to stay in California. Talk about leverage.

Plus his comp package is insane.

He’s getting a $85mm compensation package, with a $1.3 million annual base salary and $7.2mm in equity every year. His package will vest over 3-4 years depending on company performance. Starbucks had to pay up, but they got their man.

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More Headlines 🍿 

• Private Equity owns a bunch of every day companies: Hey everyone, it’s High Yield Harry here, I did a deep dive in my latest newsletter piece covering all of the companies that are owned by Private Equity that you never would’ve expected. I also wrote a thread on it here. This is a fun read

• July CPI annual inflation rose 2.9%, less than expectations of 3.0% while Core CPI growth of 3.2% matched expectations. Monthly growth of 0.2% was in line with estimates. This is the first time inflation has dropped below 3% since 2021! Additionally, wholesale inflation rose 0.1% in July, less than expected. This probably gives the fed the green light to cut 25bps in September

• Apollo backed telco Brightspeed reached a deal to slash debt by $1.1 Billion and gain $3.7 Billion of new financing

• Blink Fitness, the low budget gym, filed for bankruptcy earlier this week and will close 10% of its locations

• B. Riley is under investigation by the SEC for their investments in Franchise Group

• RBC’s ex-CFO, who was fired over an alleged affair, is suing for wrongful dismissal and reputational harm

• The Wall Street Journal did a deep dive into Bank of America’s Investment Banking culture. They allegedly found that BofA has a culture where Bankers work around safety guidelines…BofA has since responded internally - telling junior bankers to report bosses that pressure them to misreport work hours to HR. This is an encouraging step to clamp down on crazy banking hours

• Activist Hedge Fund Elliott is nominating 10 directors to Southwest Airline’s 15 person board

• Home Depot is seeing customers pull back spend

• Flutter Stock Jumps as Sports Gambling Lifts U.S. Earnings

• Median Silicon Valley home prices have crossed the $2 million threshold…

• Big Lots is closing 300 stores and warns they could go out of business

• The iphone might be getting sleeker..

M&A Transactions💭 

Mars is acquiring snack maker Kellanova in $36 billion deal, a 16.4x EV/EBITDA multiple. Kellanova owns popular brands such as Starburst, Eggo, Twix, Pringles, Snickers, and Pop-Tarts.

Cellnex Austria, operator of wireless telecommunications infrastructures, has entered into a definitive agreement to be acquired for $873.86M by MEAG - A Munich Re Company. Deutsche Bank and Mediobanca advised on the sale.

Algonquin Power & Utilities entered into a definitive agreement to sell its renewable energy business to LS Power Group for $2.5B. J.P. Morgan advised on the sale.

Action1, developer of risk-based patch management platform, has reached a definitive agreement to be acquired for $1.0B by CrowdStrike (NAS: CRWD).

QGenda, developer of SaaS based workforce management software, has reached a definitive agreement to be acquired for $2.5B by Hearst Communications. Evercore Group advised on the sale.

POWER Engineers, operator of a global consulting engineering firm, has reached a definitive agreement to be acquired for $1.78B by WSP Global (TSE: WSP). AEC Advised on the sale.

Osisko Mining (TSE: OSK), a precious metal mining company, has reached a definitive agreement to be acquired for $1.57B by Gold Fields (JSE: GFI). Canaccord Genuity advised on the sale.

OPUL and HintMD (NAS: RVNC), a biotechnology company, has entered into a definitive agreement to be acquired for $924.0M by Crown Laboratories. Centerview Partners advised on the sale.

Crew Energy (TSE: CCR), a oil and gas exploration, development, and production company, has reached a definitive agreement to be acquired for $943.51M by Tourmaline Oil (TSE: YOU). AATB Capital Markets, Peters & Co., and TD Securities advised on the sale.

The Carlyle Group (NAS: CCG) entered into a definitive agreement to acquire the Kidney Business of Baxter International (NYS: BAX) for $3.8B. J.P. Morgan and Perella Weinberg Partners advised on the sale.

The Shared Ownership of Sage Housing was acquired for $520.22M by Universities Superannuation Scheme. Deutsche Bank and Barclays advised on the sale. 

Mogas Industries, manufacturer of service ball valves, has reached a definitive agreement to be acquired for $305.0M by Flowserve (NYS: FLS). Jefferies advised on the sale.

Loc Performance, manufacturer of machined components, has reached a definitive agreement to be acquired for $950.0M by Rheinmetall (ETR: RHM).

Jaggaer, developer of multinational business-to-business enterprise software, has entered into a definitive agreement to be acquired for $3.0B by Vista Equity Partners. Moelis & Company and Goldman Sachs advised on the sale.

Epicor Software, developer of enterprise software products, has entered a definitive agreement to be acquired for $4.0B by CVC Capital Partners. Barclays and Goldman Sachs advised on the sale.

Stancorp Financial Group (NYS: SFG) has reached a definitive agreement to acquire the Employer Voluntary Benefits Business of Allstate Corporation (NYS: ALL) for $2.0B. Ardea Partners and J.P. Morgan advised on the sale.

Cheney Brothers, distributor of food and grocery products, has reached a definitive agreement to be acquired for $2.1B by Performance Food Group (NYS: PFGC). Morgan Stanley advised on the sale.

Private Placement Transactions💭 

Halda Therapeutics, developer of a drug discovery platform, raised $177.0M of Series B venture funding led by Access Biotechnology, Boxer Capital, and Taiho Ventures.

Ather Energy, manufacturer of electric two-wheelers, raised $125.0M of Series F venture funding led by National Investment and Infrastructure Fund at a pre-money valuation of $1.18B.

Zepto, operator of an online grocery delivery platform, raised $340.0M of Series G venture funding led by General Catalyst and Mars Growth Capital.

Noteworthy Chart 🧭

Best of YouTube ⌚️

This Video from 3 months ago is pretty timely - it shows Jim Cramer grilling Starbucks’s old CEO and him giving Cramer some inadequate answers…

Meme Cleanser 😆